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Axe 'exorbitant' IBRC discharge tax – Law Society

The Law Society’s Pre-Budget 2020 submission has laid out a series of reform proposals based on the daily experience of practitioners.

Key submissions include:

• A reduced VAT rate for legal services, or at least for legal services utilised by individuals, in order to promote access to justice and remove the inequality of treatment between individuals and economic traders who can recover VAT,

• A formal technical consultation period in advance of the Finance Bill to allow practitioners assist the Oireachtas in achieving its legislative aims,

• Taxpayers caught up in the congested tax appeals system are not afforded the principles of natural justice and fairness because of long delays in the system, with accumulating interest. Triaging of the backlog, increased use of mediation, and halting of the statutory interest rate must be considered urgently.

The Law Society also advocates for changed tax treatment for:

• Co-habiting and divorced couples,
• The permanently disabled and their qualifying medical expenses,
• The treatment of pensions funds on divorce,
• Changes to the Nursing Homes Support Scheme 2009.

The submission points out the inefficiencies around the sale and purchase of property:

• IBRC charges €2,000 + VAT for letter of non-crystallisation/discharge. The Society has highlighted this wholly disproportionate fee for a release letter, where former and other institutions charge €35-€100 + VAT. This fee is being borne by the home owner who had no responsibility for the transfer of original loans to IBRC,

• Local Government Rates Bill 2018: The Society conveyed its concerns about this  bill which places a statutory charge on property for unpaid rates, thereby frustrating future sales. It also holds property owners liable for any failure of occupiers / tenants to discharge the rates during the period of the tenancy, placing an increased risk burden on them which may impact on economic growth,

• Help to Buy Scheme contractors’ deposit-claw back falls to homeowners:

Currently, the legislation provides that a claw back of deposit paid to the initial contractor falls to the subsequent occupant of the home. This arises even where the home owner has no knowledge of the relationship between the contractor and Revenue.

The Law Society wrote  to the Minister for Finance, Public Expenditure and Reform, Minister for Justice and Equality and the Revenue Commissioners again last March, on this matter.

The Law Society has also issued a practice direction for lawyers with an Irish practising certificate.

An Irish practising certificate entitles a solicitor practising in Ireland to provide legal services under the Solicitors Acts 1954-2015.

A practising certificate does not entitle a solicitor to practise outside the jurisdictions that are permitted by Irish and EU law.

Practice outside jurisdiction

The new Law Society practice direction clarifies the situation with regard to practice permitted under the Establishment Directive (Directive 98/5/EC) and the Services Directive (Directive 77/249/EC) outside of the jurisdiction.

Any practice carried out in accordance with the Establishment Directive requires registration as a Registered European Lawyer ("REL") and is therefore carried out under those provisions in the host Member State and not under the Irish practising certificate.