Rent a Room Relief - Family member question

Happyhouse22

Have a thought today about the rent a room relief scheme- now my instinct would be that this isn’t allowed but having looking on revenue and citizens information can’t see anything prohibiting it so thought I would ask on here...

My partner and I are currently building a house in Dublin, this project is going to end up being quite costly and use up most of our savings, To help our financial situation we were considering using the rent a room relief scheme. Based on current rental rates in the area we would be confident of getting 9,000- 11,000 per year for the room. The only issue with this is that we currently live alone and have been used to this for a number of years- in an ideal world we wouldn’t want to share our new home.

Now the idea I had was regarding my father, he lives in the west of Ireland but is consistently in Dublin for work, he usually stays in hotels or Airbnb’s when he comes up for work. Now when the house was built we would invite him to stay with us- in normal circumstances Imwouldnt dream of charging for this but currently he is looking for ways to help us out financially (he already gifted us the site using up my category A CATexemption)

So my question is can we charge my father 800 per month (probably slightly less than market rates for the area) to rent a room in our house? He would still live primarily in the west of Ireland and would only use the room for 5-15 days per month- yet it would still work out cheaper on average than what he currently pays in hotel bills.

Looking on revenue, you can’t usethe scheme if renting to a spouse or child but other relationships seem okay- so I guess the potential issue would be with him having a home and only using the room when needed. (But then if we rented to a stranger and they only used the room infrequently we would probably just consider it a bonus and not question it)

Buddy Bubs

I can't see a problem there. He can also gift you 3000 a year outside the category A threshold.
Rent a room relief doesn't ask names or anything, just declare you got it on your tax return, which is an obligation, even if you won't be liable to pay anything.

Happyhouse22

Buddy Bubs wrote: »

I can't see a problem there. He can also gift you 3000 a year outside the category A threshold.
Rent a room relief doesn't ask names or anything, just declare you got it on your tax return, which is an obligation, even if you won't be liable to pay anything.

Thanks, would definitely declare it but worried it’s a bit of a grey area.

CIARAN_BOYLE

Happyhouse22 wrote: »

Thanks, would definitely declare it but worried it’s a bit of a grey area.

There's a restriction against getting rent a room from your children spouse or civil partner. There is no restriction against getting rent a room from your parent so it's not a grey area.

Happyhouse22

CIARAN_BOYLE wrote: »

There's a restriction against getting rent a room from your children spouse or civil partner. There is no restriction against getting rent a room from your parent so it's not a grey area.

Thanks for answers, very helpful.

Okay to add another complication. My father has offered to gift/loan us €100,000 to help with the build.The idea would be that he would give us the loan and each year we would subtract the amount of the small gift allowance from the total loan (a nominal interest rate to be covered by this also). Doing this would mean the loan would be payed off in about 20 years.

However could we also add the amount of the rent a room scheme every year meaning we could write off the loan in 7 or 8 years rather than 20.

Will Yam

Happyhouse22 wrote: »

Thanks for answers, very helpful.

Okay to add another complication. My father has offered to gift/loan us €100,000 to help with the build.The idea would be that he would give us the loan and each year we would subtract the amount of the small gift allowance from the total loan (a nominal interest rate to be covered by this also). Doing this would mean the loan would be payed off in about 20 years.

However could we also add the amount of the rent a room scheme every year meaning we could write off the loan in 7 or 8 years rather than 20.

2 separate issues I think.

First you need to decide if the €100k is a gift or a loan. If a gift it eats into your €335k group threshold tax free allowance. So he could give you €3k and your wife €3k leaving €94k of threshold. If a loan, it becomes a loan of €94k on which interest will apply (don’t know the rate off hand) but would certainly wipe out the €6k sge annually.

As for rent a room, If this were say, €10k annually, you can do whatever you wish with this money - pay the interest with it or reduce the capital loan outstanding.

Happyhouse22

Will Yam wrote: »

2 separate issues I think.

First you need to decide if the €100k is a gift or a loan. If a gift it eats into your €335k group threshold tax free allowance. So he could give you €3k and your wife €3k leaving €94k of threshold. If a loan, it becomes a loan of €94k on which interest will apply (don’t know the rate off hand) but would certainly wipe out the €6k sge annually.

