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Topical Tax Issues
by Sinead Herlihy

Bike to Work Scheme

If a company decides to implement the above scheme it cannot only be made available to the directors of the company, it must be made available to all employees of the company.

VAT cannot be reclaimed by the company on the cost of the bikes or associated equipment i.e. helmets, pumps, etc.

 

Income Tax

Incorrect claims for allowances and tax credits are now subject to a €3,000 penalty.

Only 75% of mortgage interest on Irish residential rental properties is allowed as a deduction in Rental Accounts with effect from 7 April 2009. Please note that this restriction also applies to foreign residential rental properties.

Also the NPPR charge of €200 is not allowed as a deduction in an individual’s rental account as the Revenue view same “as a rate levied by a local authority”.

 

VAT

Statutory penalty of €4,000 to cover:

  1. Failure to file VIES returns for services.
  2. VAT 13B holders : failure to notify Revenue if they cease to qualify for authorisation, penalty for each VAT period in which they fail to notify Revenue.
  3. Property: Failure to issue a Capital Goods Record for a property
  4. Property: Failure to provide documentation on the surrender / assignment of a pre 1 July 2008 lease
  5. Property: Failure to provide specified documentation to purchasers for properties transferring under the sale of a business
  6. Property: Failure to maintain specified information on the VAT history of properties held.

VAT Consolidation Act 2010 came into effect on 1 January 2011 and has repealed the 1972 Act. All contracts should now reference the VAT Consolidation Act and relevant sections.

If a liquidator replaces another liquidator then Revenue must be notified to update the VAT registration details of the company in liquidation, if applicable.

A liquidator can claim for bad debt relief but the usual conditions apply.

 

Key areas of focus for Revenue Audits

  • Locums.
  • Using increased exemption for termination payments without obtaining prior Revenue approval.
  • Categorising as a termination payment payments where there was a contractual entitlement to payment under the PAYE system e.g. pay in lieu of notice, holiday pay, etc.
  • Reimbursement of motor expenses and subsistence.
  • Employer using incorrect PRSI class for employees e.g. uses Class A instead of Class S. Repayments are now subject to the 4 year rule.
  • Non deductible VAT i.e. food, drink, accommodation, entertainment expenses, etc.

 

Tax Clearance Certificates

Where a taxpayers tax liabilities are being discharged via an instalment arrangement beware that a tax clearance certificate which would normally have been valid for one year may only be issued for a shorter period.

 

Incorporation

When doctors incorporate their sole trades it should be noted that they must form unlimited companies not limited companies.

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