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GAZETTE
DECEMBER 1989
additional return if it appeared
to the Revenue Commissioners
that a return already made by
that accountable person was
defective;
- any accountable person to
deliver to the Revenue Com-
missioners, w i t h o ut being
required by them, an additional
return if he became aware that
the return or additional return
already delivered by him was
defective.
These provisions are retained in
the revised legislation but tax and
interest must be assessed on the
return, and payment must accom-
pany delivery of the return.
Where tax may be paid by instal-
ments, provision it made for the self
assessment and payment of the
instalments due at the date of
assessment and for the payment of
any further instalments when they
become due. Provision is also made
for the discharge of inheritance tax
by transfer of Government secur-
ities, the requirements being that
any payment of tax and interest (in
excess of the nominal value of the
Government security or securities)
should accompany the return and
that any transfer of the security or
securities to the Minister for
Finance should be completed
expeditiously.
The new sec t i on 36 also
authorises the Revenue Com-
missioners, for audit purposes, to
call for a statement, wi th support-
ing evidence if necessary, relating
to property comprised in a gift or
inheritance. They may also inspect
any property comprised in a gift or
inheritance and any books, records,
accounts or other documents
which may be relevant to the
assessment of tax in respect of a
gift or inheritance.
Section 76.
Under the original
capital acquisitions tax legislation,
interest was not charged on tax
where a return was delivered by an
accountable person within three
months of the valuation date, and
a further interest-free period of one
month was allowed for payment
when the tax was assessed by the
Revenue Commissioners. This
maximum interest-free concession
of four months is now being applied
by this section to self assessments
of tax made by or on behalf of the
accountable person.
The section also enables the
Revenue Commissioners to treat
conditional or incorrect payments of
tax as payments on account of tax.
Section 77
updated the penalties
contained in section 63 of the
Capital Acquisitions Tax Act, 1976.
Failure to comply wi th the self
assessment requirements could
result in a penalty of £2,000.
Section 78
contains various
consequential provisions arising
from the fact that the 3% discretion-
ary trust tax imposed by the Fin-
ance Act, 1984, is now also subject
to mandatory self assessment.
Section 79
imposes a surcharge
in respect of any serious under-
valuation of an asset which is
comprised in a gift or inheritance
and which is included in a return
delivered by or on behalf of an
accountable person. Over the
years, many solicitors have com-
mented on the difficulty encounter-
ed from time to time in persuading
clients to submit realistic valua-
tions, particularly for real property,
despite the fact that in many in-
stances these undervaluations led
to delays and additional compliance
costs for taxpayers and their
advisers. The purpose in legislating
for this surcharge was hopefully to
eliminate the practice of submitting
serious undervaluations. The sur-
charge consists of an amount
(30%, 20% or 10%) of the tax
ultimately attributable to the
undervalued asset, and where im-
posed will be legally deemed to
constitute part of the tax due. The
operation of the surcharge is illu-
strated in the accompanying box.
ADMI N I STRAT I ON
The new process
The new procedures are as follows:
(1) Completion of a tax return
(form I.T.38); assessment of
tax and interest (if any) by the
taxpayer or by his or her agent;
( 2 ) Lodgement in the Capital
Taxes Branch of the completed
return with a remittance for
the tax and interest due;
( 3 ) Checking of each return for
arithmetic accuracy by staff in
the Capital Taxes Branch.
Minor errors will be corrected
by Revenue staff. If significant
errors are discovered the re-
turn will be sent back for re-
assessment.
it is important to
note that the delays arising
from the submission of incom-
plete or incorrect returns could
result in additional
interest
charges. The
administrative
practice which operated until
recently, whereby interest was
not charged on outstanding
tax during periods when the
returns were lodged with the
Capita! Taxes Branch, will no
longer apply, interest
on
overdue tax will be charged
from the valuation date.
( 4 ) All returns are screened to
determine whether a detailed
examination (an audit) is
required in respect of all as-
pects of the gift or inheritance.
( 5 ) Each return form includes an
application for a certificate of
discharge from capital acquisi-
tions tax (the red form C.A.11).
Operation of the surcharge for serious undervaluations
provided for in section 79, Finance Act, 1989
An accountable person delivers a return in respect of a house
devised to him absolutely by his deceased brother. The market value
of the house is ascertained by the Revenue Commissioners at
£50,000 under section 15 of the Capital Acquisitions Tax Act, 1976.
The tax ultimately payable on the valuation of £50,000 is £8,000
If the value of the house shown in the return delivered by the
brother of the deceased person
- is £35,000, that £35,000 is 70% of £50,000, and no surcharge
is involved;
- is £25,000, that £25,000 is 50% of £50,000, and the surcharge
is 10% of £8,000 = £800;
- is £20,000, that £20,000 is 40% of £50,000, and the surcharge
is 20% of £8,000 = £1,600;
- is £15,000, that £15,000 is 30% of £50,000, and the surcharge
is 30% of £8,000 = £2,400.
In addition to the usual rights of appeal in respect of valuations,
the taxpayer has an additional right of appeal to the Appeal
Commissioners against the imposition of the surcharge on the basis
that he had reasonable grounds for his estimate of the market value
of the asset giving rise to the surcharge.
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