Stage Payments of Outstanding CAT
06 July 2023
Beneficiaries don’t often enjoy having to pay CAT. However, in many cases, the are funds in the estate to meet the liability. What are the options open to beneficiaries if they are not in funds?
Where there are no funds available then in accordance with the re-launched CAT guide “Collection and Enforcement Guidelines” (a link to which is below) Revenue offer three methods of paying off CAT
- Statutory Instalments
- Non-statutory instalments
- Registration of the debt as a voluntary judgment mortgage
Most practitioners will be familiar with the statutory instalment procedure, where you are allowed to pay your CAT in 60 monthly instalments. However, this arrangement is only available for CAT payable on immovable property, agricultural property consisting of lands, building and farm machinery or relevant business property. It also covers a limited interest taken in any property. Understandably, it doesn’t apply to those assets readily realisable such as shares or cash. Even if this method is chosen, simple interest of 8% per annum applies. The interest rate is 6% for CAT on Agricultural Property or Business Property.
Practitioners may not be as familiar with the other two arrangements. Non-statutory instalments are allowed on a concessionary basis in exceptional circumstances where the tax liability cannot be paid without causing excessive hardship. If this arrangement is agreed with Revenue, part payments must go first towards the CAT and not any interest and interest accrues on unpaid tax. The arrangement will not be permitted if a scheduled payment is missed.
In exceptional circumstances, Revenue will allow CAT to be postponed. This is where payment of the CAT would cause excessive hardship, (for example, the beneficiary having to sell their home). This arrangement is subject to agreement by the taxpayer to register the debt as a voluntary judgment mortgage on the property involved.
These are the principal arrangements. The Guidance note does set out some interesting information on historic interest rates which would be useful for practitioners in cases where the CAT is a long time outstanding.
I attach a copy of the guide from Revenue if you wish to download the full guide.
Hope this is of use and if you have any probate, tax or will drafting queries please do not hesitate to reach out to me through the query service on the website. Colm Kelly.