Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.

Property

I own an apartment that is rented out for part of the year. For the remainder of the year, it is occupied by my student children. I have no mortgage on this apartment. Can I claim all of the expenses I incur, such as management fees, or can I only claim pro rata for the period that the apartment is rented?

Mr T.F., Dublin

As I think you suspect yourself, there is no way you are going to be allowed to claim expenses in relation to periods when the apartment is occupied rent free by family members. However, it is not as simple as splitting expenses pro rata to the period for which the apartment is rented. Certain expenses, such as agency fees and advertising costs - which are incurred in the search for tenants - would be reclaimable in full. Other items, such as management fees, capital depreciation of fittings, rates e.t.c., would only be allowed for the period during which the apartment is let.

Tax error

I have a dilemma. I got an e-mail from our human resources department recently and feel very angry. Apparently, the company's payroll system somehow miscalculated my tax payments this year! I was shocked to learn that due to this error, I now owe the Revenue Commissioners more than £1,000 - this is a very substantial sum of money which I had not budgeted for.

The company accepts it made the error. Apparently, my tax credits on the payroll system for the current tax year are incorrect. This problem arose when the credits were transferred from finance to the payroll administrators, as the euro values were denominated as pounds. The pound value was then converted to euros, as that is the currency used on the payroll system. This caused the tax credits to be increased by 27 per cent in error. The company has outlined two main options to rectify the situation:

1) To move all affected employees to a Week 1 basis - this means that for the remaining pay periods, you will be paying the correct level of tax. However, there will be an outstanding amount of tax to be paid for this tax year. The Revenue Commissioners will be alerted to this when they receive your annual returns for this tax year. The outstanding amount can then be recouped by individual arrangement with the Revenue Commissioners, over the next tax year or possibly a longer period, by amending your tax credits per pay period.

2) Recoup the full amount of the overpayment within this current tax year i.e. in the December pay period and adjust your tax payments to the correct level going forward.

I found the options to be a good solution for the company - but not for me. I am a permanent employee with the company and assumed that it was managing my tax correctly. Now when it appears there are problems, they seem to wish me to sort it out with the Revenue Commissioners - but I am not self employed! I budget my finances tightly. To be faced with this debt, through no fault of my own is, to put it very mildly, very disappointing. In many businesses, when such an error is made, the business also takes responsibility and shows goodwill by accepting the debt themselves (banks are occasionally reported for this type of action).

The company says it does not have time to consult employees individually as it must have a solution within days to implement it by the next payroll date, and has decided to implement Option 1 while giving employees the chance to avail of Option 2 by informing the payroll department of their preference.

Can you recommend any course of action? Are human resources obliged to take any more actions?

Name with editor

You would be surprised to hear how many people find themselves in a similar situation. Indeed, I have been there or thereabouts myself before now and know others who have had the same problem.

I have no doubt that the arrival of the euro will catch out a lot more payroll departments than just your company's.

As the company itself says, the shortened tax year and the extension of the tax credit system would not have helped either.

Unfortunately, there is not an awful lot you can do apart from choosing the least painful method of paying the money. Put simply, this is tax that you owe on your earnings.

While the mix-up is admittedly the fault of your employer, it is the duty of the employee to manage their tax affairs.

The fact that companies deduct the tax at source by law is a matter of convenience both to yourself and the tax authorities, but it does not absolve the individual taxpayer from responsibility for the tax liability.

As you say, like most prudent earners you budget carefully - and a sum of more than £1,000 would knock a sizeable hole in any budget.

However, had no problems occurred, that budget should have been accommodating a higher tax bill this year on a monthly basis.

I cannot see any way in which the company should or would accept responsibility for the debt, although, as the error was the company's, I would expect it to expedite it in a way least onerous to their staff.

The e-mail to you (and by the way, I am not convinced that e-mail with its attendant security and confidentiality issues is the most appropriate way of communicating this information) refers to two main options but are these the only ones?

I gather not. It appears that the Revenue might grant up to four years for taxpayers in this situation to repay the debt in acknowledgment of the fact that the error was not made by the taxpayer but by the employer.

The company wants to give you less than a week to choose your option and I cannot see this as being fair, reasonable or required.

On the other hand, the option it is implementing by default is simply a return to the correct monthly tax deduction on your salary, and no-one can deny that it has a right, a duty even, to deduct the correct amount of tax once it becomes aware of what that amount is.

Therefore, I cannot see any real problem there. Such a move does not claw back any of the back tax owed and, therefore, does not limit your choices in this respect - unless of course you wanted to pay it all off in this shortened tax year, which I gather from your letter you do not.

You refer to the banks and the fact that, in many cases, people have been found to have had money credited to their account incorrectly due to clerical error at banks.

It is worth noting that, in such cases, the banks can and do demand the money back from the account to which it has been credited inadvertently.

Again, the argument is that the money does not belong to the holder of the account to which it has been credited and, therefore, must be paid back.

And again, the main argument is about when the money must be repaid.

Banks inevitably will want to take the money back immediately but this may well inconvenience the holder of the account mistakenly credited - with such a rebalancing leaving the account in debt or likely to fall so imminently.

In general, banks accept that they may have to wait as long again for the money as the period of time between the original error and when it was notified to the account holder.

In other words, if your account was mistakenly credited with £500 in January and you were notified of this by the bank six months later in July, you would generally have a further six months to repay the sum.