The Gazette 1991

a p r i l 1991

g a z e t t e

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-

(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

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.

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