Non-Resident Landlord Withholding Tax reforms

[Bronte]

Quick update, after a fair bit of cajoling i got the tenants to declare their RNs, we are now nearly up to to date . Does anyone know if it possible for me to do the RNs myself on their behalf, moving forward? I'd just collect all rent, and then do the declarations and payments on their behalf ; like a collection agent I guess?

That sounds way too convenient to be possible. I'll just appoint a relation as my collection agent and do the admin myself. No way in hell am I letting tenants pay tax for me.

 

[T McGibney]

Well they have the title deeds to another property so I'm sure they are not worried.

What difference would that make? Just because they have custody of the deeds to a property owned by you doesn't mean that they can misappropriate them to compensate for the consequences of an error on their part.

 

[T McGibney]

That sounds way too convenient to be possible. I'll just appoint a relation as my collection agent and do the admin myself. No way in hell am I letting tenants pay tax for me.

Very wise.

 

[massilia]

Hi Bronte; thanks

That sounds way too convenient to be possible. I'll just appoint a relation as my collection agent and do the admin myself. No way in hell am I letting tenants pay tax for me.

Thanks Bronte, but I am not sure I understand your point. I was suggesting that the tenant reverts to what they have always done over the last 20 years, paying me 100% of the rent every month. I then do the admin of declaring the RN as my own collection agent.

So the tenants deposit 100% into my bank account (in Ireland) then I transfer 20% to the taxman every month, and I do the RNs regularly as my own Collection agent. This way I avoid the issue of the tenant having to declare and pay the 20% themselves (which is a hassle and as I can attest to first-hand leads to long delays in declaration and payments) . I don't understand why I would ask a relative to get involved. unless we are talking about physically demanding payment; which is not where I am at at all. thoughts?

 

[T McGibney]

Hi Bronte; thanks

Thanks Bronte, but I am not sure I understand your point. I was suggesting that the tenant reverts to what they have always done over the last 20 years, paying me 100% of the rent every month. I then do the admin of declaring the RN as my own collection agent.

So the tenants deposit 100% into my bank account (in Ireland) then I transfer 20% to the taxman every month, and I do the RNs regularly as my own Collection agent. This way I avoid the issue of the tenant having to declare and pay the 20% themselves (which is a hassle and as I can attest to first-hand leads to long delays in declaration and payments) . I don't understand why I would ask a relative to get involved. unless we are talking about physically demanding payment; which is not where I am at at all. thoughts?

You can't be your own collection agent. It needs to be an Irish resident. But pretending you are your own collection agent might be the easiest way out out of this stupid impasse.

I think you're unwise to have your tenants do this. Some day soon, a story is going to break of a landlord being badly burned by their tenants running away without having remitted the tax deduction to Revenue.

 

[Dr Strangelove]

95% of tenants will be unaware of this obligation and about 99% would groan at being told to act as a collection agent by their landlord.

Landlords of all residencies should simply ensure they pay the correct amount of tax on their rental income.

 

[T McGibney]

95% of tenants will be unaware of this obligation and about 99% would groan at being told to act as a collection agent by their landlord.

It's worse than that.

There is precedent that suggests that both Revenue and the landlord are powerless to take action against a tenant who "forgets" to remit toRevenue the tax deducted on rents paid by them to the landlord.

 

[torblednam]

There is precedent that suggests that both Revenue and the landlord are powerless to take action against a tenant who "forgets" to remit toRevenue the tax deducted on rents paid by them to the landlord.

I just want to be clear that I'm reading this correctly; are you saying that in a case where the tenant pays the rent to the landlord net, and pockets the 20% that they've deducted, instead of remitting it, that Revenue are powerless to recover it?

It's not an area I'm familiar with, but that seems... improbable... that Revenue would leave themselves caught out like that

---

 

[T McGibney]

I just want to be clear that I'm reading this correctly; are you saying that in a case where the tenant pays the rent to the landlord net, and pockets the 20% that they've deducted, instead of remitting it, that Revenue are powerless to recover it?

It's not an area I'm familiar with, but that seems... improbable... that Revenue would leave themselves caught out like that

---

Yes I'm saying that.

Check the Ombudsman's Report for 1998, released in 1999 where an attempt by Revenue to pursue a residential tenant for arrears of tax on rents payable to a non-resident landlord was torn asunder by the Ombudsman.

The key points underpinning the Ombudsman's decision are still applicable today.

It's still available online but the collective stinging memory of that embarrassment seems to have been lost within the ranks of the Revenue Commissioners.

 

[Dr Strangelove]

Check the Ombudsman's Report for 1998, released in 1999 where an attempt by Revenue to pursue a residential tenant for arrears of tax on rents payable to a non-resident landlord were torn asunder by the Ombudsman.

