Certificates Of Discharge From Capital Acquisitions Tax

Section 147(1)(r) of the Finance Act 2010 has deleted section 60 and section 61 of the CAT Act with effect from 3 April 2010 (the date of the passing of the Finance Act 2010). Section 60 of the Capital Acquisitions Tax Consolidation Act 2003 (the CAT Act) had provided that tax due and payable in respect of a taxable gift or a taxable inheritance was and remained a charge on property. Conveyancing practice was that certificates of clearance from the Revenue Commissioners were obtained under the provisions of section 61 of the CAT Act as appropriate.

Therefore, from 3 April 2010, tax for gifts or inheritances is no longer a charge on property. The change to the legislation is retrospective, except where the Revenue Commissioners have instituted proceedings within the meaning of section 147(3) of the Finance Act 2010 to recover gift or inheritance tax prior to 3 April 2010. 

The Revenue Commissioners have written to the chairman of the Probate, Administration and Trusts Committee of the Law Society confirming that the Revenue Commissioners have not instituted any proceedings within the meaning of section 147(3) of the Finance Act 2010. A copy of this letter is published with this practice note (below*).

Solicitors should no longer request production of certificates of clearance from gift or inheritance tax or enforce undertakings for the production of certificates of clearance from gift or inheritance tax.

It should be noted that a certificate of discharge must still be produced to the Property Registration Authority when applying for registration of property held by way of adverse possession and, accordingly, if making such an application or purchasing a property subject to such an application, a certificate of discharge must be obtained.

By way of transition, since April, the Revenue Commissioners had issued letters to solicitors specific to individual cases confirming that a clearance certificate was no longer required. These letters of comfort will no longer be issued by Revenue and therefore should no longer be requested.

* Section 147 of the Finance Act 2010: Capital Acquisitions Tax as a charge on property

Section 147(1)(r) of the Finance Act 2010 deletes section 60 and section 61 of the Capital Acquisitions Tax Consolidation Act 2003 (the CAT Act) with effect from 3 April 2010, being the date of the passing of the Finance Act 2010. Section 60 of the CAT Act had provided that tax due and payable in respect of a taxable gift or a taxable inheritance was and remained a charge on property. Certificates of clearance were obtained from the Revenue Commissioners under the provisions of section 61 of the CAT Act as appropriate.

Under section 147(1)(r) of the Finance Act 2010, from 3 April 2010, tax is no longer a charge on property in respect of which a gift or inheritance tax is due to be paid. This change to the legislation is retrospective in this application, subject to section 147(3) of the Finance Act 2010, which provides that the provisions shall not apply retrospectively where the Revenue Commissioners have instituted proceedings to recover gift or inheritance tax prior to the passing of the act.

The Revenue Commissioners hereby confirm that no proceedings have been instituted within the meaning of section 147(3) of the Finance Act 2010 and that the Revenue Commissioners understand that the Law Society will be circulating a copy of this letter to solicitor members of the Law Society who will be relying on this statement. In the circumstances, Revenue are not issuing any individual letters to solicitors confirming that proceedings have not been instituted within the meaning of section 147(3) of the Finance Act 2010 in relation to specific gifts or inheritances.

As section 61 of the CAT Act has been deleted, there is no legal requirement on the Revenue Commissioners to issue certificates, and the practice of issuing certificates has been discontinued.

In the case of applications to the Property Registration Authority for adverse possession, clearance certificates are still required under section 62 of the CAT Act, and applications for such certificates should be sent to the applicant’s local Revenue office.

Kevin Cashell,
CAT Project Board,
Office of the Revenue Commissioners