Revenue Letter On Amendments To Returns

Taxpayers have in the past two weeks been receiving these letters and articles have appeared in the print media on the matter.

These letters are generic letters and have no relevance for most taxpayers.

It is a shotgun approach to notifying taxpayers that from 1st May 2017 the rules on qualifying disclosures to the Revenue re offshore tax liabilities are changing.

Where a taxpayer advises the Revenue of undisclosed tax liabilities before any audit or investigation has been initiated by the Revenue it is regarded as an unprompted qualifying disclosure. The benefit of an unprompted qualifying disclosure is that the penalty will be mitigated and the taxpayer will not be disclosed in the list of tax defaulters.

The ability to avail of the benefits of a qualifying disclosure for offshore tax liabilities will not be available after 30th April 2017 so the Revenue in sending out these letters are trying to encourage early disclosure of offshore tax liabilities.

It is likely that very few taxpayers would have undisclosed offshore tax liabilities.

Such a liability would typically arise where

  • Undeclared income was deposited/invested abroad
  • A foreign bank account earned interest and this was not declared
  • A holiday home was purchased abroad and rented out each year but the rents were not disclosed here
  • An offshore structure was put in place to earn income abroad which was not disclosed here
  • A foreign asset is inherited from a deceased Irish taxpayer which had not been disclosed in their lifetime

If you have an offshore account or offshore assets that is perfectly legitimate provided the funds arose out of income disclosed here and no income arose or is arising therefrom which was not disclosed in your Irish tax returns.

A qualifying disclosure pre 1 May 2017 of an offshore liability would typically be settled as follows:

 

Total undisclosed income                  €200,000 from 2009

Tax/ PRSI/Levies/USC                         €105,000

Interest                                                     €59,792

Penalty 10%                                             €10,500

Total Settlement                                   €175,292

The taxpayer would not be disclosed in the list of tax defaulters

 

Post 30 April 2017 the liability on this level of income would be

Tax/PRSI/Levies/USC                                     €105,000

Interest                                                               €59,792

Penalty 100%                                                   €105,000

Total Settlement                                             €269,792

The taxpayer will be included in the list of tax defaulters and could also be prosecuted.

 

If you feel you may have an undisclosed offshore liability please contact us as soon as possible