Pension taxed because of inactive company

percy212

Hello

I opened a company in 2010 which was never used. Essentially its dead. I did file as required by the revenue showing zero income etc. My mother was named as a director on the company documents along with myself. The revenue are now after her for 20% of her contributory pension since 2010 telling her its because she is a company director *even though they can't see the company filings in the local tax office*

I can't understand how this can be the case. The company is and has always been inactive. Nobody has made any profit.

I will be closing it formally this week but how can I get my mother out of this Kafkaesque hellhole.

Thanks for any advice.

Alan Shore

Did you register the company with the Local Tax Office. Did you put down your mothers details as a director of the company. Are they looking for a Tax return from her for 2010?

The revenue are now after her for 20% of her contributory pension since 2010 telling her its because she is a company director - whats your basis for this.

percy212

I set the company up through an online service. An accountant has been filing returns as required just showing zeros. It is registered with Revenue but as for a local tax office, I have no idea.

Yes my mothers details are down on the company documents. Her pension however is filed under my fathers tax return.

My basis for the 20% demand, is that both she and my father were at the local tax office today following a demand letter. The person they spoke to said "this is because you are a company director. this is coming from head office". All sounds a bit heavy handed to me. Is the tax office wrong?

Citizenpain

Have they asked for Tax from her or have they simply asked for her to file a tax return?

Contributory Pension is taxable income whether she is a Director or not-

http://www.citizensinformation.ie/en/social_welfare/irish_social_welfare_system/claiming_a_social_welfare_payment/taxation_of_social_welfare_payments.html

percy212

Thanks for the responses.

Yes, Revenue have asked for additional monies based on the fact that she is a company director. Up to last year everything was in order with both parents pensions per the Revenue. They are very conscientious people.

This new demand is based on zero income from a non operational company. I think the agent may be mistaken. Surely being a director of a dead company cannot cause further tax on a state pension.

Mr. Incognito

This is the whole debacle we had with the Revenue last year.

Your mother is oblidged to file a Form 11 Personal Tax return based on the fact that she is a director of a company.

As part of this a pension is a taxable source of income. However, as she is not receiving any salary from the company it is very very unlikely that she will have any additional liability.

Filing a Form 11 showing the directorships and taking account of zero income should make this demand disappear.

This is the unhappy consequence of setting up a company and adding her as a director. It triggers these sort of things. No point blaming Revenue when YOU added her as a Director of a company without knowing that this would trigger further obligations. If you don't know what you are doing seek competent advice.

Right now you can file a Form 11 for her showing the zero incomes and have the company struck off to avoid this repeating.

ABEasy

If your dad is filing a joint return with your mam as a spouse this should fulfil her filing obligations.

Revenues approach doesn't sound correct, is it a private pension? (might have reduced credits on pension maybe?).

Either way I'd get your accountant to have a look at it, i'd be fairly sure there will be no additional liabilities for your mam!

srsly78

I thought having to file a form 11 only applied to proprietary directors (>15% shares?). Does she have shares? Might be simpler if she had none.

barneystinson

Just to be clear - regardless of whether she is a proprietary director or not, if the company is a genuinely dormant company, then there is no requirement for her to file a return as a chargeable person. See paragraph 3 of SP-IT/1/93, appended to tax instruction 47.6.3:

http://www.revenue.ie/en/about/foi/s16/income-tax-capital-gains-tax-corporation-tax/part-47/47-06-03.pdf?download=true

percy212

Thanks everyone. All the advice above is very useful and I will look into each recommendation. I think I will start with the suggestion below from BarneyStinson. It sounds like the path of least resistance. I will do a voluntary strike off with one arm of Revenue, and then march the paperwork over to another arm............definitely not in Kansas anymore :rolleyes:

Just one note to Mr Incognito. I did have expert advice during setup, share distribution, and company filings with Revenue. I am not blaming Revenue for being, well frankly, ARCANE....just wondering why one office is pushing hard on a personal collection while not knowing anything about the company's financial standing (with all info being available at another office). Inter office communication seems very disjointed, and is not conducive to fostering entrepreneurship.

Anyway, I will keep posting here and let you know what happens

barneystinson wrote: »

Just to be clear - regardless of whether she is a proprietary director or not, if the company is a genuinely dormant company, then there is no requirement for her to file a return as a chargeable person. See paragraph 3 of SP-IT/1/93, appended to tax instruction 47.6.3:

http://www.revenue.ie/en/about/foi/s16/income-tax-capital-gains-tax-corporation-tax/part-47/47-06-03.pdf?download=true

barneystinson

percy212 wrote: »

Thanks everyone. All the advice above is very useful and I will look into each recommendation. I think I will start with the suggestion below from BarneyStinson. It sounds like the path of least resistance. I will do a voluntary strike off with one arm of Revenue, and then march the paperwork over to another arm............definitely not in Kansas anymore :rolleyes:

Just one note to Mr Incognito. I did have expert advice during setup, share distribution, and company filings with Revenue. I am not blaming Revenue for being, well frankly, ARCANE....just wondering why one office is pushing hard on a personal collection while not knowing anything about the company's financial standing (with all info being available at another office). Inter office communication seems very disjointed, and is not conducive to fostering entrepreneurship.

Anyway, I will keep posting here and let you know what happens

You clearly don't understand how Revenue is structured; as an individual all of her tax affairs are dealt with at District level.

I'd suggest what may have happened here is one of 2 things: the company either hasn't registered for corporation tax or its registered but hasn't filed a corporation tax return.

In either case Revenue will correctly pursue income tax returns from persons they believe to be proprietary directors, until the individual clarifies their exemption from the requirement to file.

percy212

True. I do not understand how Revenue works (does anyone) which is why I pay an accountant. He is MIA currently so I am seeking advice from the online experts here Thanks for the feedback. I will clear things up.

Note: I am new to the Irish taxation system despite being Irish. Returned emigrant - the old school type.