Did you recently receive a Revenue letter on offshore bank accounts and other matters? If it affects you, you only have 8 weeks until the Revenue deadline
Revenue has written to nearly 500,000 taxpayers over the last two weeks inviting them to review their tax returns and consider whether they need to make a disclosure to the Revenue in relation to any undeclared and/or under declared offshore income and gains.
This correspondence is part of Revenue’s campaign to alert taxpayers to the fact that it will not be possible to make a qualifying disclosure in relation to offshore matters after 30 April 2017. The benefits of making a qualifying disclosure prior to 30 April next include reduced penalties, non publication of the taxpayer’s name in the Revenue’s list of tax defaulters and crucially, the matter will not be referred to the DPP for investigation with a view to criminal prosecution by the Revenue. The disclosure regime applies to all taxpayers including individuals, corporates and trusts.
What offshore matters need to be disclosed?
Offshore assets include an account/asset held in another country, income or gains arising from a source or accruing in another country and property situated in another country. Offshore in this instance means anywhere outside of the State.
There are a number of situations (and the examples below are not an exhaustive list) where taxpayers may have an offshore issue and need to consider whether the underlying funds and associated income/gains have been declared for Irish tax purposes. For example;
• A taxpayer may have deposited funds offshore (for example, in Northern Ireland) and be in receipt of offshore deposit interest which has not been included in their Irish tax return;
• They may own a property overseas which is rented out or has been sold and the income or gain has not been disclosed;
• A taxpayer may receive income or other distributions from an offshore trust or company which they have not declared in their Irish tax return; or
• A taxpayer may have inherited assets abroad and not realise that it may be subject to Irish tax.
For example,John is Irish resident and a sole trader.
In 2009 he placed €200,000 in a bank account in Northern Ireland. The €200,000 had not been included in his accounts and had not been declared for tax purposes. Tax, PRSI and levies of 51% were chargeable at the time. In 2015, John withdrew the full amount and closed the account when the balance was €221,500.
1. John takes the opportunity to make a qualifying disclosure now, he will owe the Revenue €194,257 in tax, interest and penalties.
2. John does not avail of the qualifying disclosure opportunity before 30 April next, and Revenue subsequently identify John as a non-compliant taxpayer, he will owe the Revenue nearly €300,000 in tax, interest and penalties, his name will be published in the list of tax defaulters and Revenue may take steps to initiate prosecution.
This is a once off opportunity for taxpayers to make a qualifying disclosure in relation to offshore matters provided it is done before 30 April. Many of those who might otherwise be unable to come forward may now do so with certainty regarding the outcome (subject to certain conditions). In order for the qualifying disclosure to be accepted by Revenue, the taxpayer must provide a full computation of tax, interest and penalties. As the Revenue will not calculate the tax liabilities for the taxpayer, it is vital the taxpayer obtain independent advice from a tax advisor as soon as possible in relation to the making of the qualifying disclosure and the calculation of any tax liabilities.
No extension beyond 30 April 2017
If the taxpayer does not make a qualifying disclosure prior to 30 April, the penalties in relation to income and gains will be much more severe (up to 100% of the tax due), the taxpayer’s name will be published in the tax defaulters list as well as the possibility of prosecution.
Furthermore, an offshore matter that has not been dealt with and paid by 30 April could have serious implications for disclosures on any future tax matters by the taxpayer.
If you have any queries, contact Coll & Co Chartered Accountants, Barna, Galway on 091-592080 or firstname.lastname@example.org
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