Notice of Assessments and CGT
07 December 2021
Just a quick note. Payment of income tax is by means of self-assessment. Any assessment other than a self-assessment is known as a Revenue Assessment (959C(1) TCA). When a CGT computation is submitted to the Revenue in the normal course and outside of the context of income tax returns, the Revenue treat this as a Revenue Assessment. This applies even though you have calculated the tax yourself, paid the tax on behalf of your client, and put together all the supporting documents that underpin the calculation.
After a period of time, when the Revenue have assimilated the information provide to you, they issue a Notice of Assessment which sets out their position regarding the submission and the tax paid. Sometimes the Notice of Assessment shows no liability due to Revenue because they have agreed with your figures or sometimes there is an amount due or an amount to be repaid. (959U and 959E TCA).
The advantage of the Notice of Assessment is that it is Revenue’s sign-off on the CGT computation. The downside is that it can take a number of months for the Assessment to arrive.
From the perspective of solicitors acting for non-resident beneficiaries of the sale of an asset, the Notice of Assessment is the best comfort in insulating the solicitor for potential secondary liability for CGT. So how does one deal with the intervening time period? Obviously, a client will wish to receive their funds as soon as may be possible. One potential solution is to retain the maximum amount of potential CGT from the sale proceeds and only pay over any balance of funds held after payment of CGT, when the Notice of Assessment arrives.
Other arrangements may be possible, where funds are held by a third party, or an indemnity is given by a client.
Another avenue open to solicitors as well is to make representations to Revenue through My Enquiries requesting that they expedite the Notice of Assessment. This can have various degrees of success.
The essential point is that solicitors need to be alive to issues where they are involved in the sale of property on behalf of non-resident beneficiaries and these issues need to be managed up front at an early stage with vendor clients.
Hope this helps and if you have any tax, probate or will drafting queries please email me on firstname.lastname@example.org