Independent Financial Advice

Lorcanor

Hi
Can anyone recommend an Independent Financial Adviser. I have cashed in an investment and have a dispute with the Financial company over the amount of tax involved. I simply want impartial independent advice to tell me if I got my facts wrong or right.
Obviously I expect to pay for the advice.

Thanks in advance
Larry

Henry Ford III

If it's only a matter of calculation a half decent accountant is what you need.

Lorcanor

Henry Ford III wrote: »

If it's only a matter of calculation a half decent accountant is what you need.

Problem is :my accountant is obliged to accept The Finance Company's calculations, aparently to protect him and me from any future audit. The onus is on me to prove my case through an Independent Financial / Tax"Expert"!

Henry Ford III

Lorcanor wrote: »

Problem is :my accountant is obliged to accept The Finance Company's calculations, aparently to protect him and me from any future audit. The onus is on me to prove my case through an Independent Financial / Tax"Expert"!

Sounds suspect tbh. Isn't he/she supposed to be acting for you?

Lorcanor

Henry Ford III wrote: »

Sounds suspect tbh. Isn't he/she supposed to be acting for you?

Yes I suspected that aswell. I checked it out with Accountants ruling body. They verified the info and advised to find a Qualified tax expert. That is the reason for my thread. Not easy to find as most are tied with one F. Institution or another...

ANXIOUS

What do you think is causing the confusion?
Were top ups made to the plan?
Any encashment charges?
Was it a gross roll up investment?

Lorcanor

ANXIOUS wrote: »

What do you think is causing the confusion?
Were top ups made to the plan?
Any encashment charges?
Was it a gross roll up investment?

An over deduction of tax - plain and simple and plain to see. Accountant is obliged to accept F. Institution's calculations which is very ambiguous . Their explanations to me are also ambiguous. I have to prove my case through an Independent Expert. If im wrong then im wrong. But I want to be told that credibly.

ANXIOUS

Lorcanor wrote: »

An over deduction of tax - plain and simple and plain to see. Accountant is obliged to accept F. Institution's calculations which is very ambiguous . Their explanations to me are also ambiguous. I have to prove my case through an Independent Expert. If im wrong then im wrong. But I want to be told that credibly.

Can you not ask them for the calculations? I've got workings with previous encashment cheque. How much do you think it's out by?

The J Stands for Jay

I suppose you couldn't out the details up here, but it'd very very simple to check if it was done right if I had the numbers.

In my experience the majority of financial advisors wouldn't be able to figure it out.

Lorcanor

Thanks McGags. 1. I wont out the details in public. 2. You are right about Financial advisors..!
3.Im dealing with a surrender. I have record of all payments and deductions . So easy to calculate tax due. Result should be zero in deductions They say no charges or none showing. They are really ignoring the discrepancy and fudging by trying to lose me with their complicated calculations which might have been necessary but now we are only dealing with the results . Perhaps my approach is to simplistic but I dont think. Its just plain common sense.
As I said I need Recognised consultant whose calculations will be accepted by the powers that be. I know I'll have to pay but will recoup if successful.

Bubbaclaus

Your tax will ultimately be at your marginal rate of tax regardless, so I'm not sure what disputing the withholdings applied will do for you?

Unless your issue is what they are saying was your income in the year?

ANXIOUS

Lorcanor wrote: »

Thanks McGags. 1. I wont out the details in public. 2. You are right about Financial advisors..!
3.Im dealing with a surrender. I have record of all payments and deductions . So easy to calculate tax due. Result should be zero in deductions They say no charges or none showing. They are really ignoring the discrepancy and fudging by trying to lose me with their complicated calculations which might have been necessary but now we are only dealing with the results . Perhaps my approach is to simplistic but I dont think. Its just plain common sense.
As I said I need Recognised consultant whose calculations will be accepted by the powers that be. I know I'll have to pay but will recoup if successful.

That's what I don't get. They don't have to accept anyone else's calculations. Is it a simple insured product with no bid/offer spread?

Lodge a complaint and ask them to refer it to actuarial.

The only thing I can think of is its not a daily dealing fund and you've a price discrepancy.

Jim2007

Lorcanor wrote: »

Yes I suspected that aswell. I checked it out with Accountants ruling body. They verified the info and advised to find a Qualified tax expert. That is the reason for my thread. Not easy to find as most are tied with one F. Institution or another...

There is something very wrong with this. What accounting body are we talking about. If I were to behave as you are describing, I'd have a very big problem with my accounting body. The accountant is obliged to act in your best interests, not his nor anyone else.

Heres Johnny

Bubbaclaus wrote: »

Your tax will ultimately be at your marginal rate of tax regardless, so I'm not sure what disputing the withholdings applied will do for you?

Unless your issue is what they are saying was your income in the year?

