Time limits in refund claims for UK tax credit

24 September 2021


Just a quick one. You may be aware that there exists between Ireland and the UK a double taxation treaty which deals with CAT. The short version of this is that there is an arrangement between the two countries that residents of Ireland and UK don’t pay inheritance tax twice on the same asset. In short the rule states that the maximum that you have to pay is the higher of the two countries. The UK rate is 40% and the Irish rate is 33%, so the effect of the rule is that you only pay 40% on an asset rather than 73% (in cases that there might be double taxation).

So UK residents have to pay inheritance tax on say, Irish real property. They also have to pay CAT in Ireland if above the threshold. The system is, is that you must pay tax in both countries and then apply for a rebate. More than likely the UK tax will have to be paid first, as there is a six month payment timeline there. Once you have the Irish liability bottomed out, you pay this to Irish Revenue. You then request Irish Revenue to apply to the UK authorities to obtain the refund.

I was dealing with one case recently where tax was paid in the UK and then we dealt with the Irish estate. There was a long running battle on an income tax query, which took a significant time to resolve. We then eventually got our valuation date and paid Irish CAT. We then went for our rebate and applied to the UK authorities for the rebate. However much to our annoyance and surprise the UK authorities indicated that they would not apply the rebate as we made our application after six years of the date of death. Obviously this was a source of annoyance to our client, who had been delayed by Irish Revenue in dealing with the matter.

So just be careful in these double taxation cases and make sure you apply for your rebate in time. It can also be a good arguing point with Revenue if they are dragging their heels on the income tax clearance side.