61%+ tax on deposit interest

[ixtlan]

Hi all,

OK... I'm sure it's a mistake but I'm annoyed.

How competent are the revenue commissioners? I did a return for 2005 this year (had paid the tax in 2006, but needed to do a form 11 due to stock options)... revenue sent me a check for double what they should have because they included the employers pension contribution as something I needed tax relief on. Took me some time on the phone to sort that out and I need to send them back the cheque.

Today I've just received my assessment for 2007 in response to the form 11 I competed. So what have they done... well first they took the deposit interest I reported and multipled it by 10.

This is a numerical error... OK... but then this is what puzzles me they took the "taxed interest-self" (gross before the DIRT that was paid on it), added it to my PAYE income, subtracted my reliefs and applied full taxation to the total.

So... to clarify, the notice of assessment shows my "taxable income" as my PAYE + gross deposit interest + dividends and I'm ending up being charged 41% on the deposit interest which already had 20% deducted, so actually I'm being charged 61% tax.

As you can see I'm annoyed. The number mistake is understandable, but I don't see how their computer can allow them to put deposit interest in this category.

So, an overpayment on 2005.... 2006 was OK last year... and now a misreading of the form and a misplacement of deposit interest for 2007.

Can't ring them until after 2.... and I'll be away today so it will have to wait until tomorrow which is why I'm seeking some responses to put my mind at rest.

Ix.

 

[advisor]

Hi all,

This is a numerical error... OK... but then this is what puzzles me they took the "taxed interest-self" (gross before the DIRT that was paid on it), added it to my PAYE income, subtracted my reliefs and applied full taxation to the total.

So... to clarify, the notice of assessment shows my "taxable income" as my PAYE + gross deposit interest + dividends and I'm ending up being charged 41% on the deposit interest which already had 20% deducted, so actually I'm being charged 61% tax.


Ix.

As I cannot see your assessment I can only assume what they have done is added together the figures you quote above but when giving you your srcop they have increased it by the amount of deposit interest received which is correct. Although there is no additional tax due on Deposit interest it is chargeable to the additional levies.

 

[WaterSprite]

Have a look at this thread, which may address your question. Was your cut off point raised to take into account the deposit interest?

Sprite

 

[ubiquitous]

Just in relation to the inputting/notation errors mentioned by the OP, anyone who handles tax assessments on a routine basis will be aware of the high frequency of errors on assessments generated from paper-filed Form 11 returns. I would estimate myself that at least one in three of such assessments are incorrect. That's why I have expressed surprise on these pages where posters mention that they "let the Revenue do the tax calculations" for them.

 

[ixtlan]

Watersprite, thanks for that reference. Yes, you are right. The standard cutoff was indeed raised by the amount of interest (10 times the real interest).

However there is no mention of the DIRT paid. If that was listed as a credit as the other thread mentioned, then there would be logic to what was done. As things stand revenue is asking for 20% tax on the interest, on top of the 20% DIRT already paid. So 40%... not 61%. I'll call them in the morning and try to resolve it.

ubiquitous, in the past I have done the calculations, but this year I was a bit more prepared and filled out the form for Aug 31. I tired to do the return on-line last year but was told that I could not, since although I am self-assessed due to share options and other share income, I cannot register for IT (Income Tax) and hence cannot do an on-line return. Is this correct? Maybe things have changed?

Ix

 

[Zorro444]

Ixtlan, there is a bug in the Revenue system for calculating DIRT. From conversations with Revenue it appears to be random and hence does not affect everyone. The problem seems to manifest itself by correctly raising the standard cutoff but not including a credit for DIRT, as you've described. I've experienced this problem since March of this year and so far the problem has not been resolved and won't be until their IT dept fix the bug. So far it hasn't had any direct financial impact but this will change in 2009 when the incorrect calculation starts to affect my tax credits. If you contact Revenue and mention that you are having problems with your DIRT calculations they should immediately know what you are talking about as I believe a reasonable number of people are affected.

 

[ubiquitous]

ubiquitous, in the past I have done the calculations, but this year I was a bit more prepared and filled out the form for Aug 31. I tired to do the return on-line last year but was told that I could not, since although I am self-assessed due to share options and other share income, I cannot register for IT (Income Tax) and hence cannot do an on-line return. Is this correct? Maybe things have changed?

It probably is correct - the helpful State, as always That said, and at the risk of boring people, if you are compiling your own tax return, you should first make some attempt to calculate your liability in advance. The risk of being ripped off by an incorrect tax assessment is much too high for comfort, in my opinion.

 

[ixtlan]

Hi all,

Spoke to the revenue, and they were quite helpful, correcting all the points I made, which were...

Interest 10 times real value
Flat rate expenses not listed
PRSA contributions by me mixed up with PRSA contributions by my employer. A small loss to me there.
PAYE tax paid not listed at all!

Also, I was incorrect about the DIRT credit. It's there, but called "retention tax credit". Really the biggest issue, which I had not even noticed when I first posted, was that the PAYE tax was not listed on the assessment.

This really is extraordinary. 4 errors on the form, including a major major one. BTW, I must add that my handwriting on the form is perfect, there are no legibility issues.

And in addition to these errors there was the error on my 2005 form where they were paying too much.

What do you think the odds are that the transcriber of the form11 will be queried on this?

Ix.

 

[ubiquitous]

What do you think the odds are that the transcriber of the form11 will be queried on this?

Zero.

On the other hand, is it really their fault? The unwieldly design of the form makes accurate transcription almost impossible. For example, the panel for PAYE tax deducted is situated seven panels away from the PAYE income panel. There are 22 pages on the 2007 Form 11, and 10 on the "shorter" Form 11e.

 

[Towger]

The risk of being ripped off by an incorrect tax assessment is much too high for comfort, in my opinion.

But it also works the other way around! They can make mistakes in your favour! As for bugs in Revenue’s software, any changes (bug fixes) have to approved by committee, enough said.

 

[Towger]

What do you think the odds are that the transcriber of the form11 will be queried on this?

None: It is supposedly read by an OCR system.

On the one time I got talking to the girl who gave me an extra 40K+ IEP on my TFA (again a basic keying error), she thought it was a funny mistake. I asked her if they would ever notice the extra credit, as it would have repeated each year and she said probably not.

 

[ubiquitous]

But it also works the other way around! They can make mistakes in your favour!

There is no such thing as a mistake in your favour. You are still liable for underpaid tax even if they make an error in assessing you, and you can be pursued for interest and penalties on arrears.

 

[Towger]

There is no such thing as a mistake in your favour. You are still liable for underpaid tax even if they make an error in assessing you, and you can be pursued for interest and penalties on arrears.

Precisely, thats where the fun start.