Millions may be lost in rent tax

MILLIONS of euro could be lost to the exchequer because landlords are not paying tax on rental income.

The Dáil Public Accounts Committee (PAC) blamed a lack of information sharing between state agencies for the potential non-payment of tax.

In its report, the committee found that arrangements between agencies to share information on payments to support the private rental market were “inadequate”.

Such a lack of co-ordination made it difficult for the Revenue Commissioners to verify if landlords were paying their due tax.

It highlighted how €197 million paid in rent supplements by the Department of Social and Family Affairs in 2005, out of a total of €368m, could not be matched by Revenue.

A separate examination by the the Comptroller & Auditor General in 2006& described efforts by the authorities to verify that landlords were properly declaring rental income for tax as “haphazard and ineffective”.

Among the PAC’s recommendations is for a change in legislation to allow Revenue have full access to the Private Residential Tenancies Board database which all landlords are obliged to register. Currently, it can only obtain such data on a “case by case” basis.

PAC committee chairman Bernard Allen said it appeared that there was “a lack of joined-up thinking” in the past between the various state agencies.

“My personal impression is that there was no great enthusiasm to get to the root of the issue,” said Mr Allen, although he accepted that the situation had “tightened up” in recent years.

However, he said it was impossible to place an accurate estimate on the amount that could be lost.

Mr Allen acknowledged that the system had improved since the Finance Act 2007 was passed. It allows the Department of Social and Family Affairs to collect and pass on the Personal Public Service number of landlords to Revenue.

However, the department had not changed its application forms in the 15 months since the act was passed, a performance described as “unsatisfactory”.

Mr Allen said their recommendations would ensure that there would be no danger the €442m spent on state support to the private rental sector ended up with unscrupulous landlords.

According to Revenue, 103,000 landlords declared receipts of rental income of €3.56 billion in 2006.