As for rent a room, If this were say, €10k annually, you can do whatever you wish with this money - pay the interest with it or reduce the capital loan outstanding.

I believe the rate of interest is determined by the rate that can be obtained by putting the money on deposit, at current interest rates this would be 1% maximum, which is only about 1,000 per year leaving

Also it definitely would be a loan officially, but I wrote gift/loan as the loan would be repaid by utilising the small gift allowance rather than repaid in actual money.

Will Yam

Happyhouse22 wrote: »

I believe the rate of interest is determined by the rate that can be obtained by putting the money on deposit, at current interest rates this would be 1% maximum, which is only about 1,000 per year leaving

Also it definitely would be a loan officially, but I wrote gift/loan as the loan would be repaid by utilising the small gift allowance rather than repaid in actual money.

Revenue typically value such things as the value of the benefit to the taxpayer. Which would mean the price you would pay on the open market for a loan (if you were an employee borrowing from your employer it would be 4% for a house loan and 13% for everything else.

So I would imagine the lowest interest they would impute would be 4%. That’s €4K a year on €100k.

So using the sge you would eat into the loan by about €2k pa thus somewhat short of 50 years to repay.

Happyhouse22

Will Yam wrote: »

Revenue typically value such things as the value of the benefit to the taxpayer. Which would mean the price you would pay on the open market for a loan (if you were an employee borrowing from your employer it would be 4% for a house loan and 13% for everything else.

So I would imagine the lowest interest they would impute would be 4%. That’s €4K a year on €100k.

So using the sge you would eat into the loan by about €2k pa thus somewhat short of 50 years to repay.

I believe the interest rate is much lower than that- can’t find anything on revenue to back this up but here are some posts that agree with me



https://www.askaboutmoney.com/threads/can-parents-give-me-loan-for-house.212652/

https://www.askaboutmoney.com/threads/interest-free-loan-from-parents.187984/


Edit: Here it is on revenue.ie https://www.revenue.ie/en/gains-gifts-and-inheritance/valuation-date-and-the-value-of-certain-benefits/free-use-of-property-and-interest-free-loans.aspx

Will Yam

Happyhouse22 wrote: »

I believe the interest rate is much lower than that- can’t find anything on revenue to back this up but here are some posts that agree with me



https://www.askaboutmoney.com/threads/can-parents-give-me-loan-for-house.212652/

https://www.askaboutmoney.com/threads/interest-free-loan-from-parents.187984/


Edit: Here it is on revenue.ie https://www.revenue.ie/en/gains-gifts-and-inheritance/valuation-date-and-the-value-of-certain-benefits/free-use-of-property-and-interest-free-loans.aspx

My opinion is that revenue will either use what it will cost you to borrow on the open market ( typically 6%), or, of you are lucky they might agree to use the employee preferential loan rate of 4% for a property.

CIARAN_BOYLE

Happyhouse22 wrote: »

I believe the interest rate is much lower than that- can’t find anything on revenue to back this up but here are some posts that agree with me



https://www.askaboutmoney.com/threads/can-parents-give-me-loan-for-house.212652/

https://www.askaboutmoney.com/threads/interest-free-loan-from-parents.187984/


Edit: Here it is on revenue.ie https://www.revenue.ie/en/gains-gifts-and-inheritance/valuation-date-and-the-value-of-certain-benefits/free-use-of-property-and-interest-free-loans.aspx

Very odd distinction.

For those of us who are accountants we learn about preferential loans to employees (where the treatment is set out in law). If we hear interest free loans our first recollection is how it is treated for employees.

We don't learn about the valuation of interest free loan that's a gift because legislation does not spell out the treatment. There's guidance (which is at best semi binding opinion) that seems to change every few years.

In 2014 (the last time I was involved at a Revenue audit when the issue was brought up) the Revenue inspector was arguing that it should be treated in the same manner as a loan to employees. At the time we could not find anything to contradict that view.

This I feel is key.

