Revenue "clampdown" - Are US Shares an 'offshore asset'?

[major]

Revenue are sending out 500,000 Reviewing and Correcting return letters over the next few weeks.
Have no fear you are not singled out.

Thanks lukas888

 

[dub_nerd]

Yeah, joe sod, I've just amended my 2016 Form 11 and added the trading account as a Foreign Bank Account, making clear that I don't believe it qualifies but I'm doing it on Revenue's own advice.

 

[newtothis]

I don't think anyone's said that every transfer has to be declared. Revenue want you to disclose the existence of offshore bank accounts once. You're expected to declare any foreign gains or earning for tax each year. There's no suggestion that you have to declared each transaction.

That's exactly what my understanding is, based on what's in the Revenue FAQ (and also what's actually asked on the form): you declare when you open an offshore account, not that you already have one (unless it's used to hold undeclared income).

And yes, there has been a suggestion that each transaction has to be declared:

...its just the wording that is confusing "declaring" money moved offshore leads you to believe that you have to notify revenue of money you have moved offshore

and:

So when you transfer 100 Euro to your offshore broker account - revenue needs a disclosure? Lovely.

This strikes me as nonsense: I can't see how anyone would get that interpretation.

As for the letter, it reads (to me) like a general warning that you're being given a last opportunity to regularise anything where you don't comply before a more rigorous compliance regime comes into practice. I don't see anything particularly wrong with that.

 

[RichInSpirit]

I understand that foreign bank accounts must be disclosed to Revenue. I have a question regarding a foreign share trading account, i.e. an account held with a share broker in another country

I was talking to the Offshore crowd too about my spread betting account and I have decided to declare it but I haven't gotten around to it yet.

 

[dub_nerd]

As for the letter, it reads (to me) like a general warning that you're being given a last opportunity to regularise anything where you don't comply before a more rigorous compliance regime comes into practice. I don't see anything particularly wrong with that.

I do. In fact, frankly, it annoys the face off me. We've been having tax amnesties in this country going back two decades. Anybody who hasn't got the message is an idiot or, more likely, a crook. How many more letters do we need to the effect that "no, we REALLY mean it this time". But instead of just doing the job they are paid to do, they put out this stupid letter and then compound the stupidity by not being able to give an unambiguous explanation about what sort of offshore accounts qualify. So those of us who believe we are already 100% compliant get to jump through more silly hoops for want of an answer.

What's next? Declaring our PayPal account? Our Amazon book tokens? (And I'm not joking -- my trading account is no more a bank account than either of those).

 

[torblednam]

I do. In fact, frankly, it annoys the face off me. We've been having tax amnesties in this country going back two decades. Anybody who hasn't got the message is an idiot or, more likely, a crook. How many more letters do we need to the effect that "no, we REALLY mean it this time". But instead of just doing the job they are paid to do, they put out this stupid letter and then compound the stupidity by not being able to give an unambiguous explanation about what sort of offshore accounts qualify. So those of us who believe we are already 100% compliant get to jump through more silly hoops for want of an answer.

So on the one hand you've had enough of amnesties, but on the other hand you're not happy now that the penalties applicable to people with hot money offshore are now being stiffened... this letter isn't offering anyone an amnesty, it's the opposite. No pleasing you!

It strikes me that people are getting their panties in a bunch over this somewhat unnecessarily. Revenue are interested in hammering tax evaders who have earned money in Ireland and evaded taxes here on it, and hidden their untaxed money offshore. I can't see them having any interest in people's share trading account, as long as the gains from those investments were returned on their Irish returns.

I'd assumed they felt they needed to write to "everyone" so that when the rules change and they start applying the new regime of no reduction in penalties for evaders who sent hot money offshore, the penalty can't be challenged on grounds of ignorance or similar...

 

[torblednam]

Right. At least Revenue got back to me promptly. Unfortunately they provided essentially no information. Here's what I asked them:

"Recently I received Revenue's letter "Reviewing and Correcting Your Tax Returns" via ROS, which I understand has gone to all self-assessed tax payers. Among other things it states: "From 1 May 2017, significant changes are being made where any corrections to tax returns relate to a person's offshore matters or matters outside the Republic of Ireland. These changes restrict a person's opportunity to make a 'qualifying disclosure'".

"I understand that foreign bank accounts must be disclosed to Revenue. I have a question regarding a foreign share trading account, i.e. an account held with a share broker in another country. (To be specific my query relates to Saxobank UK Ltd.). The account itself can be used only for share trading, there is no deposit interest involved, and Saxobank do not consider it a "bank account". Dividends and gains/losses on shares are all separately accounted for on tax returns, and any money lodged to the account is all fully tax-paid in Ireland."

