How does a sole trader get a refund of overpaid income tax paid more than 6 years ago

[CuriousCork]

A friend of mine, a sole trader, has just discovered that he overpaid income tax of €11,000 in 2017. However the Revenue wont refund it as they say that they do not pay refunds more than 4 years old. His own accountant has confirmed that is the case. (His old accountant is now retired and is beyond the statute of limitations to be sued.)

Any solution to this issue?

 

[ClubMan]

Any solution to this issue?

Don't think so.

Four year rule

This page explains the details on the four year time limit

www.revenue.ie

 

[cally1990]

No, there has been numerous tax appeals with https://www.taxappeals.ie/ and each fail due to the 4 year rule

Eg

https://www.taxappeals.ie/_fileupload/determinations/2020/01tacd2020.pdf

It's pretty clear cut. No case here

The document for cases you CANNOT appeal (from tax appeals commission) was updated and they will NOT hear theses cases anymore either because there is nothing to appeal :-(

 

[CuriousCork]

Whilst my friend's accountant was clearly negligent, the Revenue made no attempt to repay the money. So much for collecting taxes in a fair and transparent manner!

 

[T McGibney]

Whilst my friend's accountant was clearly negligent, the Revenue made no attempt to repay the money. So much for collecting taxes in a fair and transparent manner!

Negligent how?

A friend of mine, a sole trader, has just discovered that he overpaid income tax of €11,000 in 2017. However the Revenue wont refund it as they say that they do not pay refunds more than 4 years old. His own accountant has confirmed that is the case. (His old accountant is now retired and is beyond the statute of limitations to be sued.)

This isn't strictly true. If a valid claim for the refund (eg a tax return) was filed with Revenue within the 4 year time period, the refund can validly be paid thereafter. This morning I was on to Revenue to find out the mailing address of a 2019 tax refund cheque that they issued last week.

Did your friend not file a tax return for 2017?

 

[jpd]

Your friend should claim the tax refund amount from his accountant

 

[T McGibney]

Your friend should claim the tax refund amount from his accountant

How?

A sole trader failing to file a valid tax return within 4 years of the year end actually constitutes a criminal offence on their part. How is that someone else's fault?

 

[Marsupial]

Whilst my friend's accountant was clearly negligent, the Revenue made no attempt to repay the money. So much for collecting taxes in a fair and transparent manner!

What did Revenue do wrong here? They collected the tax paid to them in a fair and transparent manner.

And, although a very talented organisation, they're not psychic so presumably wouldn't have been aware of the overpayment until after the 4 years limit had passed. I assume that they then advised your friend - in a fair and transparent manner - that, due to the provisions of Section 865 (4) of the Taxes Consolidation Act 1997, they were legally unable to refund his money.

Surely your friend didn't expect revenue to break the law of the land?

 

[T McGibney]

Surely your friend didn't expect revenue to break the law of the land?

There's nothing illegal or unlawful about a tax repayment being made outside the four-year rule window.

The point of the rule is that it removes any obligation from Revenue to issue such a repayment.

 

[Marsupial]

There's nothing illegal or unlawful about a tax repayment being made outside the four-year rule window.

The point of the rule is that it removes any obligation from Revenue to issue such a repayment.

I doubt that the Comptroller and Auditor General would be impressed with any Revenue official who decided, on a whim, not to abide by any provision of the relevant tax legislation - including Section 865 (4).

 

[torblednam]

From the TAC determination (and all the previous ones on the same issue):

"In my view, the use of the word ‘shall’ per s.865(4) TCA 1997, indicates an absence of discretion in the application of this provision. The wording of the provision does not provide for extenuating circumstances in which the four-year rule might be mitigated.
In short, I do not consider that I have the authority or jurisdiction to direct that a
repayment be made to the Appellant where the claim for repayment is outside the four-year period specified in s.865(4) TCA 1997."

Neither the TAC nor Revenue has discretion in the matter - if either were to make an exception in one case, then the floodgates open.

 

[T McGibney]

then the floodgates open.

The floodgates being that taxpayers can recoup money that they have previously overpaid to the State.

Imagine considering that to be a bad thing.

 

[Gordon Gekko]

The line has to be drawn somewhere. Four years seems fair to me. The systems shouldn’t need to be open-ended just to facilitate eejits like the OP’s friend. And, yes, someone who realises that they overpaid tax 7 years ago is an eejit.

 

[T McGibney]

The line has to be drawn somewhere. Four years seems fair to me. The systems shouldn’t need to be open-ended just to facilitate eejits like the OP’s friend. And, yes, someone who realises that they overpaid tax 7 years ago is an eejit.

Agree 100% but every administrative system should have force majeure protections built it. This should never encompass the sort of eejit who never got around to fiing a valid 2017 sole trader tax return until after 31 December 2021 but equally, the existence of legislation to outlaw tax refunds in cases involving genuinely extenuating circumstances is my opinion ridiculous.