Making the HRI Work For You – Thomas Crummy

HRI

Thomas Crummy, ALCI Chairman and proprietor of the award winning contracting company, Thomas Crummy Landscapes Ltd, provides some insightful detail on how to utilise the government’s Home Renovation Initiative to improve your bottom line. With a view to stimulating the domestic construction market, the government introduced the Home Renovation Initiative in 2013. The incentive provides for tax relief for homeowners by way of an income tax credit at 13.5% of qualifying expenditure on repair, renovation or improvement works carried out on a main home by qualifying contractors.

The initiative’s first draft essentially ignored the landscape sector, but thanks to the tireless efforts of ALCI (the Association of Landscape Contractors of Ireland), the Department of Finance amended it to include Landscaping Works. The amendment was a testament to the influence of industry bodies and a coup for the wider industry. Through my role in the Association I am hearing both positive and negative comments about the initiative.From my personal experience, the initiative has been extremely helpful in getting projects across the line. I can say with certainty that upwards of 80% of my current work schedule involves the initiative’ ‘Customers don’t have to spend a minimum of €4,405 with you. They can add a number of small receipts from you and other trades to make up that figure over the two years’

MAKING IT WORK
If the initiative is not working for you it’s because you’ve got to make it work for you. Most consumers are completely unaware that landscape projects are eligible, and part of our job is to raise awareness. One of the simplest ways to achieve this is to include a copy of the HRI summary in all of our residential/private quotations. It represents a great hook, people want discounts and more often than not it seals the deal. In addition to getting a discount the consumer is also reassured that we are legitimate businesses with our affairs in order. With the number of cowboys in the landscaping business, this is something that’s becoming ever more important. One of the great points about the initiative and one that seems to be overlooked is that customers don’t have to spend a minimum of €4,405 with you. They can add a number of small receipts from you and other trades to make up that figure over the two years. So no matter how small the job it can work for you.

CUTTING THROUGH THE PAPERWORK WITH THE REVENUE ONLINE SYSTEM
The ROS system has only recently gone live and I have to compliment Revenue on a great job, it is very user friendly and does not take long to complete. In my opinion this scheme has no disadvantages and only helps make it easier for the client to make the decision to employ you to carry out their project. When assisting clients, it is important to point out that the system can and should be used to check that a contractor qualifies under the initiative. This should be done before a contractor is engaged. The checking function represents a useful tool for the wider industry in rooting out the unscrupulous fly-by-night merchants. ‘I can say with certainty that upwards of 80% of my current work schedule involves the initiative’

“The ROS system is very user friendly and does not take long to complete.”

UNDERSTANDING THE SCHEME
The Home Renovation Incentive (HRI) runs from 25 October 2013 to 31 December 2015. It provides for tax relief for homeowners by way of an income tax credit at 13.5% of qualifying expenditure on repair, renovation or improvement works, including landscaping works, carried out on a main home (principal private residence) by qualifying contractors.The works must cost a minimum of €4,405 (before VAT), which will attract a credit of €595. Where the cost of the works exceeds €30,000 (before VAT), a maximum credit of €4,050 will apply. The credit is payable over the two years following the year in which the work is carried out and paid for. 2015 will be the first year for HRI tax credits. The works must be carried out on or after 25 October 2013 and up to 31 December 2015. Homeowners must be Local Property Tax compliant in order to qualify under the incentive while contractors must be VAT registered and tax compliant in order to qualify to carry out works under the HRI. There is no obligation under the scheme to get all work carried out on a home by one contractor. If a homeowner has several smaller jobs that they want to get done, including work on their garden, they will all qualify providing they meet the criteria outlined above and the total cost of the works can be spread until 31 December 2015, so the homeowner could get the garden done this year and the kitchen next year and claim tax back on both jobs.

USING ROS
As I mentioned, the initiative is administered through the Revenue’s online system. The process is straightforward and contractors shouldn’t be put off . When you visit the site you enter Works Notifications in advance of commencing works. The Works Notification will include a description of the works, the address of the main home where the works will be carried out, the estimated cost of the works including a VAT breakdown, the estimated start and end dates for the works. Homeowners will look up the Works Notification in advance of works commencing to ensure that the contractor qualifies. Contractors will enter payments received (Payments Notifications) from homeowners. Homeowners will look up the Payments Notifications as well as entering their tax credit claim.

WHAT INFORMATION WILL BE ENTERED TO THE ELECTRONIC HRI SYSTEM FOR WORKS NOTIFICATIONS?
The contractor will enter the following information –
● The property ID (the address will be returned for confirmation)
● The name of the person claiming the HRI relief (the homeowner )
● A description of the works
● The estimated cost of the works, separately identifying the VAT amount
● An estimated start date and an estimated end date for the works.

WHAT INFORMATION WILL BE ENTERED TO THE ELECTRONIC HRI SYSTEM FOR PAYMENTS NOTIFICATIONS?
The contractor will enter the following information –
● The Unique Reference Number (allocated by the electronic HRI system at Works Notification Stage)
● The name of the person making the payment (the homeowner)
● The date the payment was received from the homeowner
● The payment amount, separately identifying the VAT amount.

For example – A homeowner is about to engage a contractor to carry out repair, renovation or improvement work on their main home in July 2014. The cost of the work is €10,000 at 13.5% VAT = Total €11,350

STAGE 1 In advance of Works Notification (before work commences) –
At this stage the homeowner should have ensured that –

● The works qualify i.e. it is repair, renovation, improvement or landscaping works to which VAT at 13.5% applies
● The contractor is registered for VAT
● The contractor is tax compliant (The RCT Rate Notification of ‘0’ or ‘20%’ will be the only acceptable evidence at this stage. The Tax Clearance Certificate will no longer be acceptable)
● The homeowner has given the contractor the LPT Property ID for the main home. NB.: homeowners should not give their PPSN or the PIN (received in connection with LPT) to contractors. The homeowner and contractor should keep copies of documentation.

STAGE 2 Works Notifi cation (before work commences)
The contractor enters the works details (Notification) to the electronic HRI system The homeowner looks up the electronic HRI system for confirmation that the contractor qualifies.

STAGE 3 Payment Notification
● The homeowner pays the contractor €1,000 on 01/08/2014
● The contractor enters the payment details (showing VAT separately) to the electronic HRI system
● The homeowner looks up the electronic HRI system for the payment details
● The homeowner pays the contractor €10,350 on 15/11/2014
● The contractor enters the payment details (showing VAT separately) to the electronic HRI system
● The homeowner claims the tax credit on the electronic HRI system ● The tax credit is applied and spread over 2015 and 2016 in equal amounts. Payments recorded by the contractor are available for completion of the Contractors Form 11/CT1.

WHERE CAN I GET FURTHER INFORMATION ASSISTANCE?
Detailed information for both homeowner and contractor is available on the Revenue website www.revenue.ie Information/assistance is also available from the ALCI. Tel: 01 247 9037; email: info@alci.ie

ThomasCrummy

THOMAS CRUMMY is Chairman of the Association of Landscape Contractors of Ireland and owner of Thomas J Crummy Landscaping, one of Ireland’s leading landscape contracting companies and winner of the Bord Bia Landscape Business of the Year 2012/2013. www.thomasjcrummy.com