I owe Back Tax

NotAnonymous

Hi,

I'm a first time poster here, and I looking for some advice.

Apparently a pay screw up 6 years ago (in 2006) meant that I paid too little paye.
This year, my tax credits have been cut, so that I will end up paying the amount owed in 3 years.
I received no communication to this effect prior to my tax credits being cut.

I am afraid I will not be able to survive with my income cut, and I was wondering is there anything that can be done? I know it is a touchy subject, but I'm sure that the Revenue does settle tax debts for less than the amount owed, but that only seems to be when the person is a TD or pharmacy owner.

I know it is my fault for not keeping a closer eye on these matters, but I was young and stupid, so any help is appreciated.

BohsCeltic

Could you ring or write to revenue and explain that the cut will severely impact your finances and see if they will accept a weekly pay plan to pay back the money owed.

relax carry on

NotAnonymous wrote: »

Hi,

I'm a first time poster here, and I looking for some advice.

Apparently a pay screw up 6 years ago (in 2006) meant that I paid too little paye.
This year, my tax credits have been cut, so that I will end up paying the amount owed in 3 years.
I received no communication to this effect prior to my tax credits being cut.

I am afraid I will not be able to survive with my income cut, and I was wondering is there anything that can be done? I know it is a touchy subject, but I'm sure that the Revenue does settle tax debts for less than the amount owed, but that only seems to be when the person is a TD or pharmacy owner.

I know it is my fault for not keeping a closer eye on these matters, but I was young and stupid, so any help is appreciated.

It's odd that you received no correspondence regarding the 2006 underpayment as in order for the underpayment to come to light a review would have to carried out either by you or Revenue. This would have triggered a P21 to issue either to the address on file for you or sent to your PAYE Anytime inbox automatically. The P21 would have a record of the underpayment, how it was calculated and how it would be collected.

If you do not have a copy if this P21, request it so you can confirm the underpayment is correct. It's odd that the underpayment is going to be collected over 3 years, as its usually 4.

Regarding how its collected, take an example of 4000 Euro underpayment over 4 years. That's 1000 a year or 19.23 Euro a week extra tax you pay. As you are PAYE no interest or penalties are applied to the underpayment.

You may also wish to check 2008 to 2011 to see if you can claim any health expenses or rental relief which may offset some of the underpayment.

Regarding your case being looked at as a hardship case, you would need to state how much the underpayment is. It would need to be pretty high in order to see if some could be written off.

NotAnonymous

BohsCeltic wrote: »

Could you ring or write to revenue and explain that the cut will severely impact your finances and see if they will accept a weekly pay plan to pay back the money owed.

I did, they told me to make my case to the "Tax Inspector" by writing to him.

relax carry on wrote: »

It's odd that you received no correspondence regarding the 2006 underpayment as in order for the underpayment to come to light a review would have to carried out either by you or Revenue. This would have triggered a P21 to issue either to the address on file for you or sent to your PAYE Anytime inbox automatically. The P21 would have a record of the underpayment, how it was calculated and how it would be collected.

If you do not have a copy if this P21, request it so you can confirm the underpayment is correct. It's odd that the underpayment is going to be collected over 3 years, as its usually 4.

Regarding how its collected, take an example of 4000 Euro underpayment over 4 years. That's 1000 a year or 19.23 Euro a week extra tax you pay. As you are PAYE no interest or penalties are applied to the underpayment.

You may also wish to check 2008 to 2011 to see if you can claim any health expenses or rental relief which may offset some of the underpayment.

Regarding your case being looked at as a hardship case, you would need to state how much the underpayment is. It would need to be pretty high in order to see if some could be written off.

I'm not sure what triggered it, might have been me getting my emergency tax back in 2006.

The figure is 6k, and it is 2k a year for three years. I know that is not a lot, and dear God do i wish it wasn't to me, but it is.

Does the statue of limitations apply regarding how long ago it was owed?

Thanks for your help!!

mathepac

NotAnonymous wrote: »

... Does the statue of limitations apply regarding how long ago it was owed? ...

No. Revenue can go back pretty much as far as they like while the tax-payer is limited to the preceding 4 tax-years for re-claiming over-payments

relax carry on

NotAnonymous wrote: »

I'm not sure what triggered it, might have been me getting my emergency tax back in 2006.

The figure is 6k, and it is 2k a year for three years. I know that is not a lot, and dear God do i wish it wasn't to me, but it is.

Does the statue of limitations apply regarding how long ago it was owed?

