Your MoneyQ&A

Tax filings: how long do I have to keep hold of my records?

Keeping records in order is important with tax returns but there is a limit on how long you need to do so, as long as you play by the rules

Keeping hold of the personal financial records on which you base your tax filings is important but not forever. Photograph: iStock

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Dominic Coyle
Tue May 21 2024 - 05:30

For the last 20 years I have been filing my Form 11 tax return and paying my preliminary tax on time. My income is largely comprised (approximately 50/50) of distribution from my ARF and dividend income. I have also returned and paid my capital gains tax as it may arise from year to year.

Over the years, I have accumulated a significant amount of detailed paper records supporting those tax returns and my question is how long I need to retain these records for Revenue purposes in the event of a query now arising. To date, I have never received a query from Revenue in regard to my tax returns.

From time to time, I have read that Revenue can revert to taxpayers for up to six years and if that is correct I wonder if I can now safely dispose of say 13 years tax returns?

Mr G.O’N.

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That’s a lot of paperwork, for sure. And you are quite correct to ask whether it really is necessary to keep it all. You’ll be relieved to hear the answer is no.

We’re all nervous of ditching the documents backing up tax returns and it is becoming an issue for more and more people as Revenue and Government gradually expand the number of people required to file a return – most recently to include those looking to avail of the rent tax credit.

And, as I understand it, the period required is under four years – in most circumstances.

Certainly, businesses are required to keep the documents relevant to a tax return for six years but for individuals, the magic figure is four as long as you abide by the rules in the first place.

This timeline is contained in Section 959Z (3) within Part 41A of the Taxes Consolidation Act 1997.

It states that Revenue is entitled to make inquiries to determine the accuracy of a tax return.

However, except in the case of suspected fraud or neglect or where a person has not delivered a full and true return, Revenue may make inquiries under this section within four years of the end of the chargeable period in which the return was filed.

There is a certain balance here as taxpayers also have a four-year window after the relevant tax year in which to apply for any reliefs or refunds they believe are due to them.

Miss that four-year window and you will lose out regardless of the merits of your case as myriad tax appeals have illustrated despite the circumstances of the lapse or the possibly difficult financial position of the applicant.

But there are a couple of key phrases in that section I was quoting that are very important to remember.

First, the taxpayer is obliged to deliver “a full and true return”. If you don’t, you lose the protection of the four-year window and Revenue can come after you at whatever point they discover you did not file a full and true return.

Similarly, as it says, if your return for any year is not accurate due to any perceived fraud or neglect, Revenue is freed from the shackles of that four-year window.

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The other phrase you want to pay particular attention to is the last bit: “ ... the end of the chargeable period in which the return was filed”.

For people following the rules, this is not an issue but if you file your return late or, more importantly, if Revenue and yourself are tictacking back and forth on any amending of that assessment, the four-year clock only dates from the final return that you file.

In practice, of course, if there is contention over a filing, this could be well beyond the usual four-year deadline of the chargeable period.

In your case, over these past 20 years, you say you have never had a query from Revenue regarding your returns, never mind a challenge.

As such, unless you have any reason to believe that there is something that might come back to haunt you, you should be free to dispose of the paperwork underpinning your returns for everything after a full four calendar years have passed from the year of your filing.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to dominic.coyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice

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