Debt warehousing scheme – update
Revenue has announced a significant extension to the Debt Warehousing Scheme in light of the current challenging economic situation for businesses, which updates information given in AB last month. Under the scheme, businesses with warehoused debt were due to enter into an arrangement with Revenue to deal with that debt by the end of the year (or by 1 May 2023 for those subject to the extended deadline).
Given the current economic uncertainty, Revenue has extended the timeline to 1 May 2024. This means that businesses will not now be faced with the challenge of either clearing the debt in the warehouse or entering into a phased payment arrangement to clear the debt until 1 May 2024. Additionally, businesses will still be able to avail of the reduced 3% interest rate from 1 January 2023, as opposed to the general interest rate of 10%, when they come to pay the debt.
Revenue's latest statistics show that the bulk of the €2.58 billion warehoused debt – €2.2 billion – is warehoused by 7,500 taxpayers and a very large cohort of taxpayers (almost 50,000) have debts of less than €5,000 warehoused.
Non-resident landlords
The legislation underpinning the collection of tax on Irish rental income of non-resident landlords requires that either the tenant withholds 20% of the rent and remits it to Revenue, or the landlord engages the services of an Irish resident ‘collection agent’ to comply with the tax obligations on the rental income on the landlord’s behalf.
There have been lengthy discussions with Revenue about the impractical nature of this requirement. However, over recent years Revenue has increasingly focused on compliance with the specific legislative requirements.
Revenue provided a ‘temporary workaround' to enable a tax return to be filed for a non-resident landlord
Revenue provided a ‘temporary workaround’ in the ROS Form 11 2020 Manual to enable a tax return to be filed for a non-resident landlord in his/her personal capacity if the landlord did not have the appropriate arrangements in place to comply with the legislation.
However, Revenue did not extend this workaround to the 2021 Form 11. Following representations, Revenue has now agreed to a more limited workaround, which is reflected in the updated Income Tax Return Form 11 2021 (ROS Form 11) Tax and Duty Manual (TDM) in paragraph 4.1.
In advance of filing the 2021 Form 11, Revenue must be notified via MyEnquiries that the non-resident landlord is aware of the legislative obligation, and has put, or is putting, in place arrangements to comply. Use of the workaround is contingent on relevant landlords taking steps to comply with the legislative requirements.
Revenue has released a webpage with practical information on the tax obligations for rental income for individuals who are non-resident landlords. It covers matters such as registering a collection agent and their obligations, when an income tax return filed by a collection agent is sufficient and no further income tax return from the landlord is required, and guidance for circumstances where the tenant is withholding and remitting the tax to Revenue.
Recommendations have been made by the professional bodies to the Minister for Finance to amend the legislation to streamline and modernise the tax treatment of non-resident landlords.
Employees may not realise that they must pay tax on the exercise of a share option within 30 days
Share scheme compliance
Revenue has commenced a national project in relation to tax compliance and share schemes, following its review of the data it received on share-based pay through returns submitted by employers.
As part of this project, Revenue issued Notices to employers who operate share schemes with information on the tax treatment of share options. Revenue had requested that employers forward the information to their employees, as employees are liable to self-assessment in relation to share options.
Employees may not realise, for example, that they must pay tax on the exercise of a share option within 30 days of its exercise, register for self-assessment and file a Form 11 income tax return each year.
It is expected that Revenue will communicate directly with employees where Revenue’s records indicate that there is a significant risk of unpaid tax. This activity will be conducted under Revenue’s Compliance Intervention Framework.
Revenue has also endeavoured to increase employee awareness of the tax treatment of share options with the release of an Unapproved share option schemes webpage and a video on this topic.
Interestingly, the recent report by the Commission on Taxation and Welfare has recommended that the treatment of employee share options is changed to enable tax to be collected through the payroll. This would align the tax treatment of share options with the general treatment of share-based pay.
Ulster Bank and KBC exit
Revenue will be engaging in a variety of communications to remind taxpayers to update their bank account details on Revenue’s records, where necessary, given the impending exit of Ulster Bank and KBC from the Irish market.
A Revenue webpage, Changing your personal details, has information on updating bank account details for tax payments, tax refunds, and for Local Property Tax (LPT) purposes, if a taxpayer’s banking provider has recently changed.
A trust may be exempt from registering on the HMRC Trust Registration Service (TRS), but is within the scope of the CRBOT
Beneficial ownership of trusts for UK trustees
Since October 2021, relevant trusts must submit information to the Central Register of Beneficial Ownership of Trusts (CRBOT) if the trustees are resident in the State or the trust is administered in the State. Revenue developed a dedicated CRBOT information webpage, which provides information for relevant trusts, trustees and agents or advisors about the CRBOT.
Revenue recently updated its CRBOT information webpage to include a new CRBOT FAQs and troubleshooting for UK trustees and advisors page to assist UK trustees, agents and advisors with their obligations to register on the CRBOT. The FAQs note that there may be situations where a trust may be exempt from registering on the HMRC Trust Registration Service (TRS), but is within the scope of the CRBOT.
Following the UK’s departure from the EU, the UK can set its own regulations regarding trusts and anti-money-laundering and countering the financing of terrorism. In some cases, this may result in differences between a UK trustee’s obligations under UK and EU legislation.
Revenue is working to simplify access to ROS and registration on the CRBOT for non-resident trustees and their representatives. A Tax Adviser Identification Number (TAIN) is not required at this time. Updated instructions will be available on Revenue’s website in due course on how to register for the CRBOT.
While every effort has been made to ensure the accuracy of this information, no responsibility for loss or distress occasioned to any person acting or refraining from acting as a result of the material contained in this email can be accepted by the Irish Tax Institute, the designer, authors, contributors or publishers. Professional advice should always be sought for your particular circumstances before acting on any tax issue.
