Mortgage suit against a house: Does the debt accrue interest or not?

Dublin ACE

I am hitting a brick wall trying to find out the following information and I would really appreciate any guidance or to be pointed in the right direction to get answers.

My father has been going through some financial troubles for some time now. He is a small time sole trader and although he has been declaring the tax that he owes, he has not been paying it.

After numerous legal letters, Revenue have been putting what he owes against his house as a mortgage suit.

I am convincing him to engage with revenue, but before we do, we need some information. I have asked a lot of people the following question and the answers are not consistent;

When money is put against a house as a mortgage suit, does the debt accrue at 8% pa or is the debt frozen?

myshirt

The interest continues to accrue.

Fact.

You need to get him to get on top of this asap and deal with his creditors.

Have you spoken to a tax consultant and/or other finance professional?

Dublin ACE

His accountant and solicitor have told him that interest does not accrue. I think they are wrong.

Citizenpain

Get it in writting off both of them -- they should have Professional Indemnity insurance most advising you here wont

Dublin ACE

I will try that. Asking them for it in writing will at least get them to research it properly.
I understand that I cannot hold anyone on boards.ie to their advice, but I would like ideas as to who I can go to for real answers.
MABS were sympathetic but it is quite specialist and their advice was unclear. I rang the high court, the circuit court and the district court, again got conflicting answers but nothing in writing.
The reason this is so important is that if the interest is building, I calculate that it will overtake the value of the house in approximately 10 years. Bearing that in mind my advice to my father is to sell the family home now and downsize. This is not easy advice but it is the only option that he is left with.

Is there a written procedure for mortgage suit written somewhere which will spell this out?

Alan Shore

My understanding is that the Revenue get a judgement that states that the taxpayer owes tax plus interest at a point in time say €100,000 on 31 October 2013.

The Revenue then go and get this judgment registered against a property that the taxpayer ownes. So there is a debt of €100,000 registered against the property.

The taxpayer still owes Revenue the outstanding tax on which interest is accruing.

If that property is sold permission is required from Revenue so the solicitor will have to give an undertaking to pay Revenue the amount of the judgement mortgage from the proceeds.

But in the time between the judgement and the settlement of the debt the interest will have accrued independently of the judgement amount. It may be that the accountant and solicitor are saying that the judgement does not increase for the interest?

You need to establish from the solicitor what exactly a mortgage suit is.

Dublin ACE

That is the most logical explanation I have heard.

Thank you

Mr. Incognito

From memory interest stops being applied once a formal legal demand is made as the demand must be for a fixed sum and not a variable one. Once judgement is delivered statutory interest of 8% applies