51 Payment of tax and interest on tax

Summary

This section contains provisions relating to the payment of tax and the charging of interest on overdue tax. The tax is due on the valuation date and simple interest, at the rate or rates set out in Part I of the Table in subsection (2) (inserted by section 145 of the Finance Act 2005) runs from that date until the date of payment. If, however, tax is paid on or before 31 October in the relevant year, no interest will be payable. If tax assessed by the Revenue Commissioners is paid within 30 days of the assessment, interest will not be charged for that period. In the case of gifts which become inheritances by reason of the death of the disponer within 2 years of the date of the gift, interest runs from the date of death.

A payment may be made on account of tax due, whether in advance of an assessment or subsequent to an assessment. Any payment is applied, in the first instance, against interest which may have accrued and the balance is applied against tax.

Details

(1) Tax is due and payable on the valuation date.

(1A) Simple interest is payable, without deduction of income tax, on the tax arising by reason of section 15(1) or 20(1) from the valuation date to the date of payment of that tax, and the amount of that interest shall be determined in accordance with paragraph (c) of subsection (2).

(2)(a) Simple interest is payable, without deduction of income tax, on the tax where the relevant date occurs —

• (i) in the period from 1 January to 31 August in any year, from 1 November in that year to the date of payment of that tax, and
• (ii) in the period 1 September to 31 December in any year, from 1 November in the following year to the date of payment of that tax.

The amount of that interest is determined in accordance with paragraph (c).

(2)(b) Interest payable in accordance with paragraph (a) is chargeable and recoverable as if it were part of the tax.

(2)(c)(i) The following definitions apply for the purposes of subsection (2)(c):

“period of delay” defines the period for which interest is payable on unpaid tax;

“relevant period” is designed to divide up any period of delay whose duration covers a period during which more than one rate of interest applies. The overall period of delay is to be divided up into the various periods (i.e. the relevant periods) applicable to any particular rate of interest. The interest due is then calculated in respect of each interest rate in accordance with the formula in subparagraph (ii). The interest due for each relevant period is then aggregated to give the full interest payable in respect of any given period of delay;

“Table” means the Table to the subsection.

(2)(c)(ii) Provision is made for calculating interest where the period of delay falls wholly into only one of the periods specified in Part 1 of the Table. Provision is also made where the period of delay straddles more than one of the periods specified in Part 1 of the Table. Part 1 of the Table sets out the normal interest rate to be charged on unpaid tax. Part 2 of the Table sets out the reduced rates of interest to be paid on unpaid tax in respect of certain agricultural property and business property which is being paid in instalments under section 55.

(2A) The provisions of subsection (2) are amended where interest is to be calculated in respect of unpaid tax to which the provisions of section 55 apply. [Section 55 provides for the payment of tax in respect of certain agricultural property and business property by way of instalments and, where tax is paid under that section, interest will be payable, in accordance with Part 2 of the Table, at 75% of the normal rate.]

Interest is not payable on the tax—

• (3)(a) to the extent to which section 89(4)(a) applies (i.e. the agricultural relief clawback), for the duration of the period from the valuation date to the date the agricultural relief ceases to apply,
• (3)(b) to the extent to which section 77(3) and (4) applies (i.e. the heritage property exemption clawback), for the duration of the period from the valuation date to the date the exemption ceases to apply,
• (3)(c) to the extent to which section 101(2) applies (i.e. the business property relief clawback), for the duration of the period from the valuation date to the date of the reduction which would otherwise fall to be made under section 92 ceases to be applicable,
• (3)(d) to the extent to which section 78(6) applies (i.e. the company heritage property exemption clawback), for the duration of the period from the valuation date to the date the exemption ceases to apply,
• (3)(e) to the extent to which section 86(6) or (7) applies (i.e. the clawback of the exemption relating to certain dwellings), for the duration of the period from the valuation date to the date the exemption ceases to apply,
• (3)(f) to the extent to which section 102A(2) applies, for the duration of the period from the valuation date to the date the development land is disposed of.

(4) Where tax and interest is paid within 30 days of the date of an assessment of tax made by the Revenue Commissioners under section 49, interest will not be chargeable on that tax for the period of 30 days from the date of the assessment or any part of that period.

(5) A payment of tax by an accountable person is treated as a payment on account of tax notwithstanding that the payment may be conditional or that the assessment of tax is incorrect.

(6) Payments on account of tax due may be made at any time. Interest ceases to be chargeable on so much of the payment as is referable to tax.

(7) Where a gift becomes an inheritance by reason of the death of the disponer within 2 years of the disposition, the date of death is treated as the valuation date for the purpose of calculating interest.

(8) Where the value of a limited interest is to be ascertained in accordance with rule 8 of Schedule 1 as if it were a series of absolute interests, the section has effect as if the reference to the valuation date in the section were references to the date of the taking of that absolute interest.

Relevant Date: Finance Act 2015