Tax Amnesty 2009 – what you didn’t know we had one?
Posted by Maman Poulet on 20 Mar 2009 at 03:14 am | Tagged as: Irish Politics, Michael Lynn, dodgy solicitors
Did you know there was a tax amnesty last month? Country on it’s knees, social welfare being difficult to claim, cuts in public services, banks being bailed out… but if you owned land and had not paid stamp duty on it don’t worry – a deal was done and there’s been a unseemly rush to get it all sorted and landowners who ‘forgot’ to pay have been let off.
Simon Carswell reports today in the Irish Times about this ’stamp duty incentive scheme’ and the amounts collected by Revenue in the past month.
THE REVENUE Commissioners has collected an additional €7.5 million since the end of last month in stamp duty and interest for the late processing of transactions under a special penalty amnesty.
This brings the total collected by the Revenue to €37.5 million under its “stamp duty incentive scheme� to encourage solicitors to present old deeds for stamping before the introduction of electronic stamping later this year.
Solicitors who availed of the Revenue’s “incentive scheme� avoided penalties of up to 30 per cent of the duty payable.
The Revenue has collected €30.3 million in stamp duty and interest of €7.19 million under the amnesty for solicitors and clients.
Most of the instruments stamped late were deeds for property where, for example, the client may not initially have been able to afford the stamp duty.
Solicitors are normally charged a €25 penalty, interest and a surcharge penalty of up to 30 per cent of the stamp duty owing after 12 months if a deed is not stamped within 44 days of the transaction.
An accountancy source told me last month about Revenue offices staying open till midnight to allow solicitors to pay stamp duty on lands/properties purchased by their clients under a scheme – ok lets call it an amnesty and stop talking in Revenue speak. I’m not a tax accountant or in the property purchasing or legal business so bear with me and join in the comments to help me get around this gift to property developers/magnates.
Electronic conveyancing is coming in later this year – the Land and Conveyancing Bill 2006 having become an act. Things had to be gotten in order for this to happen – someone/everyone bar me knew there was a lot of land deals out there that had not had stamp duty paid on them.
Enter the Finance Act (No.2) 2008 – which brought in a 56 day waiver of penalties from date of enactment for all executed but unstamped documents provided the documents are presented for stamping along with the appropriate stamp duty and interest. So things were very busy in the Revenue Stamp Duty Section in the middle of February when the 56 days were almost up.
Still with me?? Good! I’m going to explain why you should be interested now!
Some of the land we are talking about here was purchased maybe 10 years ago – so how could the sale have been legally completed if the stamp duty had never been paid. We’re talking about a sizeable amount of money – which without an amnesty should have incurred penalties and interest. Also mortgages would have been arranged for many properties/developments and if there is one thing I’ve learnt from Michael Lynn it’s that solicitors have to give undertakings to banks about properties that the purchase is legal and complete.
So I’m wondering
a) How come the Revenue Commissioners allowed this to go on for so long – ie lands being purchased and no stamp duty being paid?
b) Can the Law Society explain how their members conducted sales of property which were not complete and how they could give undertakings to banks on the purchase of land where the stamp duty had not been paid?
c) Can the government explain why property developers and the rest get an amnesty on fines and interest on not paying their stamp duty aka obeying the law?
What else should I be wondering? I know people won’t be surprised that the builders have their paths eased to the taxman under this government – remember that on April 7th when we all being screwed again. The Government can go on about e-conveyancing and getting thing in order all they want – this smells of rotten pork barrel politics Irish style.
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Does the waiver really go as far as 10 years back? I take it, that it extends to all unpaid stamp duty.
It’s got to the point where it’s hard to express just how angry I feel without mashing the keyboard and flinging my computer against the wall. …So that sentence will have to do.
Yes I’ve heard of deals completed where stamp duty was not paid which have been ’sorted’ in last month. Section 81 of the act (Extract below) deals with this waiver. Ernst and Young refer to it as ‘one off opportunity to regularise stamping of outstanding documents.’ Says it all really…
Great analysis. Completely agree with your questions and your ire.
Hope someone in the Revenue and the Law Society is asked those questions.
Why don’t you?
(Note that I do no conveyancing work whatsoever). I think the undertaking is not worded quite as you say. IIRC, it promises that the legalities will be completed. Until the stamp duty is paid, they are NOT completed.
However, in a quick moving market, this is often accepted, as long as trust in the players is high. Ah, the nostalgia !
