Revenue issued an eBrief on 31 October to remind taxpayers that they must register all tenancies; otherwise they cannot deduct interest paid in relation to those tenancies. ICAI has consistently argued against this severe sanction as Revenue's role is the administration of the tax system, and should not be extended to taking on the responsibilities of other Government bodies.

The severe sanction was introduced in Finance Act 2006, which resulted in landlords not being entitled to deduct interest on borrowings in respect of tenancies unless ALL those tenancies were registered with the Private Residential Tenancies Board. The income tax returns for 2006 contain the question – “Where the registration requirements of Part 7 of the Residential Tenancies Act 2004 have been complied with in respect of all residential premises tick the box”.

ICAI has no difficulty with the registration requirements of the Private Residential Tenancies Board, or with the concept that failure to register should be penalised. However, we are of the view that it should not be the Revenue's role to apply such penalties-Revenue's eBrief specifically mentions that “withdrawal of interest relief may result in an underpayment of tax and expose the landlord to interest and penalties”. The Residential Tenancies Act 2004 has its own set of penalties which can be applied.

This issue is of such concern to ICAI that a separate Pre-Budget Submission, under the umbrella body CCAB-I, was sent to the Minister for Enterprise, Trade & Employment requesting that the tax sanction should be repealed, in particular at this time of uncertainty in the Irish residential property market.

A copy of the Revenue eBrief No. 54/2007 is reproduced at Section 2.05.