Thanks for your help!!

6000 Euro is very large for a PAYE underpayment from just one year.

First things first. Request a letter from the PAYE section outlining clearly how the underpayment arose. Once you are happy that the underpayment is actually correct, request that if a portion cannot be written off, that the underpayment be spread over 4 years rather than 3.

smcgiff

You should be able to get the term extended if that's any help. Someone where I work was found to have underpaid about 2.5k tax in 2007 and has to pay back over 4 years.

Similarly she had to ring up with a query regarding her reduced tax credits to find this out.

Bizarre.

NotAnonymous

Thanks guys for all your advice.

I've confirmed the underpayment, it was due to an error in a previous job I had giving me double credits.

I'll write a letter to the Tax Inspector, and let you guys know how I got on if any of you want to know.

Also how do I claim back medical expenses for previous years?
I'll have to get receipts reissued, would there be a problem that they are not the original ones?
I imagine that I can't claim for the ones that can not be reissued, or can I prove I paid them another way?

Thanks for all your help!!

testicle

BohsCeltic wrote: »

Could you ring or write to revenue and explain that the cut will severely impact your finances and see if they will accept a weekly pay plan to pay back the money owed.

It is a weekly plan, over 3 years. They've reduced his tax credits.

The only available option is to extend the tax credit reduction to more than 3 years. If they agree to it of course.

relax carry on

NotAnonymous wrote: »

Thanks guys for all your advice.

I've confirmed the underpayment, it was due to an error in a previous job I had giving me double credits.

I'll write a letter to the Tax Inspector, and let you guys know how I got on if any of you want to know.

Also how do I claim back medical expenses for previous years?
I'll have to get receipts reissued, would there be a problem that they are not the original ones?
I imagine that I can't claim for the ones that can not be reissued, or can I prove I paid them another way?

Thanks for all your help!!

Health expenses are claimed either online via paye anytime or a paper med 1 form. You can only claim for what you can prove you paid. Receipts are not necessary to be submitted with the claim. You must submit them if requested.

http://www.revenue.ie/en/tax/it/leaflets/it6.html

NotAnonymous

Sorry for this, but could I ask for your opinion on this letter?

Inspector of Taxes,
The Plaza Complex,
Belgard Road,
Tallaght,
Dublin 24.


Dear Sir or Madam,

I am writing to you regarding an underpayment of taxes in 2006.

I feel that this issue is not my fault and that I should not be liable for this underpayment.

I am unable to repay the current amount that is being taken from my pay now and I respectfully ask if a portion of that could be written off, and that the remainder be paid back over a 6 year period.

Please feel free to contact if you need any further information,

I don't know how to phrase it nicely, so any help here would be much appreciated

Mr. Incognito

NotAnonymous wrote: »

Sorry for this, but could I ask for your opinion on this letter?



I don't know how to phrase it nicely, so any help here would be much appreciated

Oh dear,

Inspector X District,

Sir,

I was recently notified of an underpayment that may relate to a previous year 2006.

I would like to receive a P21 Balancing statement for the year in question showing how and in respect of what this underpayment arose.

I would also like to request, as is my right under the Revenue Consumer Charter, the statutory authority for this demand in relation to any underpayment that may or may not have arisen as it is my understanding that revenue are only authorised to revisit years of assessment that are within the preceeding 4 tax years, and may extend this assessment to previous years only in cases of wilfull fraud or deception and any further extending powers that are being introduced by the Finance Act 2012 may not yet have full force of law when this demand was raised and as such any such demand may have been and may continue to be unlawful.

Once I am in receipt of this information I will forward same to my professional advisors and be in contact in due course.

Is mise

XXX

Come back with a response please.

Its tenatious but its worth a crack

omen80

I thought the 4 year rule applied both ways, unless that's just for PRSI?

Mr. Incognito

omen80 wrote: »

I thought the 4 year rule applied both ways, unless that's just for PRSI?

A tax payer cannot claim back more than 4 years except they are claiming under a International Tax Treaty and it is under the terms of the Treaty.

Revenue didn't re-open past 4 years unless there is Fraud or Illegality.

They have extended this to 6 under the new FA.

Advisors are only legally oblidged to keep records for 6 years so that makes sense but most keep it longer- Lawyers for example would keep a lot of records almost 20 + years

NotAnonymous

I spoke to them and apparently I requested this back in 2007 when looking for my tax cert. Dunno if that makes a difference or not.

