Local Property tax: Last chance to avoid interest and penalties

The Revenue Commissioners have announced that March 31st is the last chance for full compliance with the  Local Property Tax and the Household charge. Those who do not comply face a range of enforcement actions and penalties. Revenue have indicated that they are very serious about ensuring that remaining non compliant individuals will be pursued. Anyone who is a residential property owner and is in any of the following situations needs to take immediate action: 

  • Has not filed and paid 2013 and 2014 liabilities
  • Has claimed an LPT exemption they are not entitled to
  • Has undervalued their property for LPT purposes 
  • Has not paid their 2012 Household Charge

 

UNDERVALUATION OF PROPERTIES

The Revenue have clarified that in respect of the undervaluation of property, this does not apply to those who have followed the Revenue guide valuation honestly and can justify their valuation. So if you can demonstrate that your valuation is correct at the time you made it, you do not have to adjust it for increases in its value since that time. If however, you have deliberately undervalued the property, then you are obliged to amend your valuation and pay the extra liability. Revenue will be consulting their extensive data on the LPT database to assess property valuations and owners whose valuations differ from those of similar properties in the same area are likely to face questions and a possible increase in their liability. This additional liability will be subject to enforcement actions and penalties.

 They have also stated that in such circumstances, they may examine the individuals wider tax affairs and include any other outstanding liabilities in any debt collection or enforcement activities.

 

HOUSEHOLD CHARGE

Even if you have paid your 2013 and 2014 LPT, if you did not pay the 2012 household charge you will be deemed to be non compliant with your LPT obligations. Unpaid household charge amounts at 1 July 2013 were increased from €100 to €200 and converted into LPT liabilities. They will be pursued by Revenue as unpaid LPT and subject to the same enforcement actions and penalties. 

 

INTEREST AND PENALTIES

If you do not discharge your liabilites by 31 March 2014, interest will be charged on outstanding household charges from 1 July 2013 and on outstanding LPT liabilities from 1 January 2014, at a daily interest rate of 0.0219%. (Equivalent to 8% per year). Interest will also apply on additional liabilites assessed on under valued properties. The full amount of the liability including interest will be pursued by Revenue. 

If you are  a chargeable person, and you have an unpaid LPT or Household Charge Liability, Revenue have the power to impose an additional charge of 10% of your income tax/corporation tax/capital gains tax liability up to a maximum of €63,485.  (generally you will be a chargeable person if you are required to make an annual tax return, this includes companies, self employed people and people with non paye income such as investment properties).  The surcharge will arise if you have an outstanding LPT return or LPT liability at the time your tax return is filed.

 

COLLECTION AND ENFORCEMENT ACTIONS

Revenue have access to a range of methods to collect outstanding LPT and household charge liabilities, including: 

  • Mandatory deductions from wages, pensions and certain government payments
  • Attachment orders to make deductions from bank accounts
  • Witholding tax refunds due 
  • Referral to the Sheriff or to a solicitor
  • Court action

Revenue have stated that manadatory deductions from wages/salaries/pensions will commence in April 2014 in respect of unpaid Household Charge amounts. Witholding of tax refunds due if there is an outstanding LPT liability has already commenced, and in these cases Revenue are withholding the full amount of the refund, which may far exceed the amount of the LPT liability.

If an outstanding tax liability is referred to a sheriff for collection, the sheriff then contacts the taxpayer to seek payment. If the debt is not paid, the sheriff has wide ranging powers to obtain payment, including seizure of goods.

People who are non compliant with LPT will  not be able to obtain a tax clearance certificate. They will also encounter a difficulty if selling the relevant property, as the LPT charge will attach as a liability to the property. 

 

WHAT CAN YOU DO? 

Its not too late! If you have not made your return or arranged payment, do so now via the online system LPT online. If you have not paid your household charge or have undervalued your property, you can also deal with this online. Your property ID and PIN can be requested (if you don't have them) via the LPT online system, using your PPSN or tax reference number. Or call the Revenues LPT helpline 1890 200 255. Revenue have stated that any taxpayer who has submitted a genuine LPT query (by email/letter/voicemail to the helpline) before 31 March 2014 will be treated as having complied, provided they pay their liability promptly once the query is resolved. So don't ignore this and hope it will go away, take action now!

 

Mary Keily, OBK Accountants

mary@ obk.ie

01 685 3149

 

 

 

Date Added: 25 Mar 2014

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