The Gazette 1977

DECEMBER 1977

GAZE1TE

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. 195