Any definite answer on whether NPPR fee is tax deductible?

oldnick said:
Look - the whole point of this thread is to answer the question is NPPR a deductible expense.

I believe ,along with the Instititue of Taxation and many posters, that it should be.
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I'd say you'll be hard pressed to find anyone who'll argue that it SHOULD not be allowed as a deductible expense, in fact I wholeheartedly agree it should, but the point I'm trying to make is that the legislation as it stands doesn't allow it, as it is not actually a rate and not actually levied by the local authority. What should be and what is actually the case is exactly the issue here, and if it requires a concession or a change to the law then that's what it needs.


oldnick said:
Yes, Revenue may have a legal case for excluding NPPR as an expense based on a few words amongst a very long detailed law...
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...but surely they're the relevant few words.

oldnick said:
But until Revenue make matters clear to the public I am convinced that when i do include NPPR that the worst that wll happen (in the case of an audit)is that they will disallow it; nothing more.
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Absolutely agree with you there; I'm sure in the absence of clear instruction, via a tax briefing or a change in IT70, you wouldn't penalised, but an expression of doubt on your Form11 would ensure that.
 
mandelbrot said:
My understanding of "levy" in this context is the imposition of a charge. AFAIK both the charge and the penalties are given rise to under the Act (linked already above).



Yep, you're dead right, even I talked myself around on that one!

But my point is that Revenue may be talked into accepting the proposition that the NPPR charge should be deductible, in line with other charges that are required as part of ownership of the property, but not on the basis that it is a rate levied by a local authority.
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We're really into 'how many angels can dance on the head of a pin' territory now.

If you ask me, the notion that Revenue need "to be talked into' allowing NPPR deduction is ridiculous and reflects very badly on them. They should be well able to accept the common-sense reality that NPPR fees (in common with insurance and certain other costs), in the context of a rental property, relate wholly and exclusively to the rental property, and on that basis should be allowable. Do they, or the country, really need to have piles of letters from TDs stacking up on their desks before they can take this obvious action?
 
well, I've put down expressions of doubt about five times in last 20 yrs ( once on mdeical costs, once on depreciation, twice on overseas rent and once on CGT).

Never had an audit.
 
Interesting to hear that - thanks. Maybe the belief that is out there about expressions of doubt is just a myth.
 
Now I'm worried. Never thought that asking taxman a question would make him suspicious; the opposite in fact.
Never used an accountant for my form 11 and prefer to ask for the occasional bit of advice direct from the taxman.

Funnily enough, I have found in 30 yrs of audited accounts for my businesses -when I had to use accountants by law - that the taxman was sometimes more flexible than the auditors on some points.

However, I won't ask them about NPPR .
 
oldnick said:
Now I'm worried. Never thought that asking taxman a question would make him suspicious; the opposite in fact.
Never used an accountant for my form 11 and prefer to ask for the occasional bit of advice direct from the taxman.

Funnily enough, I have found in 30 yrs of audited accounts for my businesses -when I had to use accountants by law - that the taxman was sometimes more flexible than the auditors on some points.

However, I won't ask them about NPPR .
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Because of discretion (and sometimes incompetence), individual Revenue staff can sometimes unilaterally come up with wild concessions.

Do you have any moral concerns about what could be seen by some as "tax evasion"? I don't think it's fair that the majority or people (correctly) don't claim a deduction for the NPPR charge while others happily submit incorrect tax returns understating their tax liability.
 
Gekko - am unsure whether you've properly read the preceding posts.

I make it quite clear that I sincerely believe it is quite wrong that anyone would think that NPPR is not a deductible expense.
So, no moral qualms. I pay the NPPR promptly and fully and this,( as per similar levies/rates/taxes in other EU states where I have property )- should be counted as a deductible expense.

To me it defies reason,common sense ,whatever, that anyone could think this is not a deductible expense.

And yes ,you're right - I don't think it's fair that most people don't claim it (if,indeed that's the case) whilst some do.
The fair -and "moral" -solution is that everybody claims it.
 
oldnick said:
Gekko - am unsure whether you've properly read the preceding posts
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I've read the preceding posts.

The tax departments of the Big 4 disagree with you. The Irish Taxation Institute disagrees with you. Tax consultants and chartered accountants within this forum disagree with you.

Based on the above, I'm surprised that you feel that it's "quite wrong that anyone would think that NPPR is not a deductible expense" or that "it defies reason,common sense ,whatever, that anyone could think this is not a deductible expense".

Section 97 TCA 1997 sets out what qualifies as a deductible expense for rental income purposes. One such item is a charge levied by a local authority. The NPPR charge isn't levied by local authorities - It's just collected by them. On this basis, I don't see how you can "hang your hat" on this point.
 
Gekko - Again ,i'm unsure if you have read any of the previous posts properly.

In the second post McGibney has a download of the Irish Tax Inst. submission to the Revenue where the ITI strongly argues that NPPR should be tax-deductible.
How could you possibly read this letter in any other way ?

ITI has not changed its mind but has merely stated -and this statement has been the basis for other accountants to think that NPPR is not tax deductible - "Revenue has indicated that NPPR is not tax deductible".

