NPPR Penalties

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in_trouble

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There seems to be much focus on the March 31st deadline to pay both the LPT and Household Charge before further penalties & interest are accrued.

Little has been made of the fact that the already ferocious & unprecedented NPPR penalties will increase by 50% come September, if you have not discharged your liability by then (as set out in the Local Government Reform Bill 2013).

If you have omitted to pay the NPPR on a liable property since it came in to being in 2009, your liability including penalties will be €4,820 come March 31st, increasing to €7,230 in September.

Does anybody know what this section might mean...is it possible that the charge & penalty expire after a 12 year period? -

  • (2) The said property shall not, as against a bona fide purchaser for full consideration in money or money’s worth or a mortgagee, remain charged with or liable to the payment of such unpaid charge or late payment fee after the expiration of 12 years from the date upon which the amount concerned fell due.

  • An Irish Times article suggests that after the penalties are increased by 50% in September, they will be frozen, i.e. my liability will remain at €72,300 and not increase further?

  • Any opinions on whether a legal challenge to the severity of the penalties would be successful? -
    Having read a government circular on the procedure to be followed by local authorities in the event of “hardship” cases – it categorically states that the only option open to a LA is to agree an extended repayment plan, however under no circumstances can the penalties or the fee itself be waived.

    However, the legislation giving effect to the increase of 50%, appears to suggest otherwise;

    76.Subject to section 77, a local authority may act as it sees fit to most efficiently collect undischarged non-principal private residence charge and late payment fee liabilities in respect of any such charge including, in the case of an individual being liable, reducing such late fee liabilities in circumstances in which the local authority considers that to do so would be most efficient for the collection of the undischarged charge and liabilities.
 
Condolences on the loss of your parent. Have you considered selling the property, paying your dues and riding off into the sunset with the balance?
 
in_trouble said:
I and short of taking a challenge

or hoping it won't be noticed whenever we go to sell the property, there is little I can do.

  • Does anybody know what this section might mean...is it possible that the charge & penalty expire after a 12 year period? -
    (2)
  • An Irish Times article suggests that after the penalties are increased by 50% in September, they will be frozen,
  • Having read a government circular on the procedure to be followed by local authorities in the event of “hardship” cases – it categorically states that the only option open to a LA is to agree an extended repayment plan, however under no circumstances can the penalties or the fee itself be waived.
  • However, the legislation giving effect to the increase of 50%, appears to suggest otherwise;

    76.Subject to section 77, a local authority may act as it sees fit to most efficiently collect undischarged non-principal private residence charge and late payment fee liabilities in respect of any such charge including, in the case of an individual being liable, reducing such late fee liabilities in circumstances in which the local authority considers that to do so would be most efficient for the collection of the undischarged charge and liabilities.
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I dispute that little has been made of the ferocious cost to not paying the NPPR, we have had endless debates on here, and if you look at other websites you will find the same. Did your dad not have an accountant? You say you couldn't afford the 3300K annually, but you were surely receiving rent from the property, and as you mention your father was very ill, I'm assuming the property was mortgage free so you must have had a good rent roll with which to pay it? Your questions/options

Yes you could chance selling it as is, I know one person who has done this, since deceased, and will now never be caught. But only in a two unit building, cannot see how you are going to get away in an 11 unit building. I know of someone else declaring two units in a 3 unit place, I'll be highlighting your post on here to them to get their act together as I've already done numerous times already.

Here are some pointers on how you could get caught, 11 Esb points, if 11 rentals are declared to revenue and there's bound to be social welfare tenants in there, all proving it is not one unit. Even the rent roll will show it wasn't one unit. I'm assuming Dublin and at least €100 a week, giving a rent of nearly 60K. But in the mess and sad circumstances of your father's passing you just might get away with it. Ultimately I'm assuming it is his tax liability. Of course this is tax fraud, and you could land yourself in really hot water, but you did ask.

Don't see how you can take a legal challenge, I believe this is a watertight tax, and I totally agree the penalties are disproportionate. I've had my own arguments on AAM about this, and about the fact that 'apparently' it is not tax deductable, in my own case I decided that it should be and declared it on my tax returns and am myself ready for an audit and revenue scrutiny.

Section 2 looks to me that if someone purchased your property in good faith, that after 12 years they would not be liable for the tax. Statute of limitations I'm assuming there. But this is another reason why you won't get away with not paying, no sane purchaser or their solicitor would accept only one NPPR in a building of 11 units. Not only would they then be running the risk of the NPPR attaching to them, they'd be potentially losing their pre 63 no need for planning on 11 units. From a revenue point of view this is why this NPPR is leading to large financial problems for people, and it will continue, as each year goes by, those that ignored the NPPR reach the point of sale and it comes back to haunt them.

I think you are correct about the extra 50% being added and then frozen, but you'll have to link the rule, not the Irish Times article, I'm assuming it's on the NPPR website.

