The Gazette 1982

g a z e t t e

a p r i l 1982

Conveyancing Notes

Exchange Control

The Society has been concerned about the extent of the

obligations imposed by Section 5 of the Exchange Control

Act 1954 on Solicitors acting in the purchase of Irish

property from a non-resident.

Section 5 provides as follows:

"Except with the permission of the Minister, a person

shall not:-

(a) make, or commit himself to make, any payment to or

by the Order of or on behalf of any persons resident

outside the scheduled territories,

(b) place, or promise to place, any sum to the credit of any

person so resident".

The onus for complying with the regulations made

under the Exchange Control Act 1954-1978 lies with the

Irish resident and the interpretation placed by the Central

Bank on this Section is that an Irish resident purchasing

property in Ireland from a non-resident vendor is obliged

to obtain exchange control consent even if the purchase

monies are being paid to a non-resident vendor's Irish

solicitors in Irish pounds.

As the residence of a vendor may not be known to a

purchaser, the Central Bank's interpretation could place a

most unfair burden on purchasers and their solicitors.

In an effort to ease this burden, the Society have made

representations to the Central Bank and the Bank have

suggested the following practice which in future will be

acceptable to them.

Where it is apparent that the Vendor is non-resident,

application for Exchange Control approval should be

made by the purchaser or the purchaser's solicitor acting

on his behalf. Where it is not apparent that the Vendor is

non-resident the sale should proceed as if the Vendor were

resident.

Deduction of Tax from Payments of Interest

Until the passing of the Finance Act 1974 income tax

was deducted at the standard rate from all "yearly"

interest paid by one party to another in conveyancing

transactions.

The 1974 Finance Act provided that interest being paid

by individuals in such circumstances after the 6th April

1974 should be paid gross except in the case of interest

paid to a non resident or interest in respect of a period

before that date. No change was made in the position with

regard to interest paid by companies.

The attention of practitioners is drawn to the distinction

between the position of interest paid by individuals,

subject to the above exceptions, on the one hand and

companies on the other hand. Non yearly or short interest

is always payable in full without deduction of tax. The

main fact which determines whether interest is yearly or

short is the degree of permanence of the loan. If it is either

payable in respect of a definite period which is greater than

one year or is capable of being payable for a period in

excess of one year it is "yearly" interest. If the obligation

is for a definite period of less than the year the interest is

short interest. It has been held in the case of

Bebb VBunni

(1854) that interest payable on unpaid purchase money

when the completion of the sale is delayed is yearly

interest because it is capable of being payable for a period

in excess of a year.

The attention of practitioners is drawn to the fact that in

such cases where the interest is payable by a company or

paid to a non-resident that interest at the standard rate of tax

should be deducted. •

Solicitors Accounts Regulations —

Recording of Receipts

It has come to the notice of the Society that some

members may be under a misapprehension as to the appli-

cation of the Solicitors Accounts Regulations to the situa-

tion where monies are received by a solicitor on behalf of a

client and placed directly or by endorsement of a cheque or

draft, on deposit or used for the purchase of a deposit

receipt.

In these cases the receipt of these funds ought to be

entered in the CashBook which the solicitors are required to

keep in compliance with the Solicitors Accounts Regula-

tions, as should the payment of the funds to the bank

involved. The receipt of the funds ought also be entered in

the Record of Bank Lodgements required by the Regula-

tions.

Failure to comply with these provisions of the Accounts

Regulations will be regarded by the Society as a serious

breach of the Regulations involving the likelihood of dis-

ciplinary proceedings.

Law Society Closes Practice

The following statement was released to the media on

18 April, 1982.

"Irregularities in the accounts of a recently deceased

solicitor in Edenderry, Mr. Timothy F. O'Toole, have

been discovered by the Law Society and immediate action

has been taken.

"One of the Law Society's own accountants has moved

in to undertake a comprehensive audit of the accounts to

determine the precise situation. If any deficits of clients'

money are discovered, these will be met by the Society's

Compensation Fund when clients submit their claims.

"The practice has, of course, been closed and its files

and documents are being taken into the custody of the Law

Society.

"Clients of the late Mr. Timothy F. O'Toole should

consult other solicitors to process their cases, and give

them written authority to take over their files and

documents.

"These will be passed to the solicitors by the Law

Society." •