The benefit is a gift. The treatment of how this benefit is valued is not set out in legislation. If you choose to rely on guidance regarding how this benefit is to be valued take a hard copy of this guidance and verify that this guidance remains in force regularly.

Will Yam

CIARAN_BOYLE wrote: »

Very odd distinction.

For those of us who are accountants we learn about preferential loans to employees (where the treatment is set out in law). If we hear interest free loans our first recollection is how it is treated for employees.

We don't learn about the valuation of interest free loan that's a gift because legislation does not spell out the treatment. There's guidance (which is at best semi binding opinion) that seems to change every few years.

In 2014 (the last time I was involved at a Revenue audit when the issue was brought up) the Revenue inspector was arguing that it should be treated in the same manner as a loan to employees. At the time we could not find anything to contradict that view.

This I feel is key.

The benefit is a gift. The treatment of how this benefit is valued is not set out in legislation. If you choose to rely on guidance regarding how this benefit is to be valued take a hard copy of this guidance and verify that this guidance remains in force regularly.

I agree. I think the best that can be achieved is the 4%. The only other option revenue might have would be to place market value on the benefit which is about 6%.

nompere

CIARAN_BOYLE wrote: »

Very odd distinction.

For those of us who are accountants we learn about preferential loans to employees (where the treatment is set out in law). If we hear interest free loans our first recollection is how it is treated for employees.

We don't learn about the valuation of interest free loan that's a gift because legislation does not spell out the treatment. There's guidance (which is at best semi binding opinion) that seems to change every few years.

In 2014 (the last time I was involved at a Revenue audit when the issue was brought up) the Revenue inspector was arguing that it should be treated in the same manner as a loan to employees. At the time we could not find anything to contradict that view.

This I feel is key.

The benefit is a gift. The treatment of how this benefit is valued is not set out in legislation. If you choose to rely on guidance regarding how this benefit is to be valued take a hard copy of this guidance and verify that this guidance remains in force regularly.

If we look on Revenue.ie

https://www.revenue.ie/en/gains-gifts-and-inheritance/valuation-date-and-the-value-of-certain-benefits/free-use-of-property-and-interest-free-loans.aspx

we find:



Joe gives an interest free loan of €300,000 to his nephew John on 1 January. The highest rate of return he could receive from an investment on deposit is 1.5%.
Calculate taxable value

Loan value


€300,000

Multiply by highest rate of return


1.5%

Taxable value


€4,500

This is regarded as a gift of €4,500 to John. The relevant tax date is 31 December each year, until the loan is paid off. Each gift is taken into account for aggregation purposes.

If John was to repay the loan at the end of October, this date of repayment is used to calculate the value of the gift for that year.
Calculate value for year loan repaid at the end of October Detail Amount
Taxable value for full year €4,500

Taxable value for year repaid

(Divide by 12 multiplied by 10)
€3,750

Published: 06 October 2020


Seems pretty clear.

CIARAN_BOYLE

nompere wrote: »

Seems pretty clear.

My point was that guidance is not underpinned in legislation.

Therefore its an interpretation and it can disappear tomorrow.

If you want to rely on it feel free but print it out for record purposes and check it's still there every few months.

Happyhouse22

Will Yam wrote: »

My opinion is that revenue will either use what it will cost you to borrow on the open market ( typically 6%), or, of you are lucky they might agree to use the employee preferential loan rate of 4% for a property.

nompere wrote: »

If we look on Revenue.ie

https://www.revenue.ie/en/gains-gifts-and-inheritance/valuation-date-and-the-value-of-certain-benefits/free-use-of-property-and-interest-free-loans.aspx

we find:



Joe gives an interest free loan of €300,000 to his nephew John on 1 January. The highest rate of return he could receive from an investment on deposit is 1.5%.
Calculate taxable value

Loan value


€300,000

Multiply by highest rate of return


1.5%

Taxable value


€4,500

This is regarded as a gift of €4,500 to John. The relevant tax date is 31 December each year, until the loan is paid off. Each gift is taken into account for aggregation purposes.

