The Gazette 1985

GAZETTE

APRIL 1985

Company in the sales of their houses but who did not negotiate the sales and merely carried out the normal legal business of a solicitor in connection with such sales would not seem to represent his foreign principal even though he might have authority to receive the purchase moneys. The correct test of "regular agency" would seem to be whether the agent actually represents the foreigner and concludes agreements on his behalf or transacts his business for him. A solicitor who merely acts in a legal capacity and to ensure his client's compliance with the legal formalities is not carrying on his client's "regular agency". For a solicitor to be liable to be charged under section 200 or 201 he must be something more than a solicitor — he must be the land agent or business agent or something akin thereto of his client. For instance, if a foreign building Company specifically retained a solicitor with a view to his acting as their agent in connection with negotiating all sales of houses which they built on an extensive tract of land, in addition to the legal conveyancing of each house, his position as solicitor would seem to be subordinate to that of general agent of the client. Likewise, if the client authorises a solicitor to accept service of notices, to negotiate new leases, collect rents and to do other acts on his behalf the solicitor could have extreme difficulty in establishing that he was not an "authorised person". However, again, in such circum- stances, the solicitor would be more of a land agent than a solicitor. The question must be one of degree — but in a case in which a solicitor acts with frequency for a client he will not be an authorised person carrying on his client's regular agency if his activities are confined to carrying out specific transactions for his client and he is neither a business agent or some other form of general non- solicitor, agent of his client. Capital Gains Tax Section 200 of the Income Tax Act, 1967, is expressly applied for the purposes of Capital Gains Tax by section 51 of the Capital Gains Tax Act, 1975 and paragraph 2(2) of the Fourth Schedule thereto. The provisions of section 205 are not expressly applied. However, paragraph 2( 1) of the Fourth Schedule to the Capital Gains Tax Act provides that the provisions of the Income Tax Acts relating to the care, management, assessment, collection and recovery of income tax are to apply also to Capital Gains Tax. Paragraph 2(2) is stated to be without prejudice to the generality of sub-paragraph (1). Accordingly, although section 205 is not, unlike section 200 (and 201), specifically mentioned under the Capital Gains Tax Act, it clearly does apply for Capital Gains Tax as for Income Tax. A solicitor should then be liable for Capital Gains Tax due by a non-resident client only if he is an "authorised person carrying on the regular agency" of the client. There are some particular potential problem situations for solicitors relating to Capital Gains on disposals of assets where they do not have any funds coming through their hands, e.g., in the case of voluntary transfers or the severance of joint tenancies or company liquidations or where the consideration is passed between the parties outside the country. In such cases it may be even clearer that the solicitor is not an "authorised person carrying on the regular agency" of the client. However, the general

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