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Tuesday 25 July 2017

Developers face probe after taxman tipped-off

Under the legislations that established NAMA, the Revenue has the power to get information on all of the loans taken over by the agency.

It has publicly said this will allow it to find out "who borrowed, as opposed to who appeared to borrow it".

A Revenue spokeswoman declined to comment further.

NAMA's chairman Frank Daly was previously the head of the Revenue Commissioners.

The Irish Independent has also learned that many developers on NAMA's books can legally reduce the tax bills on the salaries they are enjoying.

NAMA has agreed to allow 41 property developers to take "salary allowances" of €100,000 each on average from their own businesses -- with two of them getting salaries of €200,000 -- to secure their co-operation.

These 41 developers owe a total of €18.6bn between them -- or one quarter of the loans on NAMA's books.

But because their salaries are not being paid directly by NAMA, tax is not deducted at the source.

It is up to the developers to pay the Universal Social Charge and PRSI on their wages -- and then they are legally allowed to use any property-based tax breaks they still have to off-set the remainder of their tax bill.

Many of the biggest property developers availed of tax breaks during the boom. Even though this scheme has closed off in 2006, the tax breaks last for seven years.

The Revenue confirmed that even when a property developer had his company loans taken over by NAMA, it should not "change the tax status of the person".

"If the person has invested directly in properties to which any of the various reliefs apply, then those reliefs should continue to apply, subject to the normal restrictions," it said.

New figures supplied by NAMA showed that around 8,600 of its 11,000-plus loans are "non-performing" -- meaning that no loan or interest repayments are being made.

And the vast majority of these loans -- which account for €54bn out of the €74bn on NAMA's books -- are classified as "120 days plus delinquent".

Payment

This means no payments of any kind have been made for four months or more.

The Revenue confirmed to the Irish Independent that these developers could claim a tax deduction on a business loan interest payment -- even though the interest may not yet be paid.

This loophole was highlighted last year but no action was taken to close it in either Budget 2011 or Budget 2012.

There is at least one tax relief that has been shut off to most NAMA developers.

They can no longer claim Section 23 tax relief on rental income from houses and apartments they owned, because in most cases the rental income is now going to NAMA instead.

Mr Daly has defended the practice of allowing developers to claim salaries of up to €200,000 -- saying it was cheaper than hiring a private sector receiver to come in and run their businesses.

According to new figures obtained by Sinn Fein leader Gerry Adams, Mr Daly is now earning more than even NAMA's highest paid property developers.

He is getting a salary of €150,000 from the agency but he is also receiving a pension of €114,893 due to his previous service as chairman of the Revenue Commissioners.

comment Page 22

Irish Independent

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