If John was to repay the loan at the end of October, this date of repayment is used to calculate the value of the gift for that year.
Calculate value for year loan repaid at the end of October Detail Amount
Taxable value for full year €4,500

Taxable value for year repaid

(Divide by 12 multiplied by 10)
€3,750

Published: 06 October 2020


Seems pretty clear.

Seems pretty clear to me also, but I’m not an accountant nor am I involved in the industry so I am somewhat concerned that Ciaran may be correct.

Would love to get the opinions of others who might be knowledgeable on this topic.

Happyhouse22

CIARAN_BOYLE wrote: »

My point was that guidance is not underpinned in legislation.

Therefore its an interpretation and it can disappear tomorrow.

If you want to rely on it feel free but print it out for record purposes and check it's still there every few months.

Thanks for clarifying - I will definitely save a copy of the page on revenue.ie - good advice. I presume this would all be self declaration anyway- so chances are it will never be questioned..

CIARAN_BOYLE

Happyhouse22 wrote: »

Thanks for clarifying - I will definitely save a copy of the page on revenue.ie - good advice. I presume this would all be self declaration anyway- so chances are it will never be questioned..

Your right it's self assessment so it may never be queried.

It could be though. Loan of 100k into your bank. Your bank reports the transaction to Revenue. Revenue put it on file and randomly select it for query.

Happyhouse22

CIARAN_BOYLE wrote: »

Your right it's self assessment so it may never be queried.

It could be though. Loan of 100k into your bank. Your bank reports the transaction to Revenue. Revenue put it on file and randomly select it for query.

I get that. And if I thought I was doing something wrong I would be worried.
Having the example on the revenue site does make me feel,more comfortable with it though...

barneystinson

CIARAN_BOYLE wrote: »

My point was that guidance is not underpinned in legislation.

Therefore its an interpretation and it can disappear tomorrow.

If you want to rely on it feel free but print it out for record purposes and check it's still there every few months.

What are you talking about, of course it's underpinned by legislation.

Section 40 (2) & (3) of CATCA 2003 provide as follows:

(2) A person is deemed to take a gift in each relevant period during the whole or part of which that person is allowed to have the use, occupation or enjoyment of any property (to which property that person is not beneficially entitled in possession) otherwise than for full consideration in money or money's worth.

(3) A gift referred to in subsection (2) is deemed to consist of a sum equal to the difference between the amount of any consideration in money or money's worth, given by the person referred to in subsection (2) for such use, occupation or enjoyment, and the best price obtainable in the open market for such use, occupation or enjoyment.


There's not much room for interpretation there, unless you believe that the open market for deposits is going to give somebody 4% for the use of their money.

Now, I suppose you could argue that there's a Nigerian prince with a short term liquidity issue who emailed you last week offering you a 30% rate of return, but it is clearly established by precedent that the best price obtainable as referred to in the legislation is for money on deposit.

There's not a judge in the land who would read that as anything other than the best price obtainable by a prudent person, in the open market. There may well be case law on it but frankly it's not worth the effort, this is a very very clear and uncontroversial area of practice in relation to CAT, and I'm kinda appalled by your anecdote TBH. Both your firm and the revenue auditor did the client a terrible disservice.

barneystinson

CIARAN_BOYLE wrote: »

Your right it's self assessment so it may never be queried.

It could be though. Loan of 100k into your bank. Your bank reports the transaction to Revenue. Revenue put it on file and randomly select it for query.

I that case it wouldn't be randomly selected, it'd be selected on risk (the risky transaction having been flagged by the bank)!

Will Yam

Happyhouse22 wrote: »

Seems pretty clear to me also, but I’m not an accountant nor am I involved in the industry so I am somewhat concerned that Ciaran may be correct.

Would love to get the opinions of others who might be knowledgeable on this topic.

It all depends on whether it is enshrined in legislation or not. The employee 4% is. The “guidance” isn’t. And revenue are not bound by guidance (they can withdraw it as quick as they like).

It’s a bit like people who were trapped here during lockdown last year who happened to arrive for a holiday when lockdown happened. They couldn’t leave but worked from home. But if they were here for 183 days they were liable to Irish income tax becuse they inadvertently acquired Irish residency. As it happened revenue relaxed the rule and said that any day they were genuinely trapped here becuse of Covid would not count toward the 183.

