The Revenue have the usual methods and means of enforcement available for collection of inheritance tax.
There is a surcharge on a person accountable for CAT who undervalues an asset Where the value is less than 60% of the value later ascertained. The surcharge is additional to CAT and interest due. The surcharge is 10% where the returned amount is 50 to 67% of the ascertained amount. Where it is 40 to 50% of the ascertained amount it is 30% surcharge and where it is less than 40% of the ascertained amount, a 30% surcharge applies.
The matter may be appealed to the Appeals Commissioner where there is a reasonable basis for the estimate of the value.
A surcharge applies to a person who fails to make a return by the due date. A 5% surcharge arises, subject to a maximum of €12,695 for delays of less than two months. A 10% surcharge subject to a maximum of €63,485 applies to a delay of more than two months.
A surcharge may arise where a return is made, where it is fraudulently or negligently incorrect or an error arises which he fraudulently or negligently fails to correct or where he fails to deliver a statement or evidence specified before a date and/or where the Revenue is satisfied that the information and require a further evidence which is not delivered.
Interest on overpaid tax applies within four years of the due date. A specified rate of interest, lower than the rate of interest on arrears is specified.
In common with other taxes, the CAT legislation provides for penalties for failures of compliance. A penalty of €30,00 is applicable where any failure to comply with any of the following obligations:
- submission of a return by the person primarily accountable,
- submission of a statement of particulars by accountable person,
- submission of additional return required;
- failure to submit a correction where he becomes aware of a material error in a previous return, non-submission of returns of taxable gifts when requested,
- non-submissions of returns by a disponer where requested,
- submission of return by a disponer when he transfers to a discretionary trust.
A further penalty of €30 per day may be imposed by a court.
Where a person deliberately or carelessly fails to comply with a requirement to deliver an additional return, he may be liable for €3000 and the difference between the amount of tax payable and the amount that would have been payable if a correct return is made.
There is a penalty for failure for obstructing officers of the Revenue in inspecting assets for the purpose of making evaluation. Penalties are €6334 in the case of deliberate or careless failures to deliver correct returns, make incorrect declaration statements. A penalty of €3000 may be applied to persons who assist or induce the delivery of any return or a false return statement declaration which he knows to be incorrect.
Apart from the civil sanctions, the right to take criminal proceedings is also claimed to be preserved.
Many of the general provisions in respect of offences under the legislation apply to CAT. See the separate sections in relation to the various criminal consequences of failures to pay tax when due.
Advisors and agents who become aware of material non-compliance and tax evasion are obliged to report the same.
The major offences include
- knowingly or recklessly concerned in evasion of tax,
- making of false returns,
- facilitating another to do the same,
- claiming an exemption to which one knows he is not entitled.
The major offences are themselves subject on summary conviction of fine up to €5,000 or six months imprisonment or on conviction on indictment, a fine up to €127,000 or up to five years imprisonment.
The obligation on agents, auditors, advisors, etc. who become aware of material noncompliance must report the same to the entity concerned and request the company to disclose the matter to the Revenue. If after six months, the advisor is not satisfied that the matter has been reported or rectified, he must cease to act as auditor for a period of three years or until the advisor is satisfied it has been rectified.
There is a fine of €1,265 on summary conviction and €6,354 on indictment and up to two years imprisonment. The advisor is not guilty if he can prove he only became aware of the offence have been committed after he had been engaged prior to legal proceeding.
Where a person accountable for tax fails to make a return, the Revenue may make an application to the Circuit Court for an order requiring the return to be made.
Where a person obtains title by adverse possession/squatting, a CAT clearance certificate must be obtained in respect of any deemed gift or inheritance that may arise. This applies only where the value exceeds €19,050 and the area does not exceed 5 hectares and does not form part of a larger holding.
Where monies of more than €50,000 are held in a deposit account in the State in the joint names of two or more parties, the bank requires a revenue clearance certificate to pay the monies to the surviving owner if the amount is more than €50,000. The Revenue certificate certifies that there are no outstanding tax or consents to the funds, the payment otherwise.
Where an administration action is taken, the court is obliged to provide payment of CAT and interest out of assets under the possession or control of the court. Notices served by the Revenue may be served by post or on the person’s usual or last known address.
The general provisions referable to Revenue audits are applicable to CAT. The CAT legislation gives the Revenue extensive powers to make enquiries and obtain evidence to assist in the assessment of tax. They may require an accountable person to deliver a statement of particulars relating to property and such other evidence as they require relating to the assessment of the tax. Revenue may authorise inspection of assets, the subject of the gift or inheritance on any books, records etc. relating to them.
The Revenue has the usual powers of investigation. It may request production of records and documents. Generally, the investigations must be made within four years of the return unless the return is negligent or fraudulent.
The Revenue have general powers under Taxes Consolidation Act to require the production of accounts and books. An authorised officer may be appointed. A professional advisor may not be required to disclose information of a confidential nature or professional advice or legal professional privilege.
The Revenue has powers to seek information from third parties such as financial institutions relating to liability. They may serve a notice. There must be reasonable grounds for believing that there is relevant information, which is relevant to the liability of the taxpayer.
An authorised person may apply to the High Court for an order seeking access to records held by third parties that are relevant to tax liabilities.
They may draw the information held by life assurance companies on a sample basis in respect of policyholder, classes of policyholder. The Revenue must be satisfied there are circumstances suggesting that classes of policies used as investment vehicles in respect of funds on which tax has not been paid. The information may only be used to base an application to the High Court for an order for greater and more specific information.
Financial institutions have obligations when issued with notices to make available their books and records and furnish information relevant to a person’s tax liability. The account holder etc. is to be given a copy of the notice. A written consent of the Revenue Commissioners is required.
An authorised officer may apply to the Appeals Commissioner for consent to issue notices to the financial institution requiring it to make available books and records relevant to a person’s tax liability or a class of person’s liability. Consent of the Revenue Commissioner must be available. There must be reasonable grounds for believing that the person or class of persons have failed to comply with the Act and this failure has caused the inability of the Revenue to asses or collect the tax.
The authorised officer may also apply to a High Court for an order seeking books and records from a financial institution relevant to a person or class of person’s liability. An application may be made to appraise the assets.
An application may be made to the District Court or Circuit Court for an order authorising officers to inspect and take copies of bank records for Revenue investigations. There must be reasonable grounds for suspecting an offence which would result in serious prejudice to the proper assessment and collection of tax is or has been committed and there is material in the financial institution’s possession, which is likely to be of substantial value in the investigation of that offence.
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