Non Principal Private Residence Tax - Late Payment Extortion

[Karloh]

My accountant felt he had some responsibility for not informing me, and will do something in the future in terms of fees. But he felt partially rather than fully responsible - as with some of the arguments here, he considered it to be a rates type of charge, rather than a tax.

I think everyone pretty much agrees that it is up to the taxpayer to be aware of taxes. Fair enough. But implicit in this in the taxing authorities make a reasonable effort to contact taxpayers using channels that taxpayers have come to expect/rely on.

But far more relevant is that the penalty should be commensurate with the infraction. For overseas residents/emigrants to be charged excessive penalties when they have a pretty strong argument for "understandable oversight" rather than evasion is simply not reasonable.

Incidentally, I'm not really in a predicament. I've paid the tax and the fine, and I'm lucky enough that it doesn't hurt much. But this is unreasonable behaviour on the part of the state, and it is putting lots of people - many of whom had to leave the country due to catastrophic financial mismanagement by the same state - under lots of pressure. So I've got a bee in my bonnet.

 

[T McGibney]

this is unreasonable behaviour on the part of the state, and it is putting lots of people - many of whom had to leave the country due to catastrophic financial mismanagement by the same state - under lots of pressure.

Well said.

 

[RainyDay]

Incidentally, I'm not really in a predicament. I've paid the tax and the fine, and I'm lucky enough that it doesn't hurt much. But this is unreasonable behaviour on the part of the state, and it is putting lots of people - many of whom had to leave the country due to catastrophic financial mismanagement by the same state - under lots of pressure. So I've got a bee in my bonnet.

Do you think that perhaps given that you are running a small business in Ireland (i.e. renting a property), you had an obligation yourself to stay in touch with what was happening here? Perhaps you should have proactively asked your accountant or your property manager or any trusty family member as to whether there were any developments you should have been aware of?

 

[dermotneary]

Secondly - just before i was going I was partially aware of a 'second home' tax. THats all how I remember it - only as a second home tax. I'm not sure if that was just a convenient short-hand for the media, or that was how it was advertised by the government at the time??? From reading blogs - it seems like I'm not the only one who got confused by this.

This is a key point; it was not immediately obvious that a person with only one house in Ireland would be liable for this charge.

Even the legislation is not clear on the matter:-

Under “Exemptions from charge”:-
4-(1) A person who, on a liability date, is the owner of a residential property shall not, in respect of that residential property, be liable to pay the charge relating to that liability date if the residential property is, on that date –
(a) in the case of an owner who is an individual –
(i) occupied by that individual as his or her sole or main residence


As we know; legislation is open to interpretation, so if a non-resident occupied the house on the liability date; they could claim to be Exempt, it being their sole/main/only residence in Ireland.

There is no reference in the legislation to a sole/main residence in another country.

 

[Karloh]

Do you think that perhaps given that you are running a small business in Ireland (i.e. renting a property), you had an obligation yourself to stay in touch with what was happening here? Perhaps you should have proactively asked your accountant or your property manager or any trusty family member as to whether there were any developments you should have been aware of?

Yes sure - like I said in my post. It's my responsibility to know about the tax. But the state also bears some responsibility to communicate effectively and using the established channels that people have come to rely on. And as such the punishment should fit the "crime". That's the key issue. Nobody on this thread is really questioning the tax itself - it is the penalty that is at issue, and to a lesser extent the communication of the tax.

It's also clear that most overseas residents in this situation are genuine, as evidenced by being up to date with the LPT, declaring rental revenue, registering with the PRTB etc.

 

[nononsense]

Just reading through this... and I see 2 things here:

a) Incompetency of professional parties (estate agent & accountant)
b) Unfair penalties & charges for late payment - as these penalties are not consistent with other penalties applied to other taxes.

Not much we can do about a), however in the case of b) we should be communicating our lack of support of such unfair terms... If the penalty charge was fair, it would be comparable to the other penalty charges applied to other taxes.

 

[dereko1969]

You forgot:
c) taxpayers with assets in a country not being familiar with the law of the land and demanding to be spoon-fed information to avoid penalties?

 

[Ceist Beag]

You forgot:
d) posters leaping up on that high horse of theirs to attack anyone who dares raise a (valid) concern that in this case the punishment is completely disproportionate to the crime.