But a pal of mine pointed out that there was no basis in law for that concession, and his view was that in 2 or 3 years time, when they are scrambling round to pay for Covid, they might “forget” all about the concession and send tax bills to this cohort.

I actually caught Reveneu out a few years ago when I proved their guidance was in conflict with the taxes act (it very much suited my purposes at the time to rely on the act rather than guidance). The guidance disappeared from everywhere within 24 hours.

So maybe they might say 1% is ok. Or maybe they may not. But it’s a risk.

barneystinson

Will Yam wrote: »

It all depends on whether it is enshrined in legislation or not. The employee 4% is. The “guidance” isn’t. And revenue are not bound by guidance (they can withdraw it as quick as they like).

It’s a bit like people who were trapped here during lockdown last year who happened to arrive for a holiday when lockdown happened. They couldn’t leave but worked from home. But if they were here for 183 days they were liable to Irish income tax becuse they inadvertently acquired Irish residency. As it happened revenue relaxed the rule and said that any day they were genuinely trapped here becuse of Covid would not count toward the 183.

But a pal of mine pointed out that there was no basis in law for that concession, and his view was that in 2 or 3 years time, when they are scrambling round to pay for Covid, they might “forget” all about the concession and send tax bills to this cohort.

I actually caught Reveneu out a few years ago when I proved their guidance was in conflict with the taxes act (it very much suited my purposes at the time to rely on the act rather than guidance). The guidance disappeared from everywhere within 24 hours.

So maybe they might say 1% is ok. Or maybe they may not. But it’s a risk.

Read the legislation Will :rolleyes:

Also, if you've had the experience you referred to you should surely be aware of arguing based on legitimate expectations. In your case, you were taking a stance based on the correct interpretation of the legislation. However, tax administration is under the care and duty of the Revenue Commissioners, and if they publish a concession setting out how they will operate the system (such as for example the non application of PAYE to travel and subsistence expenses, for which there is no statutory basis), then taxpayers have a legitimate expectation that they can rely on the concession.

In your case, it makes perfect sense that they would pull down their published guidance if it turns out it's not in accordance with the legislation, since as long as it remains up, people can rely on it.

Will Yam

barneystinson wrote: »

What are you talking about, of course it's underpinned by legislation.

Section 40 (2) & (3) of CATCA 2003 provide as follows:

(2) A person is deemed to take a gift in each relevant period during the whole or part of which that person is allowed to have the use, occupation or enjoyment of any property (to which property that person is not beneficially entitled in possession) otherwise than for full consideration in money or money's worth.

(3) A gift referred to in subsection (2) is deemed to consist of a sum equal to the difference between the amount of any consideration in money or money's worth, given by the person referred to in subsection (2) for such use, occupation or enjoyment, and the best price obtainable in the open market for such use, occupation or enjoyment.


There's not much room for interpretation there, unless you believe that the open market for deposits is going to give somebody 4% for the use of their money.

Now, I suppose you could argue that there's a Nigerian prince with a short term liquidity issue who emailed you last week offering you a 30% rate of return, but it is clearly established by precedent that the best price obtainable as referred to in the legislation is for money on deposit.

There's not a judge in the land who would read that as anything other than the best price obtainable by a prudent person, in the open market. There may well be case law on it but frankly it's not worth the effort, this is a very very clear and uncontroversial area of practice in relation to CAT, and I'm kinda appalled by your anecdote TBH. Both your firm and the revenue auditor did the client a terrible disservice.

I’m sorry but I disagree with your interpretation.

I think its most likely that (if it came to it) the revenue sc would argue in court that the benefit is not what the beneficiary could get by putting money on deposit (because the beneficiary is not putting the money on deposit), but the benefit is the benchmarked against the price (or cost ) of the benefit on the open market. In other words the benefit is the difference between what one gets an interest free loan, and what the loan would cost elsewhere.

The benefit is the cost of the loan, not the opportunity cost of the deposit.

