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GAZE1TE
DECEMBER 1977
Conveyancing: Investigation of Title
TAXATION REQUISITIONS I
by
Roderick Buckley, Solicitor
Death Duties
Death Duties are defined by Section 13 (3) of the
Finance Act, 1894, and Section 30 of the Finance Act,
1971 as meaning Estate Duty, Succession Duty, Legacy
Duty and certain additional stamp duties and succession
duties specified in the First Schedule to the Finance Act,
1894. Section 47 of the Finance Act, 1975, abolished all
of these duties with effect from the 1st April 1975.
However, these duties can still be relevant where the title
to a property includes a death prior to the 1st April, 1975.
Estate Duty was introduced by the Finance Act 1894
and was a tax on the principal value of all property
passing or deemed to pass on the death of any person
dying after the commencement of Part 1 of that Act.
Estate Duty did not take account of the manner in which
the deceased's property was distributed or of the
relationship of the legatee to the deceased. It was simply a
tax on the total value of the property changing hands or
deemed to change hands on the death of the deceased.
Legacy Duty and Succession Duty on the other hand
were somewhat similar to the Inheritance Tax introduced
by the Capital Acquisitions Tax Act 1976 in that the rate
of duty depended on the relationship between the
deceased and the legatee or between the predecessor and
the successor. The rate of duty was lower between close
relatives, and Section 30 of the Finance Act 1965
provided that with effect from 30th July 1965 Legacy
and Succession Duty would cease to be chargeable as
between husband and wife or lineal ancestor and
descendant.
Section 9(1) of the Finance Act 1894 gives the
Revenue a "first charge" on property for the Estate Duty
payable in respect of that property.
Similarly, Section 42 of the Succession Duty Act 1853
provides that Succession Duty "shall be a first charge on
the interest of the successor, and of all persons claiming in
his right, in all the real property in respect whereof such
duty shall be assessed" and that the said duty shall be a
debt due to the State from the successor having, in the
case of real property comprised in any succession,
"priority over all charges and interests created by him".
In effect the purchaser of any property subject to
Succession Duty or Estate Duty may find himself liable to
pay the duty, and it is essential therefore that the solicitor
acting for any such purchaser should satisfy himself that
the property is not in fact charged with Succession Duty
or Estate Duty.
Section 72 of the Registration of Title Act 1964
provides that all registered land shall be subject to any
claims for Estate Duty and Succession Duty affecting the
land, whether those claims are or are not registered.
There are two limitations on the Revenue's charge for
Estate Duty and Succession Duty:
Firstly, Section 52 of the Succession Duty Act 1853
provides that "no bona fide purchaser of property for
valuable consideration under a title not appearing to
confer a succession shall be subject to any duty with
which such property may be chargeable under the
provisions of this Act, by reason of any extrinsic
circumstances of which he shall not have had notice at the
time of such purchase". Similarly, the proviso to Section
9(1) of the Finance Act 1894 states that property shall
not be charged with Estate Duty "as against a bona fide
purchaser thereof for valuable consideration without
notice". This limitation is probably not of great practical
importance, as a purchaser would almost inevitably have
notice of the potential claim for Estate Duty or Succession
Duty.
Secondly, Section 12 of the Customs and Inland
Revenue Act 1889 provides that real property, or any
estate or interest therein, shall not, as against a purchaser
for valuable consideration, or a mortgagee, remain
charged with or liable to payment of any sum for
Succession Duty after the expiration of 12 years from the
happening of the event which gave rise to the claim for
such duty. This Section is applied to Estate Duty by
Section 8(2) of the Finance Act 1894. It is unnecessary
therefore to enquire into the position regarding payment
of Estate Duty or Succession Duty where the death on the
title, or other event giving rise to a charge to tax, occured
more than 12 years before the purchase in which you are
acting.
The procedure for obtaining a certificate of discharge
from Death Duties, in any case where there has been a
death on the title prior to the 1st April 1975 and within
the 12 years preceding the purchase in which you are
acting, is set out in Section 11 of the Finance Act 1894
and Sections 51 to 52 of the Succession Duty Act 1853.
Sub-Section (1) of Section 11 authorises the Revenue
Commissioners "on being satisfied that the full Estate
Duty has been or will be paid in respect of an estate or
any part thereof' to give a certificate to that effect "which
shall discharge from any further claim for Estate Duty the
property shown by the certificate to form the estate or
part thereof as the case may be". Sub-Sections (3) and (4)
provide that such a certificate shall exonerate "a bona fide
purchaser for valuable consideration without notice",
notwithstanding any fraud or failure to disclose material
facts on the part of the person applying for the certificate.
Section 51 of the Succession Duty Act provides that
the Revenue Commissioners will issue a Certificate of
Payment of Succession Duty "to any person interested in
any property affected by such duty". Section 52 of the
Act then provides as follows:
"Every receipt and certificate, purporting to be in
discharge of the whole duty payable for the time
being in respect of any succession or any part
thereof, shall exonerate a bona fide purchaser for
valuable consideration, and without notice, from
such duty, notwithstanding any supression or mis-
statement in the account upon the footing whereof
the same may have been assessed, or any
insufficiency of such assessment".
A purchaser in good faith for valuable consideration
can therefore place absolute reliance on an unconditional
Certificate of Discharge from Succession Duty or Estate
Duty and does not have to enquire into the facts behind
the certificate to see whether the certificate has been
properly obtained.
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