The Personal Insolvency Act 2012 introduces fundamental reforms to Irelands insolvency and bankruptcy laws as it introduces three different types of debt resolution process including a Debt Relief Notice (DRN) Debt Settlement arrangement ( DSA) and Personal Insolvency Arrangement (PIA).
This is a brief note to highlight the how Revenue will expect Practitioners in this area to deal with taxation maters that may arise in relation to these processes.
By way of background it will be noted that Revenue through the auspices of the Collector Generals office in Limerick have already well developed procedures and processes to deal with taxpayers who either fall behind in submitting Tax Returns and/or fail to settle any tax liabilities as and when they become due for payment. This can include allowing outstanding taxes to be settled through a series of phased instalment payments over time, the imposition of interest, and debt recovery through enforcement etc.
In order to ensure there is in place a clear and streamlined engagement between Revenue on the one hand and various other stakeholders on the other such as the Practitioners and the Insolvency Service of Ireland, Revenue have decided that the first point of contact for ALL queries in this area will be the dedicated Insolvency Unit of the Collector Generals office in Limerick. This can be contacted by secure email or by telephone on 061/488061.
Where an Approved Intermediary (AI) or Personal Insolvency Practitioner (PIP) makes contact with the Insolvency Unit in relation to a specific case, arrangements will be made by that Unit for the relevant Revenue caseworker to discuss the specific tax issues arising with that Practitioner. The Unit will monitor progress on all cases from a Revenue compliance perspective and will ensure that statutory deadlines are met. However while it may advise the Revenue caseworkers as to issues that may arise, it will be the caseworker in consultation with his/her management team within the Revenue District that will decide whether Revenue “opt in” or “opt out” of a debt settlement resolution process.
By “opting in” in a DRN case Revenue will be consenting to a Debt Relief Notice in relation to a Revenue Debt. IN the case of a DSA or PIA, an opt in will mean that Revenue are consenting to the inclusion of Revenue debt in an proposed settlement arrangement that may be formalised.
Information Required by Revenue Caseworkers
In the published guidance Revenue have helpfully outlined the information they will require as a minimum when engaging in a process that involves Revenue debt. It is stressed that if this information is not forthcoming Revenue will have no option but to opt out of any relieving proposals that may be proposed.
- Information required for Revenue to decide whether to opt in/out of process
- Name address PPS number and confirmation of PIP/AI appointment
- All Tax Returns must be up to date
- A specified prescribed financial statement must be prepared and in the case of a DSA/PIA arrangement details of PIP fees must be included
- Additional information required once initial decision to “opt in” has been made
- Details and supporting schedule of Assets including charges/liabilities arising
- Details of how debt has been addressed to date
- Details of future projections/expected gifts/ other income etc
- Where the Revenue debt exceeds €20,000 details of any other debt outside of the DSA/PIP process will be required also
It should be noted that a 70 day protective notice period will be applied by Revenue in all cases so that a Revenue caseworker will not initiate any enforcement action for 70 days from the date that formal notification of a debtors intention to seek a DRN etc is received.
Revenue have also stated that they will only consider any arrangement that provides for all current taxes to be kept up to date as provided for in legislation. Where a Revenue audit is ongoing or indeed scheduled to commence in any case applying for personal insolvency the AI/PIP should contact the Insolvency Unit which will then determine internally within Revenue whether it is appropriate to “opt in” while the audit is ongoing. If there is any suspicion that there are undeclared assets/sources of income Revenue will have no choice but to opt out of any proposed arrangement.
It is understood that if Taxes are under Appeal Revenue will take the view that it has no option in the short term but to opt out of any proposed arrangement until that Appeal is concluded as it is only at that time that the tax can be accurately quantified.
Kilcoyne & Co Accountants
Accountants in Dublin