CHANGES TO THE CAPITAL ACQUISITIONS TAX REGIME


The Finance Act 2010 which came into effect on 9 April 2010 introduced a number of important changes to the Capital Acquisitions Tax (CAT) regime for solicitors and private individuals:

  • As a result of the changes introduced, CAT is no longer a charge on property that has been subject to a gift or inheritance. This change applies retrospectively. As CAT is no longer a charge on property, Revenue has ceased its practice of issuing CAT clearance certificates.

  • The secondary liability of Legal Personal Representatives in the case of inheritances and Donors in the case of gifts, which arose when a beneficiary failed to discharge his or her CAT liability, has been abolished. It is now the beneficiary’s full responsibility and obligation to discharge their CAT liability before the relevant payment date.

  • However where there is a non-resident beneficiary, the Legal Personal Representative or their solicitor must act as an Agent for that beneficiary in terms of dealing with their CAT liability. The Legal Personal Representative or their solicitor is entitled to retain funds adequate to meet the CAT liability of that beneficiary from any amount that is due to the beneficiary. The liability of the Legal Personal Representative or their solicitor will be restricted to the amount of funds within their control.

  • Payment dates for CAT have also changed. The Act introduced a fixed "file & pay" date of 31 October in line with other taxes such as Income Tax and Capital Gains Tax. If you receive a gift or inheritance between 1 January and 31 August, any CAT liability must be paid by 31 October that year. If you receive a gift or inheritance between 1 September and 31 December, any CAT liability must be paid by 31 October the following year. Revenue is also encouraging on-line filing through its ROS system and in particular if any reliefs are being claimed, Revenue will insist that the CAT return, known as an IT38, be filed electronically.

For more information, please contact a member of our Property & Private Client Team.