That’s fascinating.

Ombudsman made the wholly reasonable point that:
-it’s unrealistic for tenants to be aware of the finer points of tax law
-it’s not reasonable to even expect them to know where their landlord’s habitual residence is

 

[torblednam]

Yes I'm saying that.

Check the Ombudsman's Report for 1998, released in 1999 where an attempt by Revenue to pursue a residential tenant for arrears of tax on rents payable to a non-resident landlord were torn asunder by the Ombudsman.

The key points underpinning the Ombudsman's decision are still applicable today.

It's still available online but the collective stinging memory of that embarrassment seems to have been lost within the ranks of the Revenue Commissioners.

I am very surprised at you suggesting that case is the sole basis for the assertion that "There is precedent that suggests that both Revenue and the landlord are powerless to take action against a tenant who "forgets" to remit to Revenue the tax deducted on rents paid by them to the landlord" - I'd go so far as to say it is (a load of) hyperbolics.

For starters an ombudsman's report is no precedent, since as you no doubt know, the Ombudsman simply makes recommendations, and the public body is under no legal obligation to accept their recommendations, (although many tend to do so in most cases).

Secondly, the fact pattern in that case and what you're talking about are night and day; the source of the inequity, as the ombudsman saw it in that case, arose from the fact that the tenant had paid the rent over gross to the landlord due to a lack of awareness of the requirement to deduct & remit. Revenue were sticking her for the remittance notwithstanding that she hadn't deducted.

A tenant who deducts an amount (prima facie evidence of their awareness of their obligation) and then fails or "forgets" to remit, hasn't a leg to stand on, and can take no comfort whatsoever from a 26 year old ombudsman case, as I'm sure you must know.

Unless there's a loophole in the drafting of section 1041 TCA 1997 as amended, that you know about and nobody else does, it seems quite clear that Revenue absolutely do have the power to pursue tenants for tax deducted and not remitted, under section 238 TCA 1997.

 

[T McGibney]

I am very surprised at you suggesting that case is the sole basis for the assertion that "There is precedent that suggests that both Revenue and the landlord are powerless to take action against a tenant who "forgets" to remit to Revenue the tax deducted on rents paid by them to the landlord" - I'd go so far as to say it is (a load of) hyperbolics.

For starters an ombudsman's report is no precedent, since as you no doubt know, the Ombudsman simply makes recommendations, and the public body is under no legal obligation to accept their recommendations, (although many tend to do so in most cases).

Secondly, the fact pattern in that case and what you're talking about are night and day; the source of the inequity, as the ombudsman saw it in that case, arose from the fact that the tenant had paid the rent over gross to the landlord due to a lack of awareness of the requirement to deduct & remit. Revenue were sticking her for the remittance notwithstanding that she hadn't deducted.

A tenant who deducts an amount (prima facie evidence of their awareness of their obligation) and then fails or "forgets" to remit, hasn't a leg to stand on, and can take no comfort whatsoever from a 26 year old ombudsman case, as I'm sure you must know.

Unless there's a loophole in the drafting of section 1041 TCA 1997 as amended, that you know about and nobody else does, it seems quite clear that Revenue absolutely do have the power to pursue tenants for tax deducted and not remitted, under section 238 TCA 1997.

I stand by my earlier observation. The basic principle that a residential tenant cannot be expected to know their landlords tax status, and shouldn't need to be aware of the finer points of tax law stand unchanged since 1998.

Any landlord who bases their plans on anything else is likely to receive a nasty surprise if the matter ends up in front of a judge who is made aware of the Ombudsman's ruling.

That's all.

 

[Bronte]

I am very surprised at you suggesting that case is the sole basis for the assertion that "There is precedent that suggests that both Revenue and the landlord are powerless to take action against a tenant who "forgets" to remit to Revenue the tax deducted on rents paid by them to the landlord" - I'd go so far as to say it is (a load of) hyperbolics.

For starters an ombudsman's report is no precedent, since as you no doubt know, the Ombudsman simply makes recommendations, and the public body is under no legal obligation to accept their recommendations, (although many tend to do so in most cases).

Secondly, the fact pattern in that case and what you're talking about are night and day; the source of the inequity, as the ombudsman saw it in that case, arose from the fact that the tenant had paid the rent over gross to the landlord due to a lack of awareness of the requirement to deduct & remit. Revenue were sticking her for the remittance notwithstanding that she hadn't deducted.

A tenant who deducts an amount (prima facie evidence of their awareness of their obligation) and then fails or "forgets" to remit, hasn't a leg to stand on, and can take no comfort whatsoever from a 26 year old ombudsman case, as I'm sure you must know.