Yes it appears the local authorities are now being given some discretion. I don't think someone with 11 units and rental will have much luck with them, but based on the fact your father was ill, and has since passed away, this is your best bet, but you need to do it now. Nobody can tell you what discretion they have, but I'm guessing they haven't formulated policies in each authority yet, and will take it on a case by case basis. I would personally have thought this get out was for cases where it was an unoccupied property and the owner was in a home, ill, incapacitated, elderly and had some kind of really genuine reason for not having paid it. But someone taking rent from 11 units sounds like a professional to me.

I'm guessing the conflict you see in the documentation is due to the fact originally no way could you get out of penalties, then they said local authorities could let you pay in instalments, recognising that if you've to pay say 3K in one go, people would baulk at it, so making it more manageable, but still no waiving of penalties and now they've changed it to let the LA, have some discretion.
 
If a low-ball estimate of €800 per unit then the income from same would have been just over €100k per annum, what happened to this money?
 
Dereko is that what one would get for a unit like those in Dublin? Around the 200 Euro mark? If so the rent roll for one house is hugh.
 
It seems I may have over-estimated the rental roll after looking at Daft though there seem to be very few studio/bedsits available there.

However, even a €500 p/m charge per unit would bring in €66k per annum whilst €600 p/m would bring in €80k.
 
Yes, I'd put in a figure of 60K myself, based on around €100 Euro. You mention bedsits, aren't those banned. OP didn't say they were bedsits.
 
Thanks for the replies.

Wasn't suggesting that there has been no discussion about the NPPR on here, but there has been little or no mention of the impending 50% NPPR increase from the Local Authorities, on the NPPR site or Revenue.

Revenue appear to be administering the LPT and HC with the NPPR still with the Local Authorities, the legislation confirms that it will stay that way.
 
in_trouble said:
Regarding a legal challenge to the penalties, there seemed to be some consensus on here previously that there was a reasonable chance of success given that the effective interest rate of 120% on the NPPR is unprecedented?


I'd have no issue paying the outstanding 12k or so at this stage but I had no idea the penalties on the NPPR were so severe, perhaps I should, to be honest I had more on my mind.
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You obviously had a lot more on your mind. I find your tax figure low and the way you put the accounts, as in putting the nursing home in their off the income odd. But never mind. I actually don't see your problem. Your mother can live off the state pension and pay the penalties out of this years rental income? Or borrow to pay off the penalties, presumably all the repairs are now done and no major expenditure is foreseen. Even with taxes it's a nice little income stream.

What happened your accountant in all of this, didn't he tell you about the NPPR in 2012/2011/2010 & 2009 ?

Yes we did indeed discuss about the penalty being unprecedented, but who can afford a challenge, with little chance of success. At some stage we also discussed that it would be better to pay that years NPPR and come then to an arrangment on the penalties in order to stop the clock running etc. Not sure if anyone managed this, but one local authority wrote to me about it at some stage, the fact they were going to help people in difficulty.
 
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dereko1969 said:
It seems I may have over-estimated the rental roll after looking at Daft though there seem to be very few studio/bedsits available there.

.
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Ok we now have the rental, about 115 per unit or thereabouts. If I go on ye old Bronte property value, that makes it worth nearly a million, at 15 times rent, but if only 12 times a still not unsubstantial 780K. Nice.
 
If I was to pay the liability as it arose, I would have had to either sell the house or borrow money.

It is only now that my father has died that we are in a position to pay and to be penalised to such an extent, esentially because we were paying 41k in Nursing home fees, removing the burden from the state, is really hard to stomach.

The law is the law I know, but the particular application and extent of NPPR penalties surely has more than a small chance of being overturned if an effective challenge was taken?
 
in_trouble said:
If I was to pay the liability as it arose, I would have had to either sell the house or borrow money.
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Don't get your point that you would have had to sell the house when the original liability arose, the same applies to all landlords.

I think you are clutching at staws here if you think you can take a legal challange, and the costs :eek: What you need to do is try and get the local authority to come to some arrangement with you. What is wrong with borrowing, it cannot be difficult to borrow based on a rent roll of 65K with a property worth so much? And you just pay it back out of rent?

What's going to happen with the profits from the rents currently?

Yes by paying nursing home fees you take the burden from the state, but by not paying the NPPR you reduced the amount the state had. If you'd paid out of annual rent you wouldn't be paying such a large amount now. After this you'll have a fine income so I don't see the issue.
 
Bronte said:
I find your tax figure low and the way you put the accounts, as in putting the nursing home in their off the income odd.
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Why? Are you not aware that nursing home costs are fully tax deductible at the taxpayer's marginal rate?

OP,

There is certainly an argument that the NPPR penalties are unduly onerous and therefore inherently unfair, and this may be a basis for having them overturned by a court. If you're interested in mounting a challenge, you'd really need to discuss this with a solicitor, probably in conjunction with a barrister. If this is a possibility, I'd be rather careful about discussing the specifics of your situation on a public forum like this.
 
sahd said:
The local authorities now have the ability to write off some of the NPPR charge and/or penalties .
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That link has this in realtion to what you've posted:

Minister Hogan said the change “explicitly provides for local authority write-downs of late payment fee liabilities when it would be economically most efficient to do so. ”

But is that in the legislation? Ditto for the 2025 writeoff.

Noonan has 'said' that the property tax will be deductable, but it's still not in revenue guidence nor legislation.
 
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