Donegal landlords from north targeted in tax clampdown

Landlords from Northern Ireland renting out property in Donegal are being targeted by Revenue Commisioners

LANDLORDS from Northern Ireland that rent out properties in Donegal - but fail to pay tax on rental incomes - are being targeted by Revenue Commissioners.

According to financial and tax experts based in Letterkenny, the net is closing on non-resident landlords in a new clampdown.

It said a large number had already received tax bills "running into thousands of euro".

Financial adviser Pascal Curran from Advice First Financial and tax consultant Mary Farrell of Tax Advice Services said they are dealing with a "steady flow of cases" involving Northern Ireland-based Donegal property owners who are faced with hefty tax bills.

Many others are in the pipeline as a result of an unpaid tax recovery drive by the authorities in the county.

They said the drive by Revenue Commissioners is part of a pilot project being run in Co Donegal.

It identifies landlords - by correlating information from a variety of sources – and then targets those not paying tax on rental incomes.

Mr Curran said many of the landlords being “chased” for tax arrears were not aware of the requirement.

“In our recent experience most non-resident landlords don't know this is a requirement until the demand for payment comes through their letter box. These demands can also include interest and penalties and can run into many thousands of euro," he said.

“An issue we've encountered is that agents acting for the non-resident landlords are not making their clients aware of the requirement.

“I have a client from Northern Ireland who has 24 rental properties in Letterkenny but was not made aware by his agent that tax was payable on his rental income in the Republic. He believed because he paid his income tax in the north that he was covered but unfortunately that was not the case as Revenue in the Republic must get a first bite of the cherry.

“The fact is that when a landlord has appointed an agent to collect the rent, it is up to the agent to deduct the 20 per cent tax due from the rent and remit it to the revenue authority. This is not happening in many cases we've come across.”

Tax consultant Mary Farrell said she has 14 live cases involving substantial sums of taxation arrears for non-resident landlords living in Northern Ireland and Britain.

“The Office of the Revenue Commissioners is using its Risk Evaluation Analysis and Profiling (REAP) computer system to correlate information from different sources - such as the Private Residential Tenancies Board (PRTB), Local Property Tax (LPT), and Non Principal Private Residence (NPPR) registers - to find Donegal landlords resident outside the State who are receiving rental income but not paying tax on it," she said.

“Many of the cases I've worked on involve second homes owned by non-resident landlords who, for various reasons, ended up letting them. Arrears are being sought for six, eight and even ten years at an approximate cost of €1,500-2000 euro per year for each property.

“It is vitally important that these demands are not ignored and that anyone contacted by Revenue co-operates fully right from the beginning. It can be very beneficial for landlords to contact Revenue before receiving communication because it puts them in a strong position to negotiate a settlement and avoid additional fees and penalties.

“Ignoring the issue and hoping you escape the net will make the situation worse when Revenue finds you - and they will find you."

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