 

[Bronte]

You forgot:
c) taxpayers with assets in a country not being familiar with the law of the land and demanding to be spoon-fed information to avoid penalties?

I think that's a bit over the top. How about efficiency from revenue in communicating this tax to overseas landlords.

1. They know who we are
2. They know we may not read Irish newspapers, and if we do we don't read revenue ads, I've never noticed ads when I read Irish newspapers online, and where I am there are no longer paper versions
3. They know we are landlords
4. How easy it would be for them to write a standard letter to all landlords outlining the taxes/rates or whatever that we should think about
5. How about in the landlord section they have a list of all the potential taxes, not all over the place in different parts of their website
6. How about a bit of leniency, the OP is not evading a tax, nor was he avoiding it, he didn't realise it existed. I do believe that currently, due to the downturn, revenue are being more 'kind' to taxpayes, why should that apply to some and not others

 

[Bronte]

My accountant felt partially rather than fully responsible - as with some of the arguments here, he considered it to be a rates type of charge, rather than a tax.

And you've no idea how many arguments we've had on here in relation to just that point, as we also debated whether some of these taxes were indeed rates and charges and should be tax deductable, and that point has not been fully resolved to my satisfaction. And despite revenue stating they would have a tax briefing on the issue, they haven't bothered, or don't want to, clarify the matter fully.

 

[Luternau]

And despite revenue stating they would have a tax briefing on the issue, they haven't bothered, or don't want to, clarify the matter fully.

Agreed. I find it really odd that some are claiming it and others not. Revenue are sure it have audited some of those claiming. If it's not allowed, we are told -if I am not mistaken, they just say to stop claiming for future years with no penalty for claiming it. That's quite unfair and inconsistent with other overclaimimg scenarios. At the very least it should indicate to them that there is confusion over it.

However, some hete say they did clarify it and it's not deductible.....

 

[mandelbrot]

I think that's a bit over the top. How about efficiency from revenue in communicating this tax to overseas landlords.

1. They know who we are
2. They know we may not read Irish newspapers, and if we do we don't read revenue ads, I've never noticed ads when I read Irish newspapers online, and where I am there are no longer paper versions
3. They know we are landlords
4. How easy it would be for them to write a standard letter to all landlords outlining the taxes/rates or whatever that we should think about
5. How about in the landlord section they have a list of all the potential taxes, not all over the place in different parts of their website
6. How about a bit of leniency, the OP is not evading a tax, nor was he avoiding it, he didn't realise it existed. I do believe that currently, due to the downturn, revenue are being more 'kind' to taxpayes, why should that apply to some and not others

Why are you putting the blame on Revenue - the NPPR is neither administered nor collected by Revenue - it's the local authorities' baby. The mess they've made of administering it is presumably a large part of the reason why administering LPT was given to Revenue. So in relation to NPPR and Revenue, points 1-6 are pretty much redundant. (You wouldn't expect Revenue to be writing out to people to pay their overdue motor tax just because they know who owns the vehicle, when motor tax is the Dept of Environment's remit?)

As for point 4 specifically, I'd say it would have been very difficult for "them" (the LA or indeed Revenue) to write a standard letter to all landlords, given that it's a chicken and egg type situation - in many cases the landlord's identity wasn't known until the NPPR had been introduced. Anecdotally I've heard lots of previously unregistered (with PRTB or Revenue) landlords have come out of the woodwork since the NPPR arrived. Sure, in the case of overseas landlords, they wouldn't have the correct address to write to (and if they wrote to the property address itself there's no guarantee it'll reach the landlord) - so they'd end up in a situation where they were exposed to people challenging their right to collect, on the basis that they'd never received the letter.

 

[mandelbrot]

Agreed. I find it really odd that some are claiming it and others not. Revenue are sure it have audited some of those claiming. If it's not allowed, we are told -if I am not mistaken, they just say to stop claiming for future years with no penalty for claiming it. That's quite unfair and inconsistent with other overclaimimg scenarios. At the very least it should indicate to them that there is confusion over it.

However, some hete say they did clarify it and it's not deductible.....

I'm satisfied that it's not deductible.

I'm also satisfied that the absence of clear guidance in the form of an ebrief or a mention in the tax manuals means that in an audit scenario it would have to be treated as a technical adjustment and accordingly no penalty would apply.

