PRSA question

Nom-IzZ

My dad has asked me to look at this, so the history is as follows:

About two weeks ago, I filled in a form so he could claim tax relief on the college fees for my sister for the past two years.

Then about a week later he gets a call from Revenue asking my Dad loads of questions about this pension and PRSA.

He has a normal pension with his job (DC ee/er contributions) and he has a PRSA which he stopped paying into in 2008. The PRSA was not deducted at source and he never claimed relief on it either.

However, Revenue had applied €4500 "flat rate expenses" credit since when he first started up the PRSA, and he continued to get this even though he stopped the PRSA. Now Revenue are saying he owes them back €2500.

It appears that Revenue made a mistake applying this extra credit and now they are trying to hit my dad for my mistake,

I have suggested to him to fight the underpayment for the 2008 and 2009 tax year as this was a mistake on Revenues Part and for 2010 lodge 12 months of what he used to pay into the PRSA inorder to get tax relief on it and not have his 2010 credits reduced

Any advise on the best course of action would be appreciated

nompere

The taxpayer has a responsibility to tell Revenue if they are giving him credits to which he isn't entitled. In this case he stopped paying into a PRSA and said nothing.

The worst thing that can be said of Revenue is that they misdescribed a credit. Given that the majority of flat-rate credits are less than €400 your father really should have asked Revenue why he was getting a credit of €4,500.

If he hasn't claimed for his PRSA contributions he needs to make those claims now - particularly as 2006 will go out of time in just over two weeks.

If there is still a liability his best option is to agree a reduction in tax credits for the next two (or possibly three) years as the least painful way of clearing his liability.

There's no real point in having a fight with Revenue about a tax liability for a year when he hasn't paid sufficient tax because of his own mistake. It's an unwinnable fight.

Toblerone1978

nompere wrote: »

The taxpayer has a responsibility to tell Revenue if they are giving him credits to which he isn't entitled. In this case he stopped paying into a PRSA and said nothing.

The worst thing that can be said of Revenue is that they misdescribed a credit. Given that the majority of flat-rate credits are less than €400 your father really should have asked Revenue why he was getting a credit of €4,500.

If he hasn't claimed for his PRSA contributions he needs to make those claims now - particularly as 2006 will go out of time in just over two weeks.

If there is still a liability his best option is to agree a reduction in tax credits for the next two (or possibly three) years as the least painful way of clearing his liability.

There's no real point in having a fight with Revenue about a tax liability for a year when he hasn't paid sufficient tax because of his own mistake. It's an unwinnable fight.

I vouch nompere's opinion, it's an unwinnable fight you're picking here. You need to find out how much net tax you owe i.e. proper and full calculated tax liability less amount paid.