Q & A

Bogus accounts My dad recently got a letter from the Revenue Commissioners saying they had information that he held a non-resident deposit account and to answer a series of questions "urgently" or else "Revenue officers may call to you without further notice".

My dad, who was a small farmer, is almost 90 years old and is a man of little means. He has been getting a non-contributory pension for the past 20 years and the only money he owns is banked in the local bank. He barely knows what a non-resident deposit account is.

The letter contains a number of difficult questions to understand and advises him to bring the letter to the attention of his tax adviser. As he is quite alarmed and concerned with the threat of revenue officers calling without further notice, what should he do?

Mr J.K., e-mail

Your father is by no means the only person to face the alarming and somewhat brusque letter from the Revenue Commissioners. The letters are supposed to be targeting the holders of bogus non-resident accounts but there is a growing suspicion that the Revenue is conducting a trawl of all holders of non-resident accounts, bogus or otherwise, in the hope of eliciting admissions of wrongdoing from frightened account-holders.

This is causing anger around the State as little blue envelopes work their way through thousands of post boxes.

However, the very fact that your father has got a letter indicates that he did at some stage have a non-resident account. The only issue is whether it was legitimate or bogus.

The one thing he should not do is ignore the letter and hope the issue will go away; those days are gone as far as the Revenue is concerned.

Your letter gives the impression that your father, as a small farmer, was unlikely ever to be in the position of having a non-resident account. I suggest he check first with his branch and determine the status of any account he has or has had with it.

It may be, as some campaigners against the Revenue clampdown on bogus non-resident account-holders allege, that the account was opened or had its status altered without his knowledge, although I have to say this seems unlikely.

If he has had a non-resident account, he needs either to produce evidence to the Revenue that he was entitled to hold it (payslips from abroad or foreign tax returns, for example).

If he was not entitled to such an account, he had better sort out quickly what his liability is - including any interest and penalties.

One way or another, he has 60 days from the date he received the envelope to settle with the Revenue or satisfy them of his innocence.

I enjoyed reading the article in last week's paper regarding "bogus accounts". I tried to make contact with Mr O'Mahony but the number comes up as not recognised. Could you please confirm the correct number?

Mr F.O'N., e-mail

Judging by the feedback on this issue, you are not alone in looking for help from Mr O'Mahony, the former AIB assistant bank manager who has been leading a campaign against the Revenue action on the holders of bogus non-resident accounts.

And I suppose you all could have done without me being unable to read my own writing. I have since checked again and the number for Mr O'Mahony's group is 021-4547011. I have checked that number this week just to make sure I am not sending anyone else on a wild goose chase and it is correct.

VAT on house sales

I read your article some time back about the impact of the additional one percentage point of VAT on the sale of new homes.

You indicated that there were two clauses - 6a and 6b - that are routinely struck out by solicitors acting for buyers though builders regularly reinstate 6b, which affects VAT increases. My contract has both these clauses struck out but my builder is still trying to pass the higher VAT charge on to me. Who is right?

Mr C.M., Dublin

Your builder is wrong and if he tries to push this through or force you to give up your new home, you should take him to the courts for breach of contract - but then your own solicitor should know this.

The key clause in the standard building contract for the purposes of VAT is Clause 6b. This allows the builder to pass on any higher costs incurred as a result of the rise in VAT.

As I said in my article - which was based on interviews with several solicitors - lawyers acting for homebuyers will routinely put a line through Clause 6b (along with clause 6a) in the contract. Developers often try to restore 6b although, given that there had been no rise in VAT since 1993 and no indication ahead of the Budget that one was likely, some had stopped the practice.

It appears your builder was one of those who was content to have the contract signed with both clauses (plus another, 6c) struck through.

Having done that, the builder has given up the right to pass on the VAT rise to buyers. I suggest you just get your solicitor to quietly point out the deletion of the clause.

You indicate that the builder maintaining the strike-through merely rendered the clause dormant, not excluded. It might sound good but I cannot see him getting to first base with any judge on that argument.

If the builder is not prepared to abide by the contract they signed - in the same way they would insist that you do so - just take them to court.

I know people worry about the costs but this is a clear case of breach of contract and it is the builder who would be paying your costs.

This situation illustrates why homebuyers should be reading their contracts very carefully just now if they are about to complete their purchase.

Purchasers are stretched enough these days to raise the money for new homes without getting nasty shocks of this nature.

The one percentage point increase in VAT on the price of new houses will add approximately €1,800 to the price of an average new home. Added to the abolition of the first-time buyers' grant that amounts to €5,610 that buyers will have to find, money that will cost €8,292 over the life of a 20-year mortgage assuming that your lender will allow you to borrow the additional money.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.