Client has apparent undeclared income

J

Jim Davis

Registered User
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Turns out a client is driving a 2006 BMW 635 despite only declaring an average PAYE income on their tax return, as director of their company. They're also cribbing about CT bill.

Any advice on what to do? (hypothetical situation of course)
 
Surely it's not your problem. He has to sign the tax form.

He could have won the car in a raffle, been willed it, htere could be numerous explanations.
 
It could be OP's problem if he is being asked to certify accounts.

There are clients that are not worth having.
 
It is most definately the OP's problem.

There is a possible reporting requirement under the Criminal Justice Act for a start IF you think there is serious tax evasion going on.

There could be a number of reasons for this though which could be quite explainable. I would ask the client how he is able to fund his lifestyle as it seems to be unsupported by the known income. See what he says before you jump to conclusions.

If it turns out your worst fears then you may need to consider getting rid of them.


DB
 
There has to be an anonymous way of doing this, for example, to bring in an audit from revenue.

In the UK, doctors can send in a form if they think a patient is lying about disability and social welfare, surely the same principle should apply here
 
Is the car theirs, purchased privately by them, or is it a company car, paid by the company they are director of with notional pay(BIK) calculated on it? I note the are cribbing about the CT bill, presumably the company is making good profits.

Apart from the issues raised by Dbran above I would also take serious note of the contents of Section 1078 TCA 1997 and their impact on tax practitioners/accountants dealing with any such hypothetical clients.

On an aside, I'd ditch them anyways as if their business sense is as bad as their sense of car choice, they have a serious problem.
 
I would gently point out that this issue could possibly be raised in a Revenue enquiry into personal tax returns, as Revenue could look at how people pay their bills etc., and encourage them to tell you how they manage their budget. I assume you also prepare their personal tax returns, and this question could be raised at that point.

It could of course be very possibe that this person has a rich partner or benefactor (of any kind), and all you can then do is note this for your files.
 
DBRAN said:
I would ask the client how he is able to fund his lifestyle as it seems to be unsupported by the known income. See what he says before you jump to conclusions.
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Goodness I didn't think an accountant could ask someone this based on the car they drive. How much is this car worth?
 
Bronte said:
Goodness I didn't think an accountant could ask someone this based on the car they drive. How much is this car worth?
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There may indeed be innocent explanations for this but a BMW 6 series starts new at almost 100K so if the person had ow declared income then it might not be considered inappropriate to enquire. Of course they could have won the lotto or been lucky at the gee gees but since Revenue register car numbers it is not not beyond the bounds of possibility that they would check self-assessed taxpayers incomes to expensive new car registrations to see if there is any anomaly.
 
Jim Davis said:
Turns out a client is driving a 2006 BMW 635 despite only declaring an average PAYE income on their tax return, as director of their company. They're also cribbing about CT bill.

Any advice on what to do? (hypothetical situation of course)
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He is driving it, you say.

But does he own it?
 
onq said:
He is driving it, you say.

But does he own it?
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It is not right to look away from something that might be questionable (on a micro-scale, that is the sort of thing that has gone wrong with our banks).
 
Looking at carzone.ie, a 2006 6-series can be bought for around 45k (less if you haggle right!).

This would be only about 900 pm on a 5 year motorloan. Depending on his other outgoings, this could be easily afforded on an average PAYE salary.
 
Jim Davis said:
Turns out a client ....
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Jim Davis,

What goods/service to you provide to your client?

Clearly if you are an accountant, tax advisor, financial advisor, solicitor etc your response is also governed by regulations of your profession.

If your business is selling cars then I'm not sure what regulations pertain.
aj
moderator
 
Padraigb said:
It is not right to look away from something that might be questionable (on a micro-scale, that is the sort of thing that has gone wrong with our banks).
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I'm not looking away I'm looking at!

LOL!

I'm making the obvious point that because someone is driving a car doesn't mean he owns it.

<shakes head>
 
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