The Gazette 1982

JANUARY/FEBRUARY 1982

CIA/E T N

accept a statement by the Vendor that the premises in sale are exempt by reason of their being a private residence. It would appear therefore that at pre-contract stage it would seem essential for a purchaser's solicitor to make enquiries as to whether the Vendor or some person standing behind the Vendor in the proposed transaction may be a person "chargeable to tax". (This matter has been highlighted by the letter from John F. Condon, published elsewhere in this issue.) The Law Society is pressing for the introduction of a statutory provision for clearance along the lines of Section 488 Sub-Section 11 of the U.K. Act and, in the meantime, asking that Inspectors of Taxes should, as a matter of practice, on receipt of an application for a Capital Gains Tax Clearance Certificate indicate whether they propose to order the deduction of Income Tax from the consideration. Land Registration Fees Order The Land Registration Fees Order 1981 (Statutory In- strument No. 370 of 1981) came into operation on 1 December 1981. The Order increases the whole range of Land Registration charges and introduces a new max- imum registration charge of £200, applicable to all tran- sactions having a consideration in excess of £36,000. The fee payable in the majority of cases of applica- tions for full registration of title has been increased to £12, which sum is also payable upon the registration of a transfer other than a transfer on sale and upon the registration of transmissions on death. The fee for the issue of a Land Certificate is increased to £5 and for the issue of a certified copy of a Land Registry Map to £4. The Order itself should be consulted for the full cost of Land Registry fees now chargeable but, for conve- nience, the scale of registration charges for transfers and burdens under Item 8 of the Schedule to the Order is set out below. TABLE Registration of transfers or burdens for which fees are payable under Item 8 of the Schedule to the Order.

Dealing in Land - A New Risk for Purchaser's Solicitors Since the coming into operation of the 1981 Finance Act, many transactions which would previously have been regarded as capital transactions may now be regarded as "Dealing in or Developing" land, attracting Income Tax rather than Capital Gains Tax. Unfortuna- tely, because of the wide ranging nature of the legislation, there is a hazard for purchasers of land or buildings which they should guard against. The new provisions apply to disposals on or after the 6th of April 1981, particularly of land or any property deriving its value from land (e.g. shares in a property holding company) which was acquired for the sole or main object of realising a gain and provided that the "gain" is to be regarded as income for tax purposes. The provisions are contained in Sections 28 and 29 of the Finance Act 1981, amending Sections 17, 18, 20, 21 and 22 of the Finance (Miscellaneous Provisions) Act 1968 and contain a power in the amended section 21 (2) enabling the Revenue Commissioners, if it appears to them that any person entitled to any consideration or other amount chargeable to tax under Section 20 is not resident in the State, to order the deduction of tax at the standard rate from such consideration (by applying Section 434 of the Income Tax Act 1967). Such an order could be directed at the purchaser or purchasers' solicitor. Apart from a purchaser's basic difficulty in knowing whether his Vendor is a "person chargeable to tax" (as there are circumstances in which some person other than the apparent Vendor could be the person chargeable to tax), the draughtsman, in adapting Section 488 and 489 of the U.K. Taxes Act 1970, which would appear to be the source of the new provisions, has created a further difficulty by ommitting any provision paralleling Sub- Section 11 of Section 488 of the U.K. Act, which enables a person who is about to dispose of land to obtain a determination from an Inspector of Taxes within 30 days as to whether the gain is to be chargeable to tax as income. It has been suggested that on an application being made for a Clearance Certificate under paragraph 11 (6) of the Fourth Schedule to the Capital Gains Tax Act 1975, the Inspector of Taxes is being put on notice of the transaction and that if he does not then issue a direction that Section 434 is to apply to the payment, he would not subsequently be entitled to issue such a direction. However, until such a situation has come before the Courts and the matter has been determined by them, it cannot automatically be assumed that no subsequent direction could be made. Moreover, there would appear to be nothing to prevent the Inspector from issuing the Capital Gains Tax Clearance Certifi- cate without prejudice to his right to treat the gain as income subsequently and issue a direction that Section 434 of the Income Tax Act should apply. While the legislation provides an exemption for a private residence, it does so by reference to the provisions of Section 25 of the Capital Gains Tax Act. Because of this, it may not be possible for a purchaser to

Value

Fees

V a l u e

Fees

£

£

£

£

1 - 1000

10.00 17.50 25.00 32.50 40.00 45.00 50.00 55.00 60.00 65.00 70.00 75.00 80.00 85.00 90.00 95.00 100.00 105.00 110.00

19001 - 20000 20001 - 21000 21001 - 22000 22001 - 23000 23001 - 24000 24001 - 25000 25001 - 26000 26001 - 27000 27001 - 28000 28001 - 29000 29001 - 30000 30001 - 31000 31001 - 32000 32001 - 33000 33001 - 34000 34001 - 35000 35001 - 36000 36000 -upwards

115.00 120.00 125.00 130.00 135.00 140.00 145.00 150.00 155.00 160.00 165.00 170.00 175.00 180.00 185.00 190.00 195.00 200.00

1001 - 2000 2001 - 3000 3001 - 4000 4001 - 5000 5001 - 6000 6001 - 7000 7001 - 8000 8001 - 9000 9001 - 10000 10001 - 11000 11001 - 12000 12001 - 13000 13001 - 14000 14001 - 15000 15001 - 16000 16001 - 17000 17001 - 18000 18001 - 19000

17