And I’d lay money the judge would buy that argument.

barneystinson

Will Yam wrote: »

I’m sorry but I disagree with your interpretation.

I think its most likely that (if it came to it) the revenue sc would argue in court that the benefit is not what the beneficiary could get by putting money on deposit (because the beneficiary is not putting the money on deposit), but the benefit is the benchmarked against the price (or cost ) of the benefit on the open market. In other words the benefit is the difference between what one gets an interest free loan, and what the loan would cost elsewhere.

The benefit is the cost of the loan, not the opportunity cost of the deposit.

And I’d lay money the judge would buy that argument.

Have you actually had any experience in this area? I have, plenty, and you're welcome to disagree but it's not just with an interpretation, it's with reality and very well established precedent and practice. I'll add a reference to the relevant division in Bohan & McCarthy on CAT when I get a chance. You aren't just disagreeing with me, you're disagreeing with all published guidance on this topic, both Revenue and the industry.

Edit: Chapter 7.05 of Bohan & McCarthy: Capital Acquisitions Tax.

Louis Friend

Laughable stuff within this thread.

The ‘free use of property’ is calculated based on the opportunity cost to the parents of not having the funds on deposit.

So a rate of 0% is fine.

They lend the €100k to the younger couple and then write-off €12k a year over circa 8 years, assuming interest rates don’t increase.

barneystinson

Louis Friend wrote: »

Laughable stuff within this thread.

The ‘free use of property’ is calculated based on the opportunity cost to the parents of not having the funds on deposit.

So a rate of 0% is fine.

They lend the €100k to the younger couple and then write-off €12k a year over circa 8 years, assuming interest rates don’t increase.

Will disagreeing with you is no laughing matter! :pac:

It's painful to have to tease a big long winded thing out of something very straightforward and common like what you just set out, just to prevent ill-informed scaremongering going unchecked.

y0ssar1an22

Happyhouse22 wrote: »

Have a thought today about the rent a room relief scheme- now my instinct would be that this isn’t allowed but having looking on revenue and citizens information can’t see anything prohibiting it so thought I would ask on here...

My partner and I are currently building a house in Dublin, this project is going to end up being quite costly and use up most of our savings, To help our financial situation we were considering using the rent a room relief scheme. Based on current rental rates in the area we would be confident of getting 9,000- 11,000 per year for the room. The only issue with this is that we currently live alone and have been used to this for a number of years- in an ideal world we wouldn’t want to share our new home.

Now the idea I had was regarding my father, he lives in the west of Ireland but is consistently in Dublin for work, he usually stays in hotels or Airbnb’s when he comes up for work. Now when the house was built we would invite him to stay with us- in normal circumstances Imwouldnt dream of charging for this but currently he is looking for ways to help us out financially (he already gifted us the site using up my category A CATexemption)

So my question is can we charge my father 800 per month (probably slightly less than market rates for the area) to rent a room in our house?[/B] He would still live primarily in the west of Ireland and would only use the room for 5-15 days per month- yet it would still work out cheaper on average than what he currently pays in hotel bills.

Looking on revenue, you can’t usethe scheme if renting to a spouse or child but other relationships seem okay- so I guess the potential issue would be with him having a home and only using the room when needed. (But then if we rented to a stranger and they only used the room infrequently we would probably just consider it a bonus and not question it)

if your father should, hypothetically, go to an ATM machine, and take out some cash...whats the problem? he needs a few hundred for his gambling or whatever else.

you're looking too much into this.

Happyhouse22

Thanks for the replies guys. Feeling more confident that I was right now. Also good to hear the contrary argument in fairness.

Will Yam

barneystinson wrote: »

Have you actually had any experience in this area? I have, plenty, and you're welcome to disagree but it's not just with an interpretation, it's with reality and very well established precedent and practice. I'll add a reference to the relevant division in Bohan & McCarthy on CAT when I get a chance. You aren't just disagreeing with me, you're disagreeing with all published guidance on this topic, both Revenue and the industry.

Edit: Chapter 7.05 of Bohan & McCarthy: Capital Acquisitions Tax.

Do you understand why we have courts? Or why we have the Tax Appeals Commission?

