The Gazette 1982

g a z e t t e

a p r i l 1982

Conveyancing Notes

short interest. It has been held in the case of Bebb VBunni (1854) that interest payable on unpaid purchase money when the completion of the sale is delayed is yearly interest because it is capable of being payable for a period in excess of a year. The attention of practitioners is drawn to the fact that in such cases where the interest is payable by a company or paid to a non-resident that interest at the standard rate of tax should be deducted. •

Exchange Control

The Society has been concerned about the extent of the obligations imposed by Section 5 of the Exchange Control Act 1954 on Solicitors acting in the purchase of Irish property from a non-resident. Section 5 provides as follows: "Except with the permission of the Minister, a person shall not:- (a) make, or commit himself to make, any payment to or by the Order of or on behalf of any persons resident outside the scheduled territories, or (b) place, or promise to place, any sum to the credit of any person so resident". The onus for complying with the regulations made under the Exchange Control Act 1954-1978 lies with the Irish resident and the interpretation placed by the Central Bank on this Section is that an Irish resident purchasing property in Ireland from a non-resident vendor is obliged to obtain exchange control consent even if the purchase monies are being paid to a non-resident vendor's Irish solicitors in Irish pounds. As the residence of a vendor may not be known to a purchaser, the Central Bank's interpretation could place a most unfair burden on purchasers and their solicitors. In an effort to ease this burden, the Society have made representations to the Central Bank and the Bank have suggested the following practice which in future will be acceptable to them. Where it is apparent that the Vendor is non-resident, application for Exchange Control approval should be made by the purchaser or the purchaser's solicitor acting on his behalf. Where it is not apparent that the Vendor is non-resident the sale should proceed as if the Vendor were resident. Deduction of Tax from Payments of Interest Until the passing of the Finance Act 1974 income tax was deducted at the standard rate from all "yearly" interest paid by one party to another in conveyancing transactions. The 1974 Finance Act provided that interest being paid by individuals in such circumstances after the 6th April 1974 should be paid gross except in the case of interest paid to a non resident or interest in respect of a period before that date. No change was made in the position with regard to interest paid by companies. The attention of practitioners is drawn to the distinction between the position of interest paid by individuals, subject to the above exceptions, on the one hand and companies on the other hand. Non yearly or short interest is always payable in full without deduction of tax. The main fact which determines whether interest is yearly or short is the degree of permanence of the loan. If it is either payable in respect of a definite period which is greater than one year or is capable of being payable for a period in excess of one year it is "yearly" interest. If the obligation is for a definite period of less than the year the interest is

Solicitors Accounts Regulations — Recording of Receipts

It has come to the notice of the Society that some members may be under a misapprehension as to the appli- cation of the Solicitors Accounts Regulations to the situa- tion where monies are received by a solicitor on behalf of a client and placed directly or by endorsement of a cheque or draft, on deposit or used for the purchase of a deposit receipt. In these cases the receipt of these funds ought to be entered in the CashBook which the solicitors are required to keep in compliance with the Solicitors Accounts Regula- tions, as should the payment of the funds to the bank involved. The receipt of the funds ought also be entered in the Record of Bank Lodgements required by the Regula- tions. Failure to comply with these provisions of the Accounts Regulations will be regarded by the Society as a serious breach of the Regulations involving the likelihood of dis- ciplinary proceedings. The following statement was released to the media on 18 April, 1982. "Irregularities in the accounts of a recently deceased solicitor in Edenderry, Mr. Timothy F. O'Toole, have been discovered by the Law Society and immediate action has been taken. "One of the Law Society's own accountants has moved in to undertake a comprehensive audit of the accounts to determine the precise situation. If any deficits of clients' money are discovered, these will be met by the Society's Compensation Fund when clients submit their claims. "The practice has, of course, been closed and its files and documents are being taken into the custody of the Law Society. "Clients of the late Mr. Timothy F. O'Toole should consult other solicitors to process their cases, and give them written authority to take over their files and documents. "These will be passed to the solicitors by the Law Society." • 61 Law Society Closes Practice