"I believe this does not count as a foreign bank account, but Revenue's wording is very general in some of its communications. So for the avoidance of doubt I wish to ask if a foreign share trading account is a foreign account that must be disclosed (under S.895 on Form 11, and separately to declaration of gains thereon for CGT) and is potentially subject to the penalty of €4,000 for non-disclosure."
_____________________________________________________________

Here is Revenue's reply:

"Dear Sir, Thank you for your email dated 24/02/2017 and the information supplied. Without inspecting documentation relating to the account it is not possible to determine whether it falls to be disclosed under S895. Revenue's main concert is that all income and gain arising in the account is declared for tax purposes. I would suggest that in your 2016 tax return you declare the existence of the account albeit it is not an account opened during that year. Regards Christine Hickey Offshore Assets Group "
_____________________________________________________________

This seems extraordinary -- Revenue can't tell you what accounts have to be declared without seeing "documentation", but you are expected to figure it out yourself without being given any criteria. I've looked at all the legislation and I still can't figure it out. I am going by the Taxes Consolidation Act 1997 Section 895 to which Form 11 refers, which says:

“deposit” means a sum of money paid to a person on terms under which it will be repaid with or without interest and either on demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person to whom it is made;

“foreign account” means an account in which a deposit is held at a location outside the State;

With such a general definition it seems quite possible that a foreign trading account is a "relevant account", so it seems there is no choice but to declare it, which is what Revenue suggested anyway. My problem now is that my 2016 tax return is long gone. Time for an amendment I guess.

Of course they're not going to tell you anything one way or the other without seeing the details of the account, how could they, that'd be very irresponsible! If you described something to me as a mammal, weighing about 8kgs, with 4 paws, whiskers, a medium length tail, fetches a stick when you throw it and growls at the postman, I might tell you that's definitely a dog, but it could just that you have a big cat!

What in the definitions in Section 895 is unclear? It seems quite clear that it covers a trading account. With good reason too; if you had a nice pub or takeaway business generating lots of cash and you siphoned off a bit of that cash under the counter and into a share trading account to effectively launder it for yourself over time, you'd have been a right clever boyo, away in a hack... until later this year...

Anyway, if your concern is about section 895, I don't see what that has to do with this week's letter, since 895 has always been there, and in my entire career to date in tax I've never heard of anyone being penalised under that section. Are you sure you're reading it correctly in relation to the penalty by the way? The €4K penalty applies where either an Irish intermediary who you used to open your foreign account fail to comply with their obligations, or where you fail to provide the intermediary with the necessary info... What does seem to be open to happening, is that a person may be liable to a late filing surcharge under section 1084. However, I very much doubt Revenue are going to be exerting much energy on applying surcharges left right and centre on otherwise fully compliant customers.

You even have it straight from the Revenue horse's mouth in their email reply, that their main concern is that income and gains have been declared, so I'm not sure why you're feeling so exercised by this.

 

[dub_nerd]

So on the one hand you've had enough of amnesties, but on the other hand you're not happy now that the penalties applicable to people with hot money offshore are now being stiffened... this letter isn't offering anyone an amnesty, it's the opposite. No pleasing you!

The penalities aren't being stiffened. They are exactly the same.

It strikes me that people are getting their panties in a bunch over this somewhat unnecessarily. Revenue are interested in hammering tax evaders who have earned money in Ireland and evaded taxes here on it, and hidden their untaxed money offshore. I can't see them having any interest in people's share trading account, as long as the gains from those investments were returned on their Irish returns.

If they have no interest in people's share trading account then you'd expect them to say that when asked that question directly, no? They didn't. The question on Form 11 doesn't say: "tell us about any accounts where you are harbouring illegal gains". It just asks for foreign bank accounts. So what's the big deal about asking whether a share trading account qualifies as a bank account for the purposes of a disclosure? Sounds like a simple question to me.

I'd assumed they felt they needed to write to "everyone" so that when the rules change and they start applying the new regime of no reduction in penalties for evaders who sent hot money offshore, the penalty can't be challenged on grounds of ignorance or similar...

And I repeat unapologetically: that's pandering to idiots and crooks.

What in the definitions in Section 895 is unclear? It seems quite clear that it covers a trading account.

So the answer is quite clear to you, but Miss Revenue Offshore couldn't answer it? What do you put that down to, and how do you square it with your contradictory assertion that they can't answer "without seeing the details of the account"? To put it another way, what sort of share trading account wouldn't be covered?

