The Gazette 1988

MAY 1988

GAZETTE

Sel f -assessment of Capi tal Acqu i s i t i ons Tax

The Capital Taxes Branch of the Revenue Commissioners is currently carrying out a pilot study on the self-assessment of inheritance tax (the study is conf i ned to post Ma r ch 1984 cases). The results to date have been very encouraging. The benefits for solicitors and their clients include much faster settlement of cases and very significant reductions in correspondence between the Revenue and solicitors.

— Earlier administration of estates. — Protection against claims for negligence and assurances in respect of secondary account- ability. An important feature has been the guarantee of a high-speed turn- around service. This includes the handling of all aspects including the issue of certificates of discharge. The Valuation Office has also agreed to process self-assessed cases on a priority basis. While at first sight self- assessment wou ld appear to increase costs for solicitors and taxpayers because the assessment computation would no longer be done by Revenue, the experience gained from the pilot study clearly suggests that the opposite is the case. The existing system of direct assessment by Revenue on the basis of returns gives rise to an average of ten rounds of corres- pondence per case. Thirty per cent (30%) of returns submitted result in nil liabilities. These figures indicate a clear need for stream- lining the system and for greater efficiency. Self-assessment would appear to be the logical answer. In contrast to direct assessments by Revenue, self-assessment holds out the prospect of settlement of limited to those matters which really do affect the security of the State or other vital interests would be more seriously regarded than the present Act. It will however be difficult to argue too strongly for a Freedom of Information Act unless and until the media, preferably by self-regulation, establish a system to ensure that the information obtained under it will be used fairly and provide proper machinery for those who consider they have been unfairly dealt w i th to have their complaints properly examined. •

Until the end of 1987, participation in the study was largely confined to a volunteer group of solicitors' practices selected by the In- corporated Law Society. We believe that the benefits for solicitors of participation are so significant that we would now like to encourage as wide a participation as possible. In this article we describe the details of the scheme as well as the assurances in relation to claims for potential negligence and exposure to secondary accountability which we are prepared to offer to participating solicitors. Background Self-assessment of the direct taxes, including Capital Acquisi- tions Tax, was one of the most s i gn i f i cant r ecommenda t i ons contained in the Fifth Report of the Commission on Taxation. The system works well in the United States and a number of other countries and is very cost effective from both a revenue administration and practitioner viewpoint. The Capital Taxes Branch decided in 1987 to set up a pilot study to explore the viability of a self- assessment system for Capital Acquisitions Tax. The planning and operation of the pilot scheme has involved very close co-operation with the Incorporated Law Society. Benefits for solicitors The results to date have shown the following benefits for solicitors from self-assessment — — Greater efficiency — Significantly less correspon- dence and lower compliance costs.

— An assurance of speedy pro- cessing of self-assessment returns (over 50% of self- assessed cases are dealt with on the day of receipt in the Capital Taxes Branch); priority has been

by Don Tho r nh i l l, Ph.D., M.Sc.(Econ.) Assistant Secretary, Capital Taxes & VAT Branches Office of the Revenue Commissioners and Andrew McLaughlin

B.A., Dip.Eur.Law, Dip. Legal Studies

Assistant Principal, Capital Taxes Branch and Manager, Self-Assessment Unit

and will continue to be given to these cases. — Enhanced understanding of the tax. page 87) Australia and Canada enabling private citizens as well as journalists to have access to a wide range of official information. The introduction of such legislation here would ensure compliance wi th A r t i c le 10 of t he European Convention on Human Rights which states that the right to freedom of expression wh i ch everyone has includes freedom to hold opinions and to receive and impart i n f o rma t i on and ideas without interference by public au t ho r i ty and regardless of frontiers. An Official Secrets Act V I EWPO I NT (Contd. f r om

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