It is precisely because words are open to interpretation. And in tax much of the interpretation is down to Revenue, and sometimes they don’t get it right. For example if you review all the findings in TAC over the last two years or so you will find that c 25% overturned Reveue’s interpretation.

I met a character about 2.5 years ago - rather like your good self - loads of experience etc (maybe it was you.....?). Full of authority, brooking no disagreement etc etc. He pronounced that a particular (very material) Revenue interpretation could not, and would not be set aside. End of. Period.

And he had rank in a major firm such that very few would question him.

Only problem was we didn’t accept his pronouncements. And guess what? After about 18 months we got the revenue to accept that there was a different interpretation, and they rewrote the relevant manual as we had hoped.

Good job we didn’t listen to Dr Noddy Know all. As one of our group said the most dangerous tax adviser is one who will never ever entertain the fact that maybe, just maybe, there could be a different perspective.

Sarn

In the case of the €100k loan, the concern is that it would be Revenue coming after you, which they are unlikely to do if you have been acting in accordance with their published guidance.

Will Yam

Sarn wrote: »

In this case, the concern is that it would be Revenue coming after you, which they are unlikely to do if you have been acting in accordance with their published guidance.

Even if they do they are more likely to act in accordance with their own published guidance.



But one can never be sure. I had a devil of a job some years ago persuading revenue that their guidance was still appropriate.

barneystinson

Will Yam wrote: »

Do you understand why we have courts? Or why we have the Tax Appeals Commission?

It is precisely because words are open to interpretation. And in tax much of the interpretation is down to Revenue, and sometimes they don’t get it right. For example if you review all the findings in TAC over the last two years or so you will find that c 25% overturned Reveue’s interpretation.

I met a character about 2.5 years ago - rather like your good self - loads of experience etc (maybe it was you.....?). Full of authority, brooking no disagreement etc etc. He pronounced that a particular (very material) Revenue interpretation could not, and would not be set aside. End of. Period.

And he had rank in a major firm such that very few would question him.

Only problem was we didn’t accept his pronouncements. And guess what? After about 18 months we got the revenue to accept that there was a different interpretation, and they rewrote the relevant manual as we had hoped.

Good job we didn’t listen to Dr Noddy Know all. As one of our group said the most dangerous tax adviser is one who will never ever entertain the fact that maybe, just maybe, there could be a different perspective.

No, that wasn't me you met. I'm always open to persuasion, you just haven't said anything persuasive in this thread.

Cool story brah, not at all relevant to the issue at hand here however. Unless you're in the business of creating extra tax liabilities for your clients when everyone else in the tax world is perfectly clear on what the legislation means... I'm well aware of the TAC and it's workings thanks, have had plenty of days in front of them.

Will Yam

barneystinson wrote: »

No, that wasn't me you met. I'm always open to persuasion, you just haven't said anything persuasive in this thread.

Cool story brah, not at all relevant to the issue at hand here however. Unless you're in the business of creating extra tax liabilities for your clients when everyone else in the tax world is perfectly clear on what the legislation means... I'm well aware of the TAC and it's workings thanks, have had plenty of days in front of them.

I’m sure you set TAC to rights!

Louis Friend

None of that is relevant.

We’re talking about the method used to value the “free use of property” when an individual lends money to another individual.

It’s the rate that the lender would get if she or she put the money on deposit. Advisers know this. Revenue know this. Revenue publicly state this.

barneystinson

Will Yam wrote: »

I’m sure you set TAC to rights!

Yet to have a determination go against me

Happyhouse22

So let’s say we all agree that the interest rate is the interest ratethat the lender would get if she or she put the money on deposit.

How does one determine this interest rate? I have been using 1% - but realistically this is much higher than anyone would get on deposit right now.

Louis Friend

Happyhouse22 wrote: »

So let’s say we all agree that the interest rate is the interest ratethat the lender would get if she or she put the money on deposit.

How does one determine this interest rate? I have been using 1% - but realistically this is much higher than anyone would get on deposit right now.

People are using zero these days. I am aware of a case two years ago where Revenue accepted 0.35%.