The Gazette 1988

JANUARY/FEBRUARY 1988

GAZETTE

Payment The once-off inheritance tax of 3% imposed by s. 106(1) FA 1984 normally becomes payable on the valuation date, as defined in s. 107(b) FA 1984: s.41(1) CATA 1976, as modified for the purpose of the tax by s. 107(f). The annual inheritance tax of 1 % imposed by s. 103(1) FA 1986 likewise becomes payable on the valuation date, defined in this con- text as 5th April in each year in which the tax becomes payable: s.41 (1) CATA 1976, as modified for the purposes of the tax by s. 104(f) FA 1986 and s.102 FA 1986. As mentioned above, a pay- ment on account of the tax payable is required to be made by the trustees when filing the requisite annual return: s.104(e)(ii) and (iii) FA 1986. Charge for inheritance tax The provisions of s. 107 FA 1984 and s. 104 FA 1986 modify or sup- plant altogether the normal provi- sions in s.35(1), s.36(2) (3) (4) and (5) and s.45 CATA 1976 regarding accountability for, returns relating to, and payment of inheritance tax. They do not affect the provisions of s.47 and s.48 CATA 1976, which provide that inheritance tax is to be a charge on property com- prised in an inheritance and authorise the Revenue Commis- sioners to issue a certificate of discharge in relation to such pro- perty. The provisions accordingly apply to trust property subject to the once-off inheritance tax of 3% imposed by s. 106( 1) FA 1984 and to the annual inheritance tax of 1 % imposed by s. 104(1) FA 1986 in the same way as they apply to in- heritance tax payable otherwise than under these sections. Exemptions S.108 FA 1984 and s.105 FA 1986 exempt a number of trusts which would otherwise be "discre- tionary t r us t s" as defined in s.105 FA 1984 and accordingly subject to the once-off inheritance tax of 3% imposed by s. 106(1) FA 1984 and the annual inheritance tax of 1 % imposed by s. 103( 1) FA 1986. The trusts so exempted include charitable trusts, trusts for the upkeep of houses and gardens of national scientific historic or artistic interest and last, but by no means least, trusts for the benefit of in- dividuals incapable of managing

does not take place until 31st March 1987: s.21(4)(c) CATA 1976. This date, and not 1st May 1985, is the appropriate valuation date: s.107(b)(ii) FA 1984. The appropriate valuation date in relation to the inheritance tax of 1 % levied annually on each 5th April by reason of s. 103(1) FA 1986 is normally that 5th April: s;104(b)(i) FA 1986."» There is provision, based on s. 12 Wealth Tax Act 1975, for the valuation of property on a particular 5th April to be agreed with the Revenue, and for the value so agreed to hold good for the 5th April in the next t wo years follow- ing: s.107(1) 1986. Accountability In the normal course of events, the party primarily accountable for inheritance tax is the " successo r" himself: s.35(1)(a) CATA 1976. In the context of the once-off in- heritance tax of 3% imposed by s. 106(1) FA 1984 and the annual inheritance tax of 1 % imposed by s. 103(1) FA 1986 a kind of fiscal Frankenstein monster is deemed to be the successor, made up out of the trust itself together wi th its trustees."" The Irish Parliamentary Draftsman, rightly suspecting that his statutory creation would be as allergic to the payment of in- he r i t ance t ax as its literary predecessor, wisely provided in s. 107(c) FA 1984 and s. 104(c) FA 1986 that the trustees at the date of the inheritance"" were to be primarily accountable for any in- heritance tax payable under the abovementioned provisions. As a precautionary measure, he went on to provide that appointees of the trust property were also to be accountable, if the appointment took place subsequently to the date upon which the tax became payable: s. 107(c) FA 1984. Returns The trustees are required by s. 107(e) FA 1984 and s. 104(e) FA 1986 to file a return of the trust property within three months of the appropriate valuation date. In the case of the annual inheritance tax of 1% imposed by s. 103(1) FA 1984 they are also required to es t ima te t he i nhe r i t ance t ax payable and to pay the tax so estimated over to the Accountant- General when filing the return: s.104(e)(ii) and (iii) FA 1986.

of his three children B, C and D. B attains the age of 25 years in 1974, C in 1976 and D in 1979. In 1987 A dies. The date of his death is " t he date of the inheritance" and the appropriate valuation date: s.106(1) (b) and s.107(b)(i) FA 1984. Example (9) In 1970 H effects a policy on the joint lives of himself and his wife W which he settles on discretionary terms for the benefit of his three children X, Y and Z, all of whom are then over the age of 25 years. H dies in 1980 and W in 1987. The policy does not "ma t u r e" as men- tioned in s.32(1) CATA 1976 until the death in 1987 of the survivor of H and W, whereupon the pro- ceeds of the policy become "pro- pe r t y" for the purposes of the one-off inheritance tax of 3% payable by reason of s. 106(1) FA 1984. The " d a t e " of the in- heritance" in relation to the pro- ceeds is the date of W's (not H's) death, and this is the appropriate valuation date: s.106(1)(a) and s.107(b)(i) FA 1984. Example (10) T dies in 1980 leaving his prop- erty by will upon discretionary trusts for the benefit of his three children, A, B and C, of whom C is the only one then under the age of 25 years. The administration of T's estate is concluded on 31st March 1982 and on 1st May 1985 C attains the age of 25 years. The ad- ministration of T's estate is con- cluded on 31 st March 1982 and on 1 st May 1985 C attains the age of 25 years. The date upon which he does so is " t he date of the in- heritance" and the appropriate valuation date: s. 106(1 )(c) and s.107(b)(i) FA 1986. Example (11) Facts as in Example (10) above, except that the administration of T's estate is not concluded until 31st March 1987, by which time C has attained the age of 25 years, upon which date the trust is deem- ed under s. 106( 1) to have becom- ed bene f i c i a l ly en t i t l ed in possession to the trust property and to have to have taken an in- heritance. However, the "delivery payment or other satisfaction or discharge'.'to the successor (i.e. to the trust: s. 106(1) FA 1984) "of the subject matter of the inheritance"

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