Q&A Dominic Coyle

Ulster Bank payout date proves taxing


Because interest earned in 2013 is not applied to customer accounts until January 2nd, 2014, Ulster Bank customers will have to pay the new rate of 41 per cent DIRT on interest earned in 2013. This of course is an additional 8 per cent tax. In my case, this will be approximately €800.

Customers are denied paying the 2013 rate of 33 per cent because of Ulster Bank bureaucracy. Ulster Bank will not facilitate their customers by paying interest earned in 2013 on or before December 31st.

This is an unexpected windfall for the Revenue Commissioners at no expense to the bank but a huge and unjustified loss to its customers. Ulster Bank need to answer questions as to how many customers are involved and how much extra of their customers cash they are donating to the Revenue.

Am I the only Ulster Bank customer to notice this? Are other Ulster Bank customers aware of this? Can they afford to ignore it?

Mr D.O’B., Limerick

Getting hit for an extra €800 in tax on your savings is a very unwelcome shock, especially as it is getting harder all the time to find interest rates for savings that will allow you to earn anything in real terms.

And it sounds like that might not be the end of your problems. If the extra eight percentage point increase in DIRT is going to cost you €800, it would appear that you will be earning gross interest of around €10,000 on this account.

Assuming that’s the case, you will also be liable to PRSI at the new 4 per cent rate on unearned income from January 1st. Thus, the difference between receiving your interest on December 31st and January 2nd is actually closer to €1,200.

However, Ulster Bank is not for turning. The problem is that this payout date is stated in the terms and conditions of the Loyalty Saver account you hold. If Ulster was to arbitrarily change this condition, what faith could you or any customer have in any of the conditions relating to this or other products?

It’s not a matter of bureaucracy but of the terms embedded in the contract that you signed. The bank would certainly find itself in hot water with the regulator if it decided to amend terms of a savings contract after the event.

For its part, Ulster Bank notes that if things had gone the other way – ie the Government had cut the rate of DIRT in the budget – you would benefit from the payment date for interest laid down for the account and it would neither want, nor be able to amend the terms and conditions in that case either.

It does show how critical the small print is on these things.

While you could not have known the Government would increase the rate of DIRT so dramatically, the idea that they would raise DIRT at all is not so far fetched as they had done so several times over recent years – each of which would have impacted on your DIRT bill given the interest payment.
Can non-payment of local property tax scupper sale?

I’m selling an apartment and am aware that LPT, household charge, etc, needs to be up to date. I have no issue there. When I checked my LPT account online it said I owed €200 for household charge for 2013. I’m pretty sure I had paid this.

When I eventually got through to Revenue I queried this and was told: “We haven’t got the payment information through yet from the county councils”. So they are assuming you owe it even if you have paid and putting it up as an arrears. Which may not be an issue for most but it could scupper an apartment or house sale?

Mr D.F., Dublin

I’ve been on to Revenue on this one and it certainly does appear to be a bit messy. The problem, they explain, is that they are merging data in relation to the household charge with the database for the Local Property Tax but they are not necessarily a neat match. For instance, anyone could pay your household charge – ie another family member – in which case their name would appear on the list as property owners were not required to register ownership for that charge.

A spokeswoman for Revenue said the data on the household charge, which is coming to them from the Local Government Management Agency (LGMA), should indicate who was totally compliant or partially compliant along with those who were exempt or who had applied for applied and qualified for a waiver.

Revenue says the process is still ongoing and will not be complete until the new year. What they do not say – but which seems to be inferred – is that until they have data from the LGMA to the contrary, Revenue’s default position appears to be that people have not paid the charge.

That seems very unfair. Part of the reason Revenue was granted the responsibility for local property tax was its perceived efficiency in collecting sums due - as against, say, the Department of the Environment/ LGMA on the old household charge or An Post on the TV licence. It’s a bit much then to hear that it appears to be assuming people have not paid their household charge when, in fact, they have.

You are obliged to settle any liability to local property tax (and household charge) before closing a sale on any property you own. As such, Revenue’s “assumption of guilt”, as you quite adroitly put it, has the potential to scupper a sale. In the current property market – and especially given the critical nature of such sales for some people in addressing mortgage difficulties – that seems singularly unhelpful. The bottom line, however, in any sale process is that it is up to the vendor to satisfy the legal advisers for the purchasers that the property is unencumbered by any outstanding charge – mortgage or otherwise.

Revenue says it will only amend the register in advance of completing the LGMA data transfer on production by you of a receipt for payment of the household charge – only emphasising the need for consumers generally to keep track of key payments and receipts.

For anyone not selling just now, there is less urgency on getting the details right. It is likely to become an issue in the new year, however, as I understand the Revenue intends to launch a residential property charge compliance campaign – presumably targeting all those its records say have yet to pay the charge. I can heard the outraged voices already.

This column is a reader service and is not intended to replace professional advice. Please send your questions to Q&A, c/o Dominic Coyle, The Irish Times, 24-28 Tara St, D2, or to dcoyle@irishtimes.com