I see that Revenue are now doing reviews of all historic LPT valuations used where any residential property is sold for more than €400k and the sale price exceeds certain predefined limits they set as to what the sale price suggests the historic LPT valuation should have been.
For example, if the property is sold for more than 15% above the top of the valuation band declared as at 1 November 2021, or 125% of the valuation at 1 May 2013 then the owner is obliged to go through a process with Revenue who are fishing for potential underpayment of LPT. The seller has to get an LPT clearance from Revenue and provide this to the buyer or the sale won't complete.
So I'm interested to understand if people have practical experience of engaging with Revenue on this and if they are willing to accept evidence that taxpayers provide to justify the valuation used (e.g. property price register historic sales) or if they insist on additional LPT being plus interest and penalties?
If only additional tax is payable, that's one thing, but if interest and penalties apply, that could be punitive given the effective 8% rate of interest on underpaid tax and Revenue can go back to 2013.
Remember of course that the government and Revenue, whether you believed them or not, made very comforting statements about the valuation when they were trying to get people file their returns and into the system for annual tax collection. A lot of people will have used the valuation that Revenue suggested. But when the property is sold now Revenue come up with these factors they say can be used to indicate what the historic valuation should have been (albeit as a rebuttable presumption) and imply that people undeclared the values.
This again further adds to the significant tax cost risk associated with property ownership. People could be building up large liabilities.
For example, if the property is sold for more than 15% above the top of the valuation band declared as at 1 November 2021, or 125% of the valuation at 1 May 2013 then the owner is obliged to go through a process with Revenue who are fishing for potential underpayment of LPT. The seller has to get an LPT clearance from Revenue and provide this to the buyer or the sale won't complete.
So I'm interested to understand if people have practical experience of engaging with Revenue on this and if they are willing to accept evidence that taxpayers provide to justify the valuation used (e.g. property price register historic sales) or if they insist on additional LPT being plus interest and penalties?
If only additional tax is payable, that's one thing, but if interest and penalties apply, that could be punitive given the effective 8% rate of interest on underpaid tax and Revenue can go back to 2013.
Remember of course that the government and Revenue, whether you believed them or not, made very comforting statements about the valuation when they were trying to get people file their returns and into the system for annual tax collection. A lot of people will have used the valuation that Revenue suggested. But when the property is sold now Revenue come up with these factors they say can be used to indicate what the historic valuation should have been (albeit as a rebuttable presumption) and imply that people undeclared the values.
This again further adds to the significant tax cost risk associated with property ownership. People could be building up large liabilities.