You even have it straight from the Revenue horse's mouth in their email reply, that their main concern is that income and gains have been declared, so I'm not sure why you're feeling so exercised by this.

With respect, I didn't ask Revenue what their main concern is, nor do I care. I want to know what I have to do in order to be compliant. It's entirely reasonable to expect that Revenue could answer that unambiguously.

 

[torblednam]

The penalities aren't being stiffened. They are exactly the same.

Well something is changing or they wouldn't be writing to the whole self assessed taxpayer population...! What is changing is that anyone with a tax liability (whether through deliberate evasion or through careless oversight) after 1st May, will no longer be able to make a qualifying disclosure to reduce the applicable tax geared penalty from 100% down to as low as 3%. This is a huge change - see how upset T McGibney is about it for example! It most certainly is a stiffening of penalties - the maximum level of penalty hasn't changed, but the potential to be hit by that maximum level of penalty has increased exponentially - as anyone who discovers they miscalculated their taxable foreign income on their 2015 self assessment return will tell you, if it needs to be resolved after 1st May 2017. The measure is an anti-evasion one, but in order for it to be broad enough to capture all cases of evasion, it also has potential to affect people who are unaware they had anything wrong in their returns. Hence the need to make sure everyone knows about it and has the chance to fix things before the consequences of an incorrect return get drastically worse...

If they have no interest in people's share trading account then you'd expect them to say that when asked that question directly, no? They didn't. The question on Form 11 doesn't say: "tell us about any accounts where you are harbouring illegal gains". It just asks for foreign bank accounts. So what's the big deal about asking whether a share trading account qualifies as a bank account for the purposes of a disclosure? Sounds like a simple question to me.

As I've already stated, they have plenty of reason to be interested in people's trading accounts generally, as there is a good chance that a person might route untaxed income into such an account.

And I repeat unapologetically: that's pandering to idiots and crooks.

Your unapology is not accepted! See my response to your first point above, as to why everyone needs to know. Repeat - it's not an amnesty, it's the last chance for people to make absolutely sure their returns are OK, and to fix things within the current penalty framework before it changes to a more draconian regime.

So the answer is quite clear to you, but Miss Revenue Offshore couldn't answer it? What do you put that down to, and how do you square it with your contradictory assertion that they can't answer "without seeing the details of the account"? To put it another way, what sort of share trading account wouldn't be covered?

It seeming quite clear to me over the internet is all well and good, but if my job was to answer such queries, I'd be making sure my a$$ is covered and having sight of the account I'm being asked to opine on. I think your post crossed with me editing my previous one to include an analogy involving cats & dogs - that still refers...

 

[Gordon Gekko]

Do you know what the salient point is?

In the deepest darkest recesses of Revenue, where Trotskyites without an ounce of commercial nous gather, they believe that it is disgraceful for any individual to have a foreign account. They simply cannot get their heads around the fact that someone might have a current account with Santander to pay the utilities for their villa or that someone might prefer to deal with a UK based stockbroker.

This entire episode is a PR disaster routed in Revenue's ignorance and bias.

 

[torblednam]

Do you know what the salient point is?

In the deepest darkest recesses of Revenue, where Trotskyites without an ounce of commercial nous gather, they believe that it is disgraceful for any individual to have a foreign account. They simply cannot get their heads around the fact that someone might have a current account with Santander to pay the utilities for their villa or that someone might prefer to deal with a UK based stockbroker.

This entire episode is a PR disaster routed in Revenue's ignorance and bias.

I didn't have you down for a conspiracy theorist Gordon! Or do you just dabble in it on the weekends...?!

 

[newtothis]

Do you know what the salient point is?

In the deepest darkest recesses of Revenue, where Trotskyites without an ounce of commercial nous gather, they believe that it is disgraceful for any individual to have a foreign account. They simply cannot get their heads around the fact that someone might have a current account with Santander to pay the utilities for their villa or that someone might prefer to deal with a UK based stockbroker.

This entire episode is a PR disaster routed in Revenue's ignorance and bias.

I cannot see how you can possibly get that interpretation. As already quoted:

I also note from a document linked from the Revenue page ('[broken link removed]'):

2.1 Is it illegal to have offshore accounts, assets or investments?
No, it is not illegal to have an offshore account or to have assets or investments offshore, but you
must pay tax on any interest, income or gains earned. Also, any money placed in an offshore account
or used to acquire assets or investments offshore must be declared for tax purposes, unless exempt
from tax or Irish tax has already been paid on it.

What is the problem here?

