Revenue Tax Briefing

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Revenue Tax Briefing Issue 12, October 1993

Third Party Returns

2.1 Solicitors

The general rules for the making of third party returns are set out in the Statement of Practice SP - IT/1/92, “Returns of Certain Information - Third Party Returns”. In applying the rules to solicitors, particular problems arise in relation to matter dealt with on behalf of clients. In such matters, the following rules will apply:

  1. The reporting provisions will not apply to payments made to or on behalf of clients which relate to the period to 1 September 1993. (the Statement of Practice date of 1 January 1993 will apply, where relevant, to all transactions on solicitors. “office accounts”).
  2. A minimum limit of ₤100 will apply to genuine individual client payments for aggregation purposes (i