Thanks Mr. Incognito for your help with the letter, though doesn't it look a bit confrontational? I don't have the kind of money for professional advisers, they'd know that, so I'm trying to approach them with the fact that I'm poor and innocent

Mr. Incognito

NotAnonymous wrote: »

I spoke to them and apparently I requested this back in 2007 when looking for my tax cert. Dunno if that makes a difference or not.

Thanks Mr. Incognito for your help with the letter, though doesn't it look a bit confrontational? I don't have the kind of money for professional advisers, they'd know that, so I'm trying to approach them with the fact that I'm poor and innocent

Up to you. Poor and innocent- Revenue don't give a flying monkeys and have no discretion to reduce interest only penalties.

I wonder if they are properly entitled to demand this, ask them to show you that they are entitled to go back 6 years- the Finance Act granting these powers has not been passed yet so in short it's ultra vires or illegal unless there is fraud and there is certainly no fraud here.

relax carry on

Mr. Incognito wrote: »

NotAnonymous wrote: »

I spoke to them and apparently I requested this back in 2007 when looking for my tax cert. Dunno if that makes a difference or not.

Thanks Mr. Incognito for your help with the letter, though doesn't it look a bit confrontational? I don't have the kind of money for professional advisers, they'd know that, so I'm trying to approach them with the fact that I'm poor and innocent

Up to you. Poor and innocent- Revenue don't give a flying monkeys and have no discretion to reduce interest only penalties.

I wonder if they are properly entitled to demand this, ask them to show you that they are entitled to go back 6 years- the Finance Act granting these powers has not been passed yet so in short it's ultra vires or illegal unless there is fraud and there is certainly no fraud here.

In the OPs post above he states that he apparently requested a review of 2006 in 2007 which means the underpayment was generated in 2007. It has probably sat on the OPs account until recently as it was too big to collect by reducing credits. A P21 would have issued in 2007 stating what was happening with the underpayment. A demand letter also probably issued requesting payment. Then nothing probably happened until quite recently as the limits for collection of PAYE underpayments were raised. The OP can ask Revenue for the sequence of events but that is the most likely scenario in my opinion.

Mr. Incognito

relax carry on wrote: »

In the OPs post above he states that he apparently requested a review of 2006 in 2007 which means the underpayment was generated in 2007. It has probably sat on the OPs account until recently as it was too big to collect by reducing credits. A P21 would have issued in 2007 stating what was happening with the underpayment. A demand letter also probably issued requesting payment. Then nothing probably happened until quite recently as the limits for collection of PAYE underpayments were raised. The OP can ask Revenue for the sequence of events but that is the most likely scenario in my opinion.

So Revenue sat on this since 2007? A few grand? Unlikely imo.

relax carry on

Mr. Incognito wrote: »

relax carry on wrote: »

In the OPs post above he states that he apparently requested a review of 2006 in 2007 which means the underpayment was generated in 2007. It has probably sat on the OPs account until recently as it was too big to collect by reducing credits. A P21 would have issued in 2007 stating what was happening with the underpayment. A demand letter also probably issued requesting payment. Then nothing probably happened until quite recently as the limits for collection of PAYE underpayments were raised. The OP can ask Revenue for the sequence of events but that is the most likely scenario in my opinion.

So Revenue sat on this since 2007? A few grand? Unlikely imo.

PAYE underpayments are/were different from other underpayments. For example there is no facility for interest or penalties in these cases yet. Up until recently, once a PAYE underpayment went over the offset limits, a demand letter issued but nothing actually happened to it as it was/is extremely unusual to have anything over the offset limits. This is changing now and I would presume that cases where demand letters issued and nothing ever happened, would now be looked at.

NotAnonymous

relax carry on wrote: »

In the OPs post above he states that he apparently requested a review of 2006 in 2007 which means the underpayment was generated in 2007. It has probably sat on the OPs account until recently as it was too big to collect by reducing credits. A P21 would have issued in 2007 stating what was happening with the underpayment. A demand letter also probably issued requesting payment. Then nothing probably happened until quite recently as the limits for collection of PAYE underpayments were raised. The OP can ask Revenue for the sequence of events but that is the most likely scenario in my opinion.

That is apparently what happened, though the letters were not forwarded on to me, I was moving apartment.

The underpayments resulted from my employer giving me full tax credits even though I had used it in another job that I has at the same time.

I still have not sent off a letter, I've been way to busy, but I will get to it next week.

Eveamwoods

Can you tell me how you got on? I'm in a situation myself.....disaster.