Section 5 Agreement as to payment of stamp duty on instruments

Summary

This section enables the Revenue Commissioners to enter into agreements to enable stamp duty to be collected by composition. Thus, rather than duty being paid and indicated by means of stamps on each individual instrument the duty is paid “in bulk” at intervals, usually annually, bi-annually or quarterly, and the instruments themselves bear a statement to the effect that duty has been or will be paid under an agreement with the Revenue Commissioners.

This section simplifies the administration and collection of duties. Those who have substantial numbers of instruments which attract stamp duty may dispense with the costly and time-consuming practice of sending all of those instruments to the Revenue Commissioners for individual stamping. For the Revenue Commissioners the advantages lie in an enhanced collection procedure and a reduction in the volume of instruments which actually require physical stamping.

Stamp duty on bills of exchange (limited to cheques, drafts and orders drawn on or after 2 April 2007) and on insurance policies are normally paid to the Revenue Commissioners under composition agreements. The composition agreement with a financial institution in relation to bills of exchange is that the financial institution either pays the stamp duty on the basis of cheques that are issued by the financial institutions to customers or, for agreements entered into or and after 1 January 2009 on the basis of cheques being presented for payment and paid by such institutions.

The Double Taxation (Relief) (Order No. 1), 1923, referred to in the commentary on section 2(2), extends to duties paid under composition agreements.

Information regarding composition agreements is contained in Statement of Practice SP-SD 3/90.

Details

(1) The Revenue Commissioners may enter into composition agreements in respect of instruments chargeable to stamp duty under Schedule 1 with (a) any person carrying on a business and who in the course of that business is a party to instruments liable to stamp duty or (b) that person’s agent. The Revenue Commissioners may enter into such an agreement when they consider that such a person or his or her agent would find it inexpedient or impractical to pay stamp duty in respect of each instrument.

(2) The Revenue Commissioners decide the form, and the terms and conditions, of composition agreements.

(3) Where an agreement is in force between any person and the Revenue Commissioners, the individual instruments need not be presented for stamping but, by way of composition, that person will pay the aggregate amount of duty due, at the end of the period specified in the agreement, in respect of each instrument which would have had to have been individually stamped in the absence of such an agreement.

(3) Instruments to which a composition agreement relates must bear a statement to the effect that the appropriate stamp duty has been or will be paid over to the Revenue Commissioners.

(4) If the person who has entered into a composition agreement fails to deliver an account of all instruments liable to stamp duty in the specified period or does not pay the duty, penalties will be imposed as follows:

• up to €125 per day while the default continues, and
• in addition, interest is payable at a rate of 0.0219 per cent per day (see section 159D) from the date when the default begins.

(5) The Revenue Commissioners may make assessments in relation to duty due on foot of composition agreements should the need arise.

Relevant Date: Finance Act 2014