You ask why the Revenue Commissioners allowed it to go on. The answer, I imagine, is that until someone tells them, they do not know a transaction has taken place.
I represented a party in a property dispute less than 10 years ago, where the original sale took place in 1968, which was when the money changed hands. The seller was the buyer’s solicitor at the time ! The legalities were not completed until sometime in the early 90s. The buyer subsequently – after about 10 years – changed solicitor, and then that solicitor encountered liquidity – too much alcohol – problems and went out of business. The third solicitor was pretty quick, though.
I can vouch for problems getting welfare payments, it’s just hypocritical for the govt to proclaim they’re there to help etc, but people are going broke working and in worse situations financially if they were on the dole.
Brilliant find on the stamp duty front, MP! I don’t pretend to fully understand finance at all (qualitative sociology for me!) but I do wonder if this is a big can of worms. If sales have not been “closed” because of non-payment of stamp duties, is there then a problem for people don’t really “own” their proprty and may have borrowed with the property as collateral, or who have mortgages on properties that they don’t fully own, or have gotten tax relief when they’re not first-time buyers, etc. Oh, oh! Naughtier than maltesers?
My quess is the Rev Comm were told to ‘get something’ from these cases before more builders/ developers go belly-up but it very odd to me to think that these cases were just let lie or were neglected.
Contra Fergus (above), I do think they go chasing after revenue targets on their own initiative, so I sense there was a possible political dimension to why/how they were not chasing stamp duties. You know, back in the 1980’s when I worked for the late Sean Condon (former CTT CEO), the revenue were on our backs looking for relatively small amounts of money from a six-person consultancy firm, and I alway thought it was politically motivated. More generally, I thought the Rev Comm was quite pro-active in what was a sort of recessionary era. So letting a whole swathe of Stamp Duties going begging, suggests something more IMO. It’s a bit like how some developers’ loans on land deals that had been parked by the banks, without interest payments, etc., until the pooh hit the fan. Hmm, back to banks and builders/ developers? Hear no, see no, etc.?
So, if I understand this correctly, the 56 day period allowed solicitors to get deeds stamped without incurring the ‘upto 30%’ penalty, even though the stamp duty may have been overdue for years ?
Where there were penalties of thousands of euro payable, they have been fixed at 25 quid ?
Thanks all – and Adrian I’ve got requests into to the Law Society and Revenue for a response!
EVM thats what I understand – no penalties were due apart from €25.
This should be headline news – thanks for bringing it to our attention.
I wish I lived in a perfect world. The fact of the matter is I don’t. Sometimes it is easier to Revenue to issue an amnesty and collect something rather than spend a lot of time and money tracking people down in the hope of collecting it all. All revenue seem to have missed out on here (other than earlier payment) is the penalties – I’m not even sure how much this amounts to. Are you?
Sure spinning this as some kind of mad conspiracy to aid the “property developers/magnates” (that was particularly blogtastic – I’d love to know how you figured out they were developers & magnates) suits your article but it will do little for your blood pressure. If you’re not sure how much was waived in terms of penalties what are you so angry about?
I may be wrong about the above and it may be a big cover up. My guess however is that it is simply the result of the inefficiencies and leakage you get in any system.
Paschal
(In the interest of disclosure I’m not a : revenue official, FF’er, solicitor, property developer, property magnate, regular magnet)
PS You say there was an “amnesty on fines and interest” even though the article you quote clearly says that “interest of €7.19 million” was collected. Surely that would imply that there was an amnesty on fines only. Am I missing something there?
I have since spoken to a solicitor who does some conveyancing. He claims that the Revenue themselves are responsible for quite a bit of delay, as if everything is not perfect on the forms submitted, they refuse to take the money !
SeanR,
I am at a loss to guess how the taxman was going to know about the 1968 land transfer to which I referred above, until the documents were presented for stamping. So, let’s have more “sense”.
Laughing here at Revenue refusing money… apologies for cynicism!
Yes, there was general hilarity at that down here too. The conversation took place with several other lawyers present, though, and it seems that it is true. Not for long, I’d say.
Hey yeah,
There is a way to legally get a mortgage and convey a land without actually being required to pay stamp duty – if you’re dealing with unregistered land and essentially hand over the title deeds without anything more, the courts will hold that you intended to convey it and you don’t have to pay stamp duty on it. To get a mortgage then, all the bank requires is that you read out a declaration that you know what you’re doing, and they pony up the cash. And it would mean a solicitor wouldn’t even have to get involved so it wouldn’t be a matter for the law society.