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GAZETTE
APRIL 1979
domicile is not deemed, U.K. assets will, as was in the
case of Estate Duty law, come within the ambit of the
Tax.
These brief comments on this complex piece of legisla-
tion will tend to illustrate certain practical points to be
dealt with later.
CAPITAL ACQUISITION TAX
The most relevant Tax insofar as the subject matter of
this paper is concerned is Capital Acquisition Tax. On the
basis that the Tax has been in operation for five years
with little change in that period, it is assumed that the
basic principles are known and understood. Con-
sequently, it is appropriate to concentrate on aspects of
practical administration of this new concept in Tax law in
relation to deceased Estates.
Accountability and Payment
One of the significant changes following the introduc-
tion of C.A.T. relates to the question of accountability
and attendant consequences — when payable, by whom,
assets chargeable, Certificates of Discharge etc. The due
date for payment of C.A.T. is directly related to the
Valuation date which is not necessarily the date of death
as was the case in the context of Estate Duty. In general
the valuation date is the date on which the
Executor/Administrator assents to the bequest which in
practical terms is usually some little time after the date of
issue of the Grant of Probate. The relevant date would be
when the Executor has title to the assets in question and is
satisfied that the Estate is adequately in funds to the point
of being capable of fulfilling the relevant bequest. In the
circumstances, it will be appreciated that, generally
speaking, the date on which the Tax becomes payable
would be at least several months after the date of death.
To be precise, this is normally within three months of the
date of inheritance i.e. the date of assent or transfer.
The consequences of this in the majority of cases is
that no longer is the Tax payable before the Grant issues
with the result of less delay in awaiting an assessed
Inaland Revenue Affidavit (Form CA24), agreeing values
etc. and arranging finance to discharge the liability
pending sale of assets. One now simply requests the
Revenue to "note" the completed I.R.A. containing
details of the assets and liabilities and this, duly marked,
is then presented to the Probate Office together with the
other relevant documents — Will, Oath of Executor etc. —
to enable the Grant to issue withour undue delay.
Following the issue of the Grant, this will be noted in
the usual way thus putting the assets of the Estate into the
name or control of the Executor who should then be in a
position to discharge the Funeral Expenses, Debts and
other Testamentary Expenses in the first instance. When
these have been discharged, or at least quantified, the
Executor is then in a position to contemplate dis-
tributions in favour of the beneficiaries at which point the
implications of Capital Acquisitions Tax have to be care-
fully considered.
Generally speaking, not only has the due date for the
payment of the Tax changed, the incidence has also in
that the beneficiary is liable for the Tax and is primarily
accountable therefor — the Executor is in fact a
secondary accountable person. Notwithstanding this,
Executors are well advised to take steps to ensure that the
Tax is paid to the point of lodging appropriate Forms IT 3
with the Capital Taxes Branch of the Revenue and in
certain cases withholding the amount of the Tax from
funds to be handed over to beneficiaries.
Having regard to the fact that C.A.T. is a cumulative
Tax, it is appropriate to suggest that the Form IT3 be
signed by the beneficiary particularly in the context that
the Form contains statements regarding previous gifts etc.
received by the beneficiary from the Testator which fact
has, of course, a direct bearing on the rate of Tax
applicable.
Arising from their preliminary examination prior to
marking the Affidavit, the Revenue are entitled where
they consider it appropriate to request a payment on
account of the Tax at that point i.e. before the issue of the
Grant of Probate.
This they would do in cases particularly where the
Executor and/or the Beneficiary are resident outside the
jurisdiction. This is an extreme example but it should be
noted from the wording of Section 60 (3) that the
Revenue have powers to demand payment of Tax in
certain situations as would particularly be the case where
an "external" dimension arises i.e. Executor, Beneficiary
or property is not within the jurisdiction.
Regarding the actual payment of the Tax, considera-
tion should be given to the manner in which payment
might be made in certain instances for example by the
surrender at par of Government securities standing at a
discount — this is a carry forward from the old Estate
Duty legislation but relates only to taxable inheritances -
and by the instalments as provided for in Section 43 of
the Act. This essentially arises in relation to property and
while it does not provide any relief in interest terms, it
does assist cash flow in the context that Tax can be
spread out and paid over five years, the first instalment
falling due one year subsequent to valuation date.
Finally, in relation to the discharge of the Tax liability,
the Executor is obliged to advise the Revenue of any signi-
ficant changes in the composition of the Estate by lodging
a Corrective Account on Form B3 and further the Execu-
tor must take care ultimately to ensure that appropriate
Certificates of Discharge from C.A.T. are available. All
such Certificates are conditional and are generally issued
on the basis of the "facts disclosed" which means that the
Revenue can subsequently reopen the case as they would,
of course, do in the event of new facts coming to light.
Nevertheless, particularly in the matter of determining
values etc., the Certificates of Discharge can have
relevance. It should be noted, however, that notwith-
standing previously accepted values, a sale of property
within three years and agricultural land within six years of
death will normally reopen the valuation question and
could consequently give rise to an additional Tax liability.
From the brief reference earlier to Capital Transfer
Tax, it will be appreciated that a liability to this Tax will
arise in relation to Irish Estates where the value of U.K.
assets is in excess of £25,000 and these assets are
bequeathed other than to the surviving spouse.
In relation to the extraction of a Grant of Probate in
England in the first instance, details of the U.K. assets
must be submitted on Inland Revenue Account Form 201
for assessment of C.T.T. This Tax is payable on
assessment of this Form as was the case in relation to
Estate Duty. Hence, the system is different when com-
pared with the Irish system for payment of C.A.T.
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