Gekko -this is getting boring and we're going round in circles.

You believe, along with the tax official, that because a national levy (NPPR) is not specifically mentioned in section 97 of the 1997 Act (hardly surprising as the Act was passed ten yrs before the national levy was introduced) then it should not tax-deductible.

I disagree and let's leave it at that.....

....... except to quote Environment Minister Phil Hogan in todays' E.Herald
" the new flat-rate property charge will be seperate from the existing NPPR"

Doubtless the property tax won't be allowable because it's not in the 1997 Act.
 
oldnick, if this argument had traction, the Big 4 would be advising their clients to take a deduction for the NPPR.

Ours is a self assessment system, so if the best tax minds in the country thought that the NPPR was deductible per the legislation, their clients would be claiming a deduction for it. But they're not.

Big 4 clients aren't claiming a deduction and you are...will you happily pay any interest charges that arise as a result of any underpayments of income tax that arise as a result of your interpretation of the relevant legislation?
 
Are these top accountancy companies KPMG, Ernstyoung, PriceWaterhouse that, according to the Sun Ind 24/4/10, charged 164 million euros as auditors and advisors to Anglo, BOI and AIB between 2000 and 2010 ?

Wow -then clearly they must be right and I'm wrong.
 
oldnick said:
Are these top accountancy companies KPMG, Ernstyoung, PriceWaterhouse that, according to the Sun Ind 24/4/10, charged 164 million euros as auditors and advisors to Anglo, BOI and AIB between 2000 and 2010 ?

Wow -then clearly they must be right and I'm wrong.
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Wow indeed. In fact I don't even know why I'm bothering wasting further time replying again, but what the hell does the fact that they audited the banks have to do with this?! The big accountancy firms have separate departments for tax and audit, so the people who are advising clients not to claim deduction for NPPR are not the same ones who audited the banks. Even leaving that aside, your arrogance is impressive; you appear to believe you are right and people who collectively have spent hundreds of years studying and working in taxes are wrong. That's impressive.

Your entire argument centres around what "should" be - and I haven't seen anyone disagree about that.

But you haven't at any point demonstrated how the NPPR is either 1) a rate, or 2) levied by a local authority.

The fact that you keep wittering on about the 97 Act being issued ten years before the NPPR came into being, shows your ignorance of how things work - the 97 Act gets amended every year for the changes in each Finance Act. If the powers that be (Govt, not Revenue) wanted the NPPR to be deductible then they would have, or will, amend the wording of the section, or classified the NPPR as a rate, which they have not done.

The only other alternatives then, are that Revenue make a concession which they might do but don't appear inclined to at present, or an action be taken as far as the High Court (AFAIK) to prove that the NPPR is a cost of managing the property that falls within the scope of S.97.
 
as per IRISH TAX INSTITUTE:-

"as the NPPR charge is payable to the local authority it is to all extents and purposes a rate and therefore should be a deductible expense " (on website A&Q NPPR)
and
"we consider that the NPPR charge should be deductible on the basis that it is a rate levied by the local authority " (ITI letter to Revenue, as mentioned before. Several other points made in that letter).

I do not know the exact semantic diffference between rates, levies, charges -nor do I know how exactly the difference between levied, collected by, etc etc.
I am merely agreeing with the Irish Tax Institute who have more knowledge of Irish tax matters than most people.

I also pointed out that, regardless whether one agrees with the tax experts in the I.T.I or with that tax official , Revenue have not made the position publicly clear. Indeed, their guidance leaflet IT70 suggests that all rates and levies are deductible. It seems reasonable for the average person to refer to Revenue guidance rather than study and interpret each section of an Act-and many years of subsequent Finance Bills.

We differ in opinions, but please, Mandelbrot, try to avoid veering towards rudeness when somone has a different opinion.
On that note I shall cease my arrogant wittering on this subject.
 
oldnick said:
We differ in opinions, but please, Mandelbrot, try to avoid veering towards rudeness when somone has a different opinion.
On that note I shall cease my arrogant wittering on this subject.
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Apologies, no offence intended, but arguably your comment that evoked my response could be very offensive to a person who works/worked in any of those firms...

We shall agree to differ, and hopefully common sense will ultimately prevail!
 
Only because its pouring with rain and nothing on TV , I thought the following is interesting and on topic re NPPR.

I am just quoting below with no arrogant opinion (I know I can come across like a self-righteous prig . My wife says that should be changed to pig)
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NPPR was introduced in the Local Government Act 2009
underneath the title of the Act it says
"an Act to impose..an annual charge..to the local authority"

So the Act states that the NPPRcharge is a charge to the local authority.

According to the state valuation office "...rates are an annual charge for the general provision of the local authorities"

Does the above therefore mean that NPPRcharges are, basically, local authority rates ?

If so, the problem of whether NPPRcharges are tax-deductible is in the wording of the Act which says the rates must be levied by the local authority in order to be an allowable expense.

I confess I don't know whether the NPPRcharge is levied by the govnt or by the local authority. I know it was introduced by the govnt but what does "levied" mean ?
 
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