Revenue clearance – part 5 – practical steps

28 April 2022

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Over the past number of blogs we have been looking at the Revenue’s clearance procedures. Here I am going to look at some of the practical steps you need to be taking in relation to approaching this area.

In the first instance, the positive of the new regime is that work can begin straight away on receiving instructions. I would consider the following steps.

Step 1 . First week of instructions. Arrange a meeting with your executor client and go through the questionnaire and identify all potential issues. Complete the questionnaire for your file as much as possible at the initial meeting.

Step 2. First week of instructions. If necessary order bank statements of the deceased and social welfare statements for the previous 5 years to ascertain pattern of income over that period.

Step 3. First week of instructions. Ensure instructions are made as soon as possible to prepare the Form 11 for the year of death. This may require identification of the most appropriate accountant.

Step 4. By the time you are ready to file the SA.2 and lodge probate papers, you may have made greater progress in determining income sources and conducted investigations so that the other remaining due diligence questions are answered. Also by this time you will have filed your form 11.

Step 5. Make your application for clearance to Revenue immediately after lodging papers in the probate office and filing SA.2

Taking the new procedures step by step will help

The above is a broad outline and of course each case will bring its own challenges. The aim for all practitioners is to ensure that you are submitting your application as soon as possible after probate papers are lodged.

On balance the new system is to be welcomed. I note in the April 2022 edition of the Gazette there is a guidance note on the clearance procedure from the Probate, Administration and Trusts Committee. A part of it states (see page 59 of the April 2022 edition)

This [new procedure] came about as a result of the diligent work over a long period of time by the solicitor members of the TALC Direct Committee on behalf of the profession and the clients we serve. While not every issue raised by solicitor members was taken on board to the extent desired, this is an improvement on the unsatisfactory regime that it replaces, where practitioners had concerns with the timing of the issuance of letters of no audit.

The new system does indeed bring a degree of certainty. However, there is a significant onus now on the personal representative. Many of whom may be elderly themselves, in grief and find these enquiries a challenge.

For practitioners, the real difficulty will be in striking the balance between where good faith investigations start and end. The phrase used in the guidance is “complete and accurate”. The key for practitioners will really be how they document the investigations made so that Revenue has a clear picture that every effort was made to disclose potential income tax liability.

Hope this is helpful and if you have any tax, probate, will drafting or capacity queries please email me on ckelly@hcalaw.ie