That's all wrong for a start. It's not taxed at marginal rate at all.
If it's a banking product it will be subject to DIRT at 39% and if it's an insurance product it's subject to exit tax at 41%

Tenigate

Lorcanor wrote: »

Problem is :my accountant is obliged to accept The Finance Company's calculations, aparently to protect him and me from any future audit. The onus is on me to prove my case through an Independent Financial / Tax"Expert"!

If the case truly is as complex as you're making out, that's probably the reason no one is willing to touch the calculation for you. Life assurance companies employ most irish actuaries, pay them loads, and no one else can compete.certainly not a qfa, many of whom never even passed the multiple choice exams.

You're not giving too much away in your opening post, so I'm doubtful anyone will be able to recommend a financial advisor with appropriate specialisation to help you.

Admittedly i have fairly basic knowledge of life assurance products and tax. But ... Life assurance exit tax is 41% (maybe made a bit complex re deemed exit tax). There's income tax on bank interest, dividends and other income. There's capital gains tax on capital gains.

So the question is, where's the confusion? Did your investment make a gain, and if so what rate of tax did you pay?

All i can guess is there's a weird actuarial calculation you're not happy with and you figure somehow you should pay less tax.

Lorcanor

I will try to explain in a little more detail

I had an investment with a Financial company which I have now cashed in. I used to make a withdrawal anytime it made a profit. There was a small amount of tax on each withdrawal and the principal tax was paid every eight years, Tax rate is currently 41% previously was 36%. I thought the tax system strange especially the small tax deduction with each withdrawal. Tax bore no relation to a 41% deduction.
However it made for a good complicated formula for calculations!. I went along with it. Who was I to question it... That formula was probably necessary when the plan was ongoing. I kept all records of payments,deductions and even the units allocated and deducted. Strange to me there are no charges showing. Just deductions under the heading of tax.

Now that the plan is finished, no need for such formulas just simply total the payments = profit. Total tax deductions should equal total tax.

The problem surfaced when I was making my tax returns.

I presented to my accountant, on a spreadsheet, details of all payments and tax deductions. We both agree on tax due on total plan. Problem is, there is substantially more tax deduction than is due. Accountant queried their calculations. They replied with their complicated formula which he does not fully understand nonetheless accepts their figures.

He is a chartered accountant. I contacted their body and as I mentioned before they confirmed that he is obliged to accept their figures. Yet he accepts the information, I present, on the other parts of my business !

In my opinion the problem hinges around the Eight year tax payment. There is only one such payment
In the course of my enquiries with the F. Company, they sent me a spreadsheet showing all payments and deductions. They all match with my records.
However the eight year tax deduction is printed on the sheet but not included in any of the calculations - in this case simple addition and subtraction.

I queried why it was not included. Really they are fudging and saying that (deemed tax) as they call it is credited to the actual tax with each payment thereby reducing the (actual) tax deducted. The way I see it had to be deducted in the first place...
The unit deductions also bear that out. All the units balance out from start to finish farther proving the deductions. I don't need a complicated formulas for that!
They seem to be treating the deemed tax as if it didn't exist and even saying the total tax on the plan is less than tax that my accountant has submitted. But I notice they call it "total actual tax" Then there is the "deemed tax" that is what I mean by fudging.

My accountant thinks I have a valid case. He can't do anything about it though. There lies my dilemma!

Sorry to be so long winded. 1. I've never used a forum before. 2. I'm trying to give as much detail as possible but at the same time conscious of a public forum. 3. I'm not looking for a QFA - no disrespect!

The J Stands for Jay

It all becomes clear.

I don't think your accountant is taking the correct approach.

You don't include your investment in your tax returns. It is taxed under the gross roll up exit tax regime. It is not taxed under income tax or CGT. The exit tax paid by the financial company is the full extent of your liability to tax on that investment and they look after the returns to Revenue.

You cannot withdraw just the growth on your investment. The rules from the Revenue Commissioners say that each withdrawal is made up of capital and growth in the same proportion as the overall investment. For example, if you invested 100,000 and it grew to 200,000. Of you take a withdrawal of 20,000 it is made up of 10,000 capital and 10,000 growth. The tax will be 4,100 on that withdrawal. The amount of capital left in the investment will then be 190,000 and this will be used in the calculation of growth going forward.

The deemed exit tax is in effect Revenue taking an advance on their exit tax. So after they deduct it, when they come to calculate the growth it gets added back. Then it's subtracted from the exit tax figure (as it's already been paid).

For partial withdrawals after the 8 year deemed exit tax, a little bit of the deemed exit tax come into play, but I'm hungover and I don't think it'll add much to the explanation.

Lorcanor

Thanks again McGaggs.

You seem to have a fair insight of the workings of these plans alright.
I had to learn it the hard way. Still don't know much about it. I have the gist of how the withdrawals are treated and roughly how the deemed tax is applied to actual tax in future and past withdrawals.

