131 / 462
g a z e t t e
a p r i l 1991
(iii) Failure to advise a client prop-
erly in relation to a potential
claim for tax.
(iv) Cases where the solicitor has
"sat down", by not account-
ing for a claim for tax.
It is necessary that each solicitor
review his files, particularly those
files dealing with taxable matters,
to ascertain if any of the above
circumstances arise and, if necess-
ary, to account for the appropriate
tax. If it is not in the knowledge of
the solicitor, he should and must
seek proper advice so that he can
either be satisfied that no claim
to tax arises or, if necessary,
prepare the return and account for
the tax.
The Amnesty also applies to
Estate Duty and, although this tax
has been "dead" since 1 April
1975, it is still possible that there
are some claims still outstanding.
There may not be many of us who
remember Estate Duty but it was
the forerunner to Capital Acquisit-
ions Tax and took the form of a
"mutations tax", i.a tax charged on
the property as it passed and not,
as we understand it today, on the
property as it is taken.
In relation to the administration
of estates, Estate Duty was payable
before the issue of the grant of
probata or administration and it
was, in many cases, for the solicitor
to arrange the borrowing from the
bank so that the duty (tax) could be
paid to enable the Grant of Probate,
or Administration to issue. This, in
many cases, meant that the estate
might have to borrow a substantial
sum as Estate Duty was a more
savage tax than CAT.
The rates of Estate Duty were
progressive and charged on the
whole estate, not on units or bands
of the estate. For example, the
maximum rate of Estate Duty at the
end of its era was 50%, viz. 50%
was charged on the total estate if
it exceeded a certain figure. For
example, if an estate of £500,000
(a very large sum in 1975) was
passing, the Estate Duty would be
£200,000. The Inheritance Tax on
such an estate passing in its en-
tirety to a stranger, today, would be
approximately £167,500.
It may be that there are still
certain cases where Grants of
Probate were not obtained in the
50's or 60's to clear title to land or
house property. It might have been
tempting for the client to "post-
pone" the issue of a Grant of
Probate or Administration until he
or she was in more favourable
circumstances to enble the Estate
Duty to be paid. It may be that the
solicitor advised such postpone-
ment in view of the lack of funds.
If such circumstances do exist, it
will now be necessary for the
solicitor, again, to review his files
and take appropriate action. It
would be better to clear title etc.
under the terms of the Amnesty
than to let the matter go any further
and find that the client has to pay
interest and possibly penalties on
top of the outstanding tax or
duty.
In relation to the Mutual Defence
Fund, any solicitor who finds him-
self in either of the above cir-
cumstances, where there is a claim
to Capital Acquisitions Tax or
Estate Duty outstanding, would be
doing a very great disservice to his
profession if he does not take
avantage of this Amnesty to deal
w i t h the matter. The tax is
something which exists and would,
except in unusual circumstances,
be the liability of the client taxpayer
but the question of interest and
penalties, arises from the solicitor's
delay, inefficiency or inability to
deal with the matter. It is to be
hoped that this opportunity will
be taken to, at least, ease the
burden on an already harassed
profession.
Similarly, failure to advise an
errant client to take advantage of
the Amnesty may expose the
solicitor to future problems.
The effect of the amnesty is that
interest to 30 April and penalties
will be waived on tax which is due
and payable in respect of gifts or
inheritances which have been
" . . . failure to advise an errant
client to take advantage of the
Amnesty may expose the
solicitor to future problems."
received on or before 30 January,
1991. Provided the tax is paid on or
before 30th April, the interest
which would have been payable up
to 30 April will be waived and pro-
ceedings will not be initiated or
continued for the recovery of any
penalty which a donee or suc-
cessor would have incurred through
default in payment.
The amnesty applies to the
following:
(1) Where the taxpayer (or the sol-
ictor) has been in default of
payment.
( 2 ) Where tax is being paid by
instalments.
( 3 ) Where an arrangement has
been made with the Revenue
Commissioners and tax has
been paid on account. Interest
arising on the Qnpaid part will
be waived provided all the tax
is paid.
It seems unfair, in these circum-
stances, that the compliant tax-
payer will be penalised where the
defaulting taxpayer may benefit by
his default. It is to be hoped that
the Revenue Commissioners will
make some concessions in relation
to interest already paijf on
instalments or on payments on
account.
The amnesty will not apply in the
following circumstances:
(1) Where additional tax becomes
payable by reason of an in-
crease in the value of property,
following the Revenue Com-
missioners consideration of
that valuation. However, if the
tax is paid prior to 30 Sept-
ember, it will still apply.
( 2) Where a surcharge payable by
virtue of the undervaluation of
, property under the provisions
of Section 79 FA 1989 unless
paid prior to 30 September.
( 3 ) Where tax is under appeal and
the appeal results in unpaid
tax being confirmed or tax in
excess of the tax already paid
being payable, unless the add-
itional tax is paid by 3o
September.
( 4 ) Where there is a judgment for
the payment of tax and inter-
est (and penalties), if applic-
able.
If a solicitor finds himself in any
of the above situations (apart from
the last one), he should consider
advising his client to pay the
additional tax before the due date.
In this way he will have protected
his client from interest and penal-
ties and, if the matter goes his way,
he will receive the tax back with
interest under the general provis-
ions of the Capital Acquisitions Tax
legislation.
113