Unless there's a loophole in the drafting of section 1041 TCA 1997 as amended, that you know about and nobody else does, it seems quite clear that Revenue absolutely do have the power to pursue tenants for tax deducted and not remitted, under section 238 TCA 1997.

I'd really be interested in seeing any case revenue will take against tenants who don't send them the 20%. That would be some wild goose chase. And a waste of public money.

Apart from that, good luck with any landlord getting back the 20% either. How do you think that would work?

What revenue should have done was allow us non resident landlords to pay the 20% directly our selves on their wonderful new system that is going to just further complicate being a landlord. That would be us tax compliant guys, not the guys revenue actually want to catch.

What I shall do is never inform my tenants I'm non resident, I haven't a notion of giving them my property id's etc, and I'll figure out how to by pass the system with either a relative or some other way and do the actual paying of it myself. I note on the revenue website their new system was designed to need certain info about the landlord, prsi no etc, but they have had to modify that because they know full well us tax payers don't want to give our tenants private personal information about ourselves.

What is driving this I wonder. Who is going to benefit from all this extra paperwork.

 

[RonnieShinbal88]

I just appointed a family member as tax agent in name and did the returns myself, if I remember correctly it was a separate account on ROS. Once set up it was straightforward. I'm assuming everyone does this. The tenant paying seems to just be in place as a deterrent so that there is some Irish resident in theory on the hook for tax as a last resort.

 

[Bronte]

I just appointed a family member as tax agent in name and did the returns myself, if I remember correctly it was a separate account on ROS. Once set up it was straightforward. I'm assuming everyone does this. The tenant paying seems to just be in place as a deterrent so that there is some Irish resident in theory on the hook for tax as a last resort.

Thanks for that, it's extremely helpful. I have an adult child resident in Ireland, well technically they are not but from revenue's point of view this will work for me. And if not I'll get a sibling for it, but what I want is to do it myself.

Can you give us more details on the separate accounts with ROS, that your family member has 2 ROS accounts, that would work brilliantly for me if I go back into being a landlord.

Good point about the Irish resident in theory, but it's pretty stupid as you'd be caught anyway by owning the property so it's a waste of time that I cannot see of any benefit to revenue. Are there thousands of non resident landlords paying no tax?

 

[T McGibney]

Are there thousands of non resident landlords paying no tax?

It seems there are. But Revenue have them by the short and curlies anyway as the CGT Letter of No Audit system means they can't sell up without first regularising their tax affairs.

 

[Bronte]

It seems there are. But Revenue have them by the short and curlies anyway as the CGT Letter of No Audit system means they can't sell up without first regularising their tax affairs.

Because of our previous interaction I went back on my sales to see what exactly happened. I signed this declaration for my solicitor:

hereby certify and confirm that no direction has been served by the Revenue Commissioners under
Section 644(2) of the Taxes Consolidation Act as of the date of closing of this sale.

Does that make sense to you? Is that about no Audit? I'm confused as to how my solicitor would put themselves on the line in any way. Your post is the first time I ever heard of that.

 

[T McGibney]

Because of our previous interaction I went back on my sales to see what exactly happened. I signed this declaration for my solicitor:

hereby certify and confirm that no direction has been served by the Revenue Commissioners under
Section 644(2) of the Taxes Consolidation Act as of the date of closing of this sale.

Does that make sense to you? Is that about no Audit? I'm confused as to how my solicitor would put themselves on the line in any way. Your post is the first time I ever heard of that.

I think that declaration refers to something different.

It's not the first case I've seen of a solicitor not being aware of the Letter of No Audit requirement.

 

[RonnieShinbal88]

Can you give us more details on the separate accounts with ROS, that your family member has 2 ROS accounts, that would work brilliantly for me if I go back into being a landlord.

I'm afraid it was a while ago and the details are a bit vague in memory. My recollection is that there was an extra PPS created for me/for the rental and not the relative, they were just the agent in name and everything went through that separate entity online and was filed by me. So in practice the landlord can make the return through a separate pps and the agent is just an agent in name, I guess the agent could also be the one filing through that PPS. If I remember correctly they may have received one letter from revenue to remind them to file a return or similar and that was the only correspondence they had. To start the process I think I submitted a form nominating them as agent and the setup all followed on from there via correspondence from revenue to me.

 

[Bronte]

I think that declaration refers to something different.

It's not the first case I've seen of a solicitor not being aware of the Letter of No Audit requirement.

Thank you, I will ask my solicitor and inform them of the situation you have outlined, as long standing clients, both my solicitor and I try to keep each other up to date with things legal and tax wise.

I'm surprised the Law Society has not sent a directive to solicitors.