Emergency tax query

pkone

Hi folks,

I have a question re emergency tax: I left Ireland in January 2007 to work in the UK...am now tax resident in the UK and, I guess, no longer tax resident in Ireland. My last normal pay check from my Irish employer was in January 2007, however, I recently agreed a payment from them which has now been paid into my bank account in Ireland...they/the system has deducted tax at the emergency rate (41%) from the payment plus they have deducted PRSI at 6%. Now, don't get me wrong, I like paying tax as much as the next man...but is it possible to reclaim this tax and declare the sum as income in the UK and have it taxed over here?

My former employer has told me that they will shortly be issuing me with a payslip together with a "supplementary P45".

I spoke to someone at the Revenue who couldn't assist.

Tks in advance!
PK

Mr. Incognito

okay, well there are two issues here.

Termination payments in Ireland are generally exempt from tax within certain limits- if this is what you meant by you recenently agreed a payment with them. If it is a termination payment let me know and I'll give you more info.

On the main topic you left Ireland in Ireland 2007, If you were in ireland for less than 183 days in 2007 you are not tax resident. however you would most likely be resident under the 280 day look back rule. Nothwithstanding you cannot be tax resident if you spent less than 31 days in ireland in 2007 (doubtful, as you prob came home for christmas?)
As regards your income tax deducted as a non resident in 2007 you are not entitled to any credits. If however you claim residency for 2007 under the 280day look back rule all your 2007 credits will operate. This should be more than sufficient to offset the PAYE liability (unless you have a monthly salary circa €18,000

As regards the refund of tax- it is not income. It's is a tax on your income whihc is refunded and thus you do not have to disclose it to RMS (UK Revenue) as taxable income.

generally it's the first year trainees answering phones in the Revenue so don't be afraid to ask to speak to a supervisor.

pkone

Thanks for your reply. I have looked at the 280 day look back rule:

"If you spend 280 days or more in Ireland over a period of two consecutive tax years, you will be regarded as resident for the second tax year. For example, if you spend 140 days here in Year 1 and 150 days here in Year 2, you will be resident in Ireland for Year 2. "

Well, I certainly spent the full year to 31 Dec 2006 in Ireland (except for annual leave)...so would that mean I could qualify as tax resident in Ireland for tax year to 31 Dec 2007? (I don't see any reference to the requirement you note of having to spend 31 days in the country in 2007?)

I received the payslip with payment dated February 2008. Would this present a problem if I qualify under 280 day look back rule? Certainly the agreement to pay me the money dates back to December 2007. It is described as "salary" on my payslip...but was my share of a profit share of a subsidiary of my former employer...so definitely not a termination payment I suppose?

What do you think?
Tks again!
PK

Mr. Incognito

my share of a profit share of a subsidiary of my former employer

This is unclear- Is it Income from selling shares or trade income of a subidiary enterprise of which you were a co-owner?

If it is trade income you're opening up a can of worms. If it was a once off and the trade (for you) has ceased coupled with the fact it is listed as salary, well I'd leave it at that. What you can do is as follows. Once you have received your P45 submit it your local tax district with a cover letter explaining this was your only source of Irish income in 2007 and coud they arrange the application of your annual credits against this income. Alternatively and more beneficially you could file a Form 12 (get it on www.revenue.ie) and this will result in the same, though quicker processing. List your Irish source income. tick the boxes for your applicable credits and tick the box for resident. ireland is a self assessment system so you only have to go presenting evidence once/if you are audited.

That should sort you out.

pkone

Thats very helpful - you obviously know your way around the system!

It was a once-of bonus payment linked to my deemed share of the profit of a subsidiary...I was not an equity owner of the subsidiary nor a director...it was simply my cut of a bonus pool which was linked to the profit of the subsidiary in question. The reason I only received now is that the amt of the pool was disputed for some time.