The Gazette 1989

GAZETTE

JULY 1989

cums t ances in wh i ch these charges arise are set out and then each one is covered in detail. The main areas concerned are discre- tionary trusts wi th a periodic charge and the treatment of retained and accumulated income. This part is also concerned wi th discretionary trusts which would be subject to the exit charges, and here are met very many of the concepts which are familiar to the C.A.T. p r ac t i t i oner such as, omission to exercise a right, transfers w i t h in or t h r ough companies etc. Again, however, the philosophy of the tax is different and must always be borne in mind. The chapter also covers the fiscal domicile rules of the UK code whereby a person having resided in the UK for 17 years out of the previous 20 years is regarded as having a fiscal domicile there. Similarly, if a person having been domiciled there leaves the UK, he retains that domicile for three years. There is also a chapter devoted to favoured t r us ts such as accumulation and maintenance trusts, protective trusts, charitable trusts, employee trusts and the form of relief given to them. It is in Part 3 that we find the areas that are most relevant to C.A.T. as it deals with items which are effective in both taxes. Again, it starts wi th an overview leaving the plan of campaign for the rest of the part and it in fact forms over half the publication. The valuation provisions of IHT in Section 52 of the IHT Act 1984 are very similar to the C.A.T. provisions and although there are special reliefs in the UK which do not apply here, many of the cases and obser- vations in this chapter would be relevant to C.A.T. In the end, Chapter 15 is very relevant in the area of C.A.T. as it covers such items as domicile both legal and fiscal and can be very impo r t ant f r om t he returned emigrants' point of view. It also covers the "foreign" element of IHT, what property would be "excluded property". The following t wo chapters are concerned wi th settled property generally and the favoured settle- ments in the UK. It incorporates extensive discretionary trusts cases including the Pearson case and is very relevant to C.A.T. It also

discusses the effect of Fumiss -v- Dawson on UK transactions and although this is not relevant here, marriage consideration. There is again a further chapter devoted to d i spos i t i ons by associated operations and the same type of disposition is included in the Capital Acquisitions Tax Act, 1976. The Irish position is not defined but the IHT provision is very similar to the Estate Duty position and within that concept the chapter considers the concept in the light of the Ramsay and Furniss decisions. Again, familiar Estate Duty cases appear, such as Bambridge -v- IRC, and IRC -v- Herdman in this area. In particular, the Convention between Ireland and the UK is dis- cussed in great detail and is perhaps the first discussion I have seen on the Irish/UK Taxation treaty for Capital Tax although it merely repeats the main provisions of the Convention with certain problems w i t h in t he con t ext of t hose provisions being discussed. This is an extremely handsome publication and would grace any p r ac t i t i one r 's bookshelf w i t h authority. As a reference work, it fulfils all the functions required with easily accessible information and, although tends to be wordy in certain areas, it is essential for all those concerned with IHT and, to a lesser extent, C.A.T. Objectively, most use of this pub l i ca t i on wi ll be made by practitioners who concern them- selves with tax as their main function and for those, I would heartily r ecommend the publication. Brian A. Bohan

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