The system in place for deferrals of the LPT has been documented and reported on by a number of outlets and commentators. It allows for a full or partial deferral of the charge, subject to interest at 4% per annum. That a deferral system is in place at all is to be welcomed. However, most commentators have highlighted the optimistic/counterintuitive/bananas (delete as appropriate) nature of the concession – we know that you can’t afford to pay us now, so therefore we are going to do you the favour charging you even more later. And people say we’ve learned nothing from the Troika. The LPT Amendment Act introduced some additional categories that may qualify for a deferral. One might offer some qualified respite for a larger group of people than first envisaged:
- A person who has suffered both an unexpected and unavoidable significant financial loss or expense…..and is unable to pay the LPT without causing excessive financial hardship, may apply for full or partial deferral. Detailed guidelines will be published on Revenue’s website.
There you have it. An entirely subjective catch-all deferral option subject to further clarification on an unnamed date to be published somewhere on the vast expanse of the interweb. Disappointed vintners have admitted that champagne sales remained flat despite the joyous news. So is there any potential for this to impact? For example, what about a young couple with two children who, having purchased in 2007, have since lost one of their employments and are struggling with increasing mortgage repayments whilst mired in huge negative equity? Will they qualify? To ascertain this, the Revenue guidance to issue will have to, at a minimum, clarify several aspects of the deferral. To begin with, the adjectives describing the “financial loss” include the following: “Unexpected” – It is difficult to imagine any narrower definition than “i.e. since 2007” as qualifying here, such was the certainty that SS Celtic Tiger would sail untroubled through the next millennium. The Government and especially An Taoiseach were certainly caught unawares. And if a man with an apparent ability to consistently pick the winner of the 3:10 in Galway couldn't foresee what was to happen, what chance had the rest of us mere mortals? So the cataclysmic collapse in the property market and subsequent recession should qualify as “unexpected”. Paying €550,000 for a studio in Smithfield only to see its value plummet and your prospects of ever sleeping untroubled again disappear would intuitively be recognised as an “unexpected” result by most. “Unavoidable” – Will probably have a narrower meaning. Losing punts paid to turf accountants on the aforementioned 3:10 in Galway will be unlikely to qualify. Similarly losing punts paid by real accountants to political figures under the fabled Galway canvas are also unlikely to be accepted, despite the perception that this was the only method through which commerce took place in the country from 2002 to 2008. However, until such time as the banks begin to instigate wholesale debt forgiveness, can the Revenue argue that the current negative equity haunting families throughout the country is anything other than “unavoidable”? “Financial Expense” – mortgage repayments on the millstones crippling Irish families must qualify here. Mustn't they? “Excessive financial hardship” – we’re particularly looking forward to clarification of the precise point at which Revenue believe that financial hardship moves from “reasonable” to “excessive”. The Revenue will have to take an extremely narrow view to construe that repayment of an onerous mortgage on a property that will potentially never again be worth the massively inflated 2007 value escapes the above definition. So it would seem that much will hinge on the clarification to issue with respect to exactly what constitutes “excessive financial hardship”. Waiting with bated breath. In order to claim this, or any other deferral, you should complete the LPT Return form Revenue issued in March or April 2013, selecting the deferral option to confirm that you wish to defer all or part of your LPT liability.