I'm also satisfied that if in an audit scenario the only issue that arose requiring adjustment was a €200 claim for an expense item that you could have a decent argument about, then (taking into account the administrative cost of raising a revised assessment and potentially ending up in court arguing over €100 of tax) any reasonable person would reach a sensible agreement going forward.

 

[dereko1969]

I think that's a bit over the top. How about efficiency from revenue in communicating this tax to overseas landlords.

1. They know who we are
2. They know we may not read Irish newspapers, and if we do we don't read revenue ads, I've never noticed ads when I read Irish newspapers online, and where I am there are no longer paper versions
3. They know we are landlords
4. How easy it would be for them to write a standard letter to all landlords outlining the taxes/rates or whatever that we should think about
5. How about in the landlord section they have a list of all the potential taxes, not all over the place in different parts of their website
6. How about a bit of leniency, the OP is not evading a tax, nor was he avoiding it, he didn't realise it existed. I do believe that currently, due to the downturn, revenue are being more 'kind' to taxpayes, why should that apply to some and not others

They didn't know who you were Bronte that was the whole point of the NPPR, to gather information on properties and who owned them.

Maybe you're mixing it up with the LPT which given you're talking about Revenue might well be the case.

How did you find out about the NPPR?

 

[Luternau]

Correct.
@Bronte
There was no reliable list of Non Principle Private Resisances in existence to do a mailing. And it was not just landlords that had to pay. Lots of second homes in the country that would fall outside any trawl of PTRB database. Any attempt to mail notices would have resulted in more mayhem than no mailing or attempt to contact direct.

In reality, because there was no Database etc, those that could prove to be outside of Ireland, should not have to pay the ridicously high penalties. Those that were here, got enough information to know this was coming in, so a penalty should apply, but no higher than applied to unpaid tax.

 

[T McGibney]

This wouldn't be a controversy at all if a more lenient penalty regime had applied, on the lines for example of that which attached to the Household Charge.

 

[Bronte]

They didn't know who you were Bronte that was the whole point of the NPPR, to gather information on properties and who owned them.

How did you find out about the NPPR?

But revenue knew I was a non resident landlord. It's on the forms I fill out that they have?

How did I find out about NPPR? Don't remember, but I read the papers, I'm a member of the IPOA which sends me circulars, I have family who are landlords (some of whom pay the NPPR and some who have paid zero on anything, not tax, not PRTB etc) also I have debated NPPR and all other landlord issues on here. And I have an annual discussion with my accountant.

 

[Bronte]

@Bronte
There was no reliable list of Non Principle Private Resisances in existence to do a mailing.

In reality, because there was no Database etc, those that could prove to be outside of Ireland, should not have to pay the ridicously high penalties. Those that were here, got enough information to know this was coming in, so a penalty should apply, but no higher than applied to unpaid tax.

But revenue know who the non resident landlords. And the civil servants who drafted the penalties would know that non residents would have an issue with knowing about this tax/charge/rate.

Going forward, if the government proposes any new tax/charge/rate then there should be a database to inform non residents because the message is not getting through. I nearly missed the PRTB myself. Indeed a family member in Ireland didn't know about it.

I get notifications about one NPPR I have to pay but another county does not send them out. How is that for joined up thinking.

 

[T McGibney]

But revenue know who the non resident landlords. And the civil servants who drafted the penalties would know that non residents would have an issue with knowing about this tax/charge/rate.

Going forward, if the government proposes any new tax/charge/rate then there should be a database to inform non residents because the message is not getting through. I nearly missed the PRTB myself. Indeed a family member in Ireland didn't know about it.

I get notifications about one NPPR I have to pay but another county does not send them out. How is that for joined up thinking.

Two quick points here:
1. Revenue weren't allowed administer the NPPR so their own systems, expertise etc are totally moot in this discussion.
2. The scale of the penalties for non-payment of the NPPR meant that they incentivised the councils to produce a mere token information campaign to publicise it. The more people who didnt know about it, the more the councils had to gain in late payment penalties.

 

[Bronte]

The more people who didnt know about it, the more the councils had to gain in late payment penalties.

Apart from this being morally questionable, is it in any way legally challengable I wonder. The fines are extortion.