Interest on payment of Fair Deal charges in estates
12 November 2020
You may well be familiar with the fact that repayment of HSE charges may be deferred by means of an application for the loan arrangement. To avail of the loan arrangement security must be provided and for Land Registry title this tends to be a charge on title.
What is key from a probate point of view is that interest will run on the HSE loan from the following two dates:-
- twelve months after the date of death,
- six months after the date of sale or transfer, for loan repayments made because the property or land on which the Charging Order exists is sold or transferred.
So it is important to keep these dates in mind. If it is the case that repayment of the loan cannot be made within the 12 month period then interest will apply, at a rate of 0.0219% per day (or 8% per annum).
The HSE charge and the interest payment will be a factor that will be part of any property sale and conveyancing practice is such that you will need to disclose to the purchaser the amount of the HSE loan and the interest accruing.
Further, as solicitors, you will be providing an undertaking to discharge the HSE loan from the sale proceeds. What is interesting to note that payment is made through the Revenue but it is the HSE that organises the discharge of the loan.
Revenue will notify the HSE of settlement of the debt once the payment has been cleared by the bank and processed by Payment Accounting and Banking, Collector-General’s Office, Sarsfield House, Francis Street, Limerick.
The HSE National Co-ordinating Unit arrange the removal of the charging order. Queries in that regard should be directed to the HSE, Fair Deal National Co-ordinating Unit, Clonminch, Tullamore, Co. Offaly. Telephone No. 057 9318400.
There can be a range of reasons as to why repayment of the HSE loan is not made within 12 months. If interest does arise, it is possible to make an application to Revenue for waiving of interest once valid reasons arise. Revenue has a specific form for such cases, and the form is attached here to this blog. Once completed the form should be submitted to Revenue through MyEnquiries.
In our experience, there must be strong and valid reasons for Revenue to consider why the loan was not repaid. If there is sufficient cash in the estate to meet the loan, then it should generally be used for that purpose. We have had the experience where awaiting social welfare clearance was not held to be sufficient cause to delay payment. On the other hand, difficulty in selling a property was considered sufficient reason to allow a waiver of interest.
As mentioned. We set out below, the form used to apply to Revenue for a waiver of interest.
We also set out here a link to the Revenue’s page concerning the HSE loan scheme and how it operates.