Inheritance / Gift Tax interest

redfest

Hi,

i have recently inherited a house and it turns out i have to pay €30k inheritance tax on same. However i was unaware of how the inheritance tax works and now it turns out i am late paying and will owe an extra €2k interest. Has anybody ever come across this? Should i send revenue the original €30k and hope they don't persue the other €2k interest. if they persue it in 6 months time however, i will have accrued another 6 months interest. Bear in mind that inheritance tax is self assessed. Anyone any ideas?

Thanks

nompere

I'll paraphrase Section 51 (5) CAT Consolidation Act 2003 for you.

If on the day you paid the tax there was €2,000 interest accrued on that tax, then Revenue will use €2,000 of the monery you paid to settle the interest, and only then reduce the tax. So you still owe €2,000 of tax, on which more interest is accruing.

grumpytrousers

the smart thing to do is to confront the issue head on. The revenue - or at least the folks who work there, aren't monsters. Write to them, or if there's a solicitor involved (whose fault this might be!) ask him to write. Explain what happened and perhaps make an offer. say that money is tight and that you can just about pay the tax and another few bob on top as a token punishment.

bloke i know lived in england, jointly owned a farm in ireland with his brother. Brother died. Bloke in birmingham effectively inherits half the farm worth 150,000 on the date of death and you only get 4 months to pay after that before interest starts mounting up.

yer man didn't pay - he genuinely didn't know - for ages. It was only when he came to want to sell the gaff that he realised he had to furnish tax clearance and the revenue wanted something like 6000 as interest on top of the tax he was due to pay.

He wrote to them, said he had difficulty paying the full amount, he was genuinely sorry, took his tax affairs seriously and so on....and offered them 3K.

they said 'fine' and he sold the farm a few weeks later.

(at which point yes i know i know i know he could have afforded to pay the other 3K!)

redfest

Thanks for that,
i think the best thing to do is talk to them and see if any negotiating van be done.
i know its only 2k in the scheme of things but better for me than the revenue.