There has been an historic problem of people hiding "hot" funds offshore. Information exchange between authorities internationally is being enhanced, people are being given notice that as a result enforcement will be stepped up. What's the issue with that? Would you prefer not to be given the heads-up if you were in that situation?

I'm no apologist for Revenue, as I think they've other things to answer for (notably the lack of consistency in dealing with the likes of Apple, who get to sit down for cosy chats with them to decide how much tax they'd like to pay), but that's another issue. On this, I really can't see what your problem is.

 

[losttheplot]

I've just read the FAQ, it seems to me, once you have declared the income and paid any tax due, there's no problem. My impression it's specifically aimed at evasion and hiding undeclared income and gains.

 

[fistophobia]

There is an issue here with confidentiality. Once you have paid all due taxes, your money is yours, to do whatever you want with it.
I dont want Revenue or anyone else knowing my personal investment strategies or holdings.
What we have here in Ireland is Scandinavian levels of wealth taxation, but without the same level of public services.
The letter is designed to shake out a few people. Maybe by fining and naming / shaming people, it will encourage more tax compliance.
Again, nothing to worry about if you are above board. For anyone else, be aware of the REAP system. Enough said.

 

[torblednam]

I've just read the FAQ, it seems to me, once you have declared the income and paid any tax due, there's no problem. My impression it's specifically aimed at evasion and hiding undeclared income and gains.

Yes, but, but, but... big mean revenue...

People looking to find offence will seldom be disappointed.

 

[joe sod]

What in the definitions in Section 895 is unclear? It seems quite clear that it covers a trading account. With good reason too; if you had a nice pub or takeaway business generating lots of cash and you siphoned off a bit of that cash under the counter and into a share trading account to effectively launder it for yourself over time, you'd have been a right clever boyo, away in a hack... until later this year...

I dont know if you are from revenue but its absolutely not clear . The question on form 11 specifically asks have you opened a foreign bank account in the previous tax year and provide details. There is no ambiguity in the question , if revenue were so concerned about huge sums of money siphoned into brokerage accounts under the counter then why did they not add in the question about brokerage accounts years ago. They knew that thousands of workers in US multinationals had them since the 90s.

Another thing when I transfer money into the brokerage account it has to go through an intermediary bank account completely different to the brokerage company. Everyone uses the exact same intermediary bank account number to transfer money into their brokerage accounts. Therefore they would have a hell of a difficulty trying to say that a brokerage account is the same as bank account . Its definitely not and this procedure proves it.

 

[dub_nerd]

I have the same process as you joe sod ... transfers go through a single account number for everyone. And I agree -- I wouldn't have guessed in a month of Sundays that the question on Form 11 could include brokerage accounts.

I've just read the FAQ, it seems to me, once you have declared the income and paid any tax due, there's no problem. My impression it's specifically aimed at evasion and hiding undeclared income and gains.

Except you still have to declare your accounts which means you still have to know which accounts are covered. It doesn't matter what it's aimed at.

 

[Prittstick]

I have this thread twice, but I am really still no wiser. I have had a TD Direct UK share-dealing Account ( their HQ is in Leeds)for years ...the cash I have lodged into it (with which I buy/sell shares) came from my Irish PAYE income. Each year I declare any dividends, share acquisitions and disposals and any CGT gains /losses on my Form 11.

I have never declared the account, as such, on the Form.

I have received the Revenue letter.. Do I now need to declare the TD Direct account? Any advice appreciated. thanks.

 

[lukas888]

I am surprised that nobody has mentioned the CRS in this discussion.I presume that the revenue letters are as a direct response to this new
sharing of financial information relating to non residents between the revenue authorities of most countries.All financial providers are obliged to forward account balance etc to their respective tax authorities who will then forward all this info on to our revenue commissioners.I expect a
huge amount of information to arrive from across Europe over the coming months.The revenue know this and are preempting this by their warning
letter.

 

[joe sod]

I have this thread twice, but I am really still no wiser. I have had a TD Direct UK share-dealing Account ( their HQ is in Leeds)for years ...the cash I have lodged into it (with which I buy/sell shares) came from my Irish PAYE income. Each year I declare any dividends, share acquisitions and disposals and any CGT gains /losses on my Form 11.

I have never declared the account, as such, on the Form.

I have received the Revenue letter.. Do I now need to declare the TD Direct account? Any advice appreciated. thanks.

Looks like lots of people are in the same boat so, and everyone has not "declared" offshore brokerage accounts as they have never been asked for this information before. I bet that the 2017 form 11 will be changed to ask for this information. The thing is that if you have had an offshore brokerage account for many years and have accumulated a large value in shares, suddenly it looks suspicious even though you have been doing everything above board.