I only learned as problems arose - after the events. For example I didn't know anything about 'deemed' tax until after the event. My Financial Adviser sold me the policy on the grounds it was good and profitable and simply cream of the profit to add to my income. Just a simple tax calculation and I would know where I stood.

I hope he is happy with his commission!!

There are just two points I want to make.

1. My account would have to note all my bank lodgements. He merely noted the surrender lodgement, the profit and the tax he interpreted that was supplied by the F.Company.The Revenue has acknowledged the profit and tax. It is obviously treated separately, on their assessment form from the rest of my income. It is assumed the F.Company has paid that part of the tax. Therefore I think he did that part ok. Just wish he could follow up on this over deduction.

2. You have explained the how the withdrawals and tax is treated.

With respect; just like the financial company, you have ignored my all important point : THE TOTAL TAX DEDUCTIONS IS AWAY MORE THAN THE TAX WE SAY IS DUE. Whether that is Deemed or Actual tax is not my concern. I just want a credible explanation (in simple layman language) or a refund.

Even more again than the F.C are now saying is due. I suspect they are using words to confuse me and fob me off. That won't happen!

Bubbaclaus

Heres Johnny wrote: »

That's all wrong for a start. It's not taxed at marginal rate at all.
If it's a banking product it will be subject to DIRT at 39% and if it's an insurance product it's subject to exit tax at 41%

Well it clearly isn't a standard deposit account due to the 'complex calculation', so I had crossed that off as a possibility. Exit Tax applies to Irish insured investment funds at source and would not need to be included in an individual's tax return, which is why I had also ruled that one out as the investment appears to be included in OPs tax return?

You make it sound like every investment is either subject to DIRT or Exit Tax.

The J Stands for Jay

The exit tax shouldn't be appearing on your tax assessment anywhere. The financial company are required to pay all of the tax. The accountant has no need to get involved, and many accountants would be unfamiliar with this tax.

From what you've said in previous posts, your tax calculation is wrong as it is based on an incorrect assumption. The financial company may still be wrong, but you'd need to re-do your calculations.

The slight difference between the application of exit tax on a deemed withdrawal and an actual withdrawal will have no effect on the overall tax due. Any over or under collection will be resolved on later withdrawals, or on a full surrender.

It's possible that there was no deemed exit tax when the investment was sold to you. The ministers for Finance are always messing with the exit tax regime.

Tenigate

Lorcanor wrote: »

.I hope he is happy with his commission!!

The exit tax rate used to be 23% with no "deemed" exit tax. During the downturn the government hiked the rate and introduced the deemed exit tax. these plans were aimed at small savers rather than large investors. If your plan loses money, you can't offset the loss. But you didn't pay tax until you cashed them in, and the rate was standard rate plus 3%

Now, you pay a levy when you contribute to these plans, can't offset a loss if you lose money, the deemed tax cripples the growth potential of your investment, and if you happen to make money you lose half of it to tax.
Squeezed middle or what?!

Lorcanor

Yes you are right McGaggs, about the tax assessment .I did appear on a first assessment with a demand for the tax. I now have a second assessment now that I looked at its not on it. Sorry! Your on the ball.
Regarding my calculation based on a wrong assumption- dont understand. Is my approach too simplistic

I'm not a financial expert

The J Stands for Jay

Lorcanor wrote: »

Yes you are right McGaggs, about the tax assessment .I did appear on a first assessment with a demand for the tax. I now have a second assessment now that I looked at its not on it. Sorry! Your on the ball.
Regarding my calculation based on a wrong assumption- dont understand. Is my approach too simplistic

I'm not a financial expert

If you were assuming that all the withdrawals were only growth, you'll get the wrong tax figures.
Looking at the growth at the end to get the tax figure will give you the wrong result as it will ignore that the growth will be different for each withdrawal as the value of the investment changes (as well as different rates of exit tax potentially applying depending on the years the withdrawals were made).

Lorcanor

Yes I was assuming that all withdrawals were only growth.

I was careful to emphasize in all my withdrawal letters, that I only wanted to withdraw the growth. I was tracking the progress of the investment. Therefore I would only look for a withdrawal when it had made a reasonable gain But it never worked out the way I expected. Your explanation of how withdrawal must be made up of capital and growth, makes sense when I put your info together with the explanation calculations, I received. However should it not balance out since there was always a gain?

I have the financial company's final surrender calculation. It shows the Investment profit, The Exit Tax and the Deemed Exit tax which is subtracted from Exit Tax and leaving the Current Exit Tax. I accept the Profit and the tax on the Investment as ok. However I'm back to my Original problem. The Total tax deductions is away more than the tax on the investment as above. If it was a small figure I'd forget about it.

I have to say you are being very informative and patient. For my part I'm not looking for a cent more than I'm entitled to. I'm quite prepared to be told ,credibly, that I'm wrong. That would be a relief, then burn all the paperwork a forget about it. I'm not there yet!. Perhaps I am just to stupid to see the problem!

Many thanks for your help McGaggs.