Practitioners should note the provisions of section 149 of the Finance (Local Property Tax) Act 2012, which provide that interest shall be payable on unpaid LPT. The rate of interest prescribed in the act amounts to 0.0219% per day, or 8% per annum.
Although there is an interest column in the Property History Summary (PHS), as interest is calculated on a daily basis, the interest (if any) due on unpaid LPT is seldom if ever shown on the PHS. Solicitors should not rely on the PHS in this regard.
When a property is being sold and there are arrears of LPT, the vendor’s solicitor should make an application to Revenue (at email@example.com) to calculate the amount of interest due, which should be paid before closing.
If, despite the provisions of the act, the LPT is to be paid from the proceeds of sale and an undertaking is being given in this regard, care should be taken by both the solicitor for the vendor and the solicitor for the purchaser to ensure that any such undertaking includes arrears of LPT and interest due.
Problems have arisen in cases where, on the closing of a sale, the LPT due per the PHS is paid but not the interest, as a subsequent PHS will show that the LPT has been paid but will then show the amount(s) outstanding and due for interest.
In all cases where the PHS shows that LPT has been ‘deferred’, interest is payable at 4% per annum. In such cases, an application should also be made to Revenue well in advance of closing a sale to calculate the interest due.
Revenue has indicated to the committee that a new format of PHS has been designed that will, in appropriate cases, highlight by use of a footnote that interest is accruing on outstanding liabilities. The new form of PHS should be in use within the next couple of months.