After the Grant of Probate or Administration has issued, the LPR will be looking to collect and distribute the assets of the estate as soon as possible. However, a note of caution needs to be exercised by the LPR when a payment is being made from the estate to a non-resident beneficiary. An Irish resident LPR shall be liable for the CAT payable by a non-resident beneficiary, where that non-resident beneficiary does not file and pay their CAT liability.
This places a huge risk on the LPR. It is imperative that the LPR makes reasonable enquiries from the non- resident beneficiary to ascertain if that person has a CAT liability. It is advisable to obtain an Affidavit from the non-resident beneficiary, confirming the details of any prior gifts or inheritances because the secondary liability will not apply due to the failure of the non-resident beneficiary to disclose a previous taxable gift or inheritance.
The legislation imposes this secondary liability on the LPR only to the extent that the LPR has control of the property which is the subject matter of the inheritance. The legislation gives the LPR powers to sell or mortgage property in order to pay the liability.
Another big risk to the LPR is that Revenue will not issue a certificate of discharge in relation to the liability of the non-resident beneficiary. Therefore it is advisable to write to Revenue, after the return has been made and paid, advising Revenue of the intention of the LPR to distribute the funds to the non-resident beneficiary within one calendar month of the notification.
If Revenue fails to respond within one calendar month, it is still permitted to audit the matter within the usual statutory time limit. However, if this occurs and a further liability comes to light, then Revenue will only seek to enforce it against the non-resident beneficiary, once the LPR acted honestly and in good faith.
The liability will only be enforced against the LPR against assets remaining under the LPR’s control and any excess liability will be sought from the non-resident beneficiary only. There will be no further liability attaching to the resident LPR. If Revenue replies within one month, indicating that it may audit the return, that the LPR should not distribute the funds to the non-resident beneficiary until the matter is resolved with Revenue.