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g a z e t t e
a p r i l 1991
Solicitor's Duties under the CAT
Amnesty
In his Budget Speech on 30
January 1991, the Minister for Fin-
ance announced an Amnesty in
respect of interest and penalties for
outstanding Capital Acquisitions
Tax and Estate Duty. In effect, this
is almost identical to the Income
Tax Amnesty of 1988 which was
such a resounding success in
gathering tax and in finalising many
problems where the taxpayer,
through lack of accounts or what-
ever, had been in default or claims
for tax had lain dormant for many
years.
The Amnesty gives a final oppor-
tunity to taxpayers to settle out-
standing Capital Acquisitions Tax
and Estate Duty liabilities by 30
September next, without the pay-
ment of a great bulk of the interest
or penalties. There are, however,
certain conditions attaching to the
granting of this amnesty:-
1. A self-assessment return must
be completed;
2. The return must be sent to the
Revenue Commissioners with a
cheque for payment of the out-
standing tax;
3. Any other Capital Acquisitions
Tax outstanding at the time of
payment must also be paid;
4. A letter accompanying the re-
turn and payment must apply for
the waiver of interest and
penalties.
As stated earlier, this affords a
final opportunity to taxpayers to
put their affairs in order before the
Revenue introduce new stringent
enforcement measures with effect
from 1 October. These new string-
ent enforcement measures will be
taken from the Income Tax Code
and include:
(a) Powers for the Revenue Com-
missioners to attach certain
financial accounts of the
taxpayer (Sec. 73 FA 1988);
(b) The use of Revenue Sheriffs to
attend the taxpayer at his
home or business and to levy
the tax and penalties, if not in
cash, by distraint;
(c) Adoption of the audit proced-
ures in relation to Capital Ac-
quisitions Tax claims and to
examine in detail, including a
visitation from the appropriate
officer of the Revenue Com-
missioners, all returns made
and to inspect property, not
only real property, to confirm
the accuracy of those returns.
It is the duty of every solicitor to
bring this tax amnesty to the
attention of his clients to make
them aware that if they have at any
time received a gift or an inherit-
By
Brian Bohan
Solicitor
ance
or made a gift
and full dis-
closure has not been made to the
Revenue Commissioners, either
through ignorance or the client
being afraid that a tax liability will
attach to the benefit, it is necessary
to formalise this situation for
the client and, if tax is due, to
advise full compliance within the
amnesty.
It may not always be obvious to
clients whether a gift has taken
place and for that reason it might
"It is the duty of every solicitor
to bring this Amnesty to the
ettention of his clients . . . "
be necessary, depending on the cir-
cumstances of each client, to en-
umerate certain instances where
such events might have taken
place.
CAT legislation targets gifts taken
as a source of gift tax. It may be
obvious to a client, where an inher-
itance is taken, that a liability to tax
will or may exist, but gifts are
separate from these and they may
not always be obvious. Gifts can
take many forms. For example, a
parent might sell land to a child at
an undervalue and of course the
difference in value is a gift.
It may be easy for the solicitor to
enumerate to his clients the cir-
cumstances which might apply to
that particular client and, by way of
reminder, some of the areas might
be:
(1) Sale of land at an undervalue.
(2) Sale of shares in a family
company at an undervalue.
(3) Interest free loans or loans at
less than a commercial rate of
interest.
(4) Interest free loans to family
companies.
(5) Passing of family heirlooms to
the next generation before
death, e.g. jewellery, antique
furniture etc.
(6) Purchase of a car for a child or
grandchild.
(7) Payment of the deposit on the
purchase of a house for a child
or grandchild.
(8) Capital injection into family
companies.
(9) The issue of shares to family
members on the set up of a
family company.
(10) The placing of assets into joint
names.
The above list is not exhaustive
and it is up to every solicitor to
familiarise himself with the circum-
stances which could give rise to a
claim.
Another area of concern to the
solicitor must be professional in-
demnity, whether through the
Solicitor's Mutual Defence Fund or
through independent insurance.
Many claims against the Defence
Fund (and probably in respect of
independent insurance companies)
are caused by the solicitor's
negligence in dealing with tax
matters, particularly those tax
matters which are endemic to his
profession, namely, gift tax and
inheritance tax. There are a number
of ways in which a solicitor may
have failed his client in dealing with
tax:
(i) Failure to identify a claim for
tax.
(ii) Failure to deal with a claim for
tax.
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