Employers filing and payment of Local Property Tax in respect of Employees

Early in 2013 the Revenue Commissioners became responsible for administering Local Property Tax (LPT) and arrears of Household Charge (HHC). Since then the Revenue Commissioners have collected in excess of €600M in respect of LPT and HHC. There is an option for property owners who are employed or in receipt of an occupational pension to pay their LPT/HHC through deduction at source from their salary or pension. Where a property owner is employed or in receipt of an occupational pension and fails to pay their LPT/HHC, The Revenue Commissioners may instruct their employer or pension provider to deduct the payment at source from their salary or pension. The same form of instruction issues to the employer or pension provider whether it is a ‘voluntary’ or ‘mandatory’ instruction.

The Finance (Local Property Tax) Act 2012 (as amended) provides the legislation regarding deduction of payment at source for LPT/HHC from salary or pension and this legislation places an obligation on employers/pension providers to collect and account for the tax on behalf of employees when instructed to do so by the Revenue Commissioners. The instruction is issued to employers/pension providers by way of an Employers’ Tax Credit certificate (P2C), as provided for under Section 65 of the Act and the employer/pension provider must implement the instruction through their payroll system and return the LPT through their P30 and P35 returns.

Where an employer/pension provider received such a P2C notification in respect of an employee/pension recipient for the 2013 LPT tax year but failed to account for the amount specified, then the employer/pension provider should immediately rectify the situation by filing amended P35 and P35L returns and paying any balance outstanding.

The Revenue Commissioners will write to employers who appear to have unpaid LPT liabilities on record for the 2013 tax year and will demand payment as provided for under Section 960E (2) of the Taxes Consolidation Act 1997. This will occur over the next few weeks and care must be taken seriously as this demand will be followed up with debt recovery/enforcement action as is deemed necessary. Interest may be charged on the unpaid amounts and penalties may be imposed on employers for failure to deduct and pay over the LPT as instructed.

Where an employer/pension provider was instructed to deduct LPT from an employee/pension recipient by way of P2C for the 2013 tax year, but the employee/pension recipient had ‘ceased’ before the instruction could be activated, then the employer/pension provider should have filed a P45 notification in the normal manner. Where for any reason an employee/pension recipient did not receive payments subsequent to receipt of the P2C instruction (example long-term absentee in the case of employment), then the employer/pension provider should notify the Revenue Commissioners in this regard. The notification should be sent to LPT Branch, PO Box 1, Limerick.

For the 2014 tax year instructions are continuing to issue in relation to LPT for 2014 and arrears of HHC. employers/pension providers who receive a P2C instruction to deduct and pay over LPT/HHC for any employee/pension recipient should implement the instruction from the next payment date in their payroll cycle. The liability should be deducted in equal amounts over the rest of the year. If for any reason this is not possible, the employer/pension provider should contact the Employer Helpline at 1890 254565.

In circumstances where an employer/pension provider does not deduct the amount of LPT (as instructed) from the employee and pay it over to the Revenue commissioners, then the employer/pension provider becomes liable for the amount due. Non-operation of the instruction may result in interest charges, penalties, refusal of a tax clearance cert and increases the chances of a tax audit.

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