730FA Assessment of appropriate tax where tax not deducted under section 730F

Summary

Section 730F(1)(b) provides as respects the happening of a chargeable event in relation to a life policy to which the provisions of this Chapter apply on or after 26 September 2001 for the imposition of the 20 per cent additional charge (linked to the current standard rate of income tax) where such a policy is a personal portfolio life policy as defined in section 730BA.

Section 730F(4) provides, where the assurance company has not deducted this additional charge from the proceeds of a policy in the period from 26 September 2001 to 5 December 2001, that special collection measures as set out in this section apply. Where these special measures apply the normal provisions for accounting and paying appropriate tax do not apply.

The section applies to regulate the time and manner in which any such appropriate tax which remains unpaid (that is the 20 per cent additional charge) in relation to a personal portfolio life policy will be assessed and paid. The objective is to require the assurance company to return sufficient information to enable Revenue to directly assess the policy-holder to the additional appropriate tax due.

There is no penalty on either assurance companies or policyholders where they did not apply the increased rate of exit tax (as no such legislation was then in place) and merely applied the rate as set out in the legislation before its amendment by Budget Day Financial Resolution No. 1 of 5 December 2001.

Details

Application

(1) It is made clear that the section only applies to bridge the gap between the Ministerial announcement that the additional charge would apply to any personal portfolio life policies cashed in after 26 September to the introduction of enabling legislation in the Budget Day Financial Resolution of 5 December 2001.

Returns

(2) An assurance company has to make a return to Revenue where it has not deducted sufficient funds from the proceeds of a personal portfolio life policy to cover the full amount of appropriate tax due in respect of the policy. The information required to be returned must be supplied by 31 December 2001.

Secondary liability of assurance company

(3) The assurance company itself may be made liable for any appropriate tax due if it failed to make the return or made an incorrect or late return. This secondary liability will be in addition to any other penalty to which the assurance company may be liable.

Direct assessment of policyholder

(4) The policyholder or other person to whom the assurance company paid the proceeds of the policy may be directly assessed for the unpaid appropriate tax.

Administrative matters

(5) to (8) Various administrative matters such as the amendment of assessments, making of enquiries to confirm accuracy of returns or in absence of any return to acquire the information necessary to make an assessment are also provided for. Any tax assessed under these provisions is due within one month after the issue of the notice of assessment.

Commencement

By virtue of section 40(4)(b) of the Finance Act 2002 this section applies to the proceeds etc. arising in respect a life policy taken out with a domestic life assurance company to which the provisions of this Chapter applies on or after 26 September 2001 even where the policy was taken out before that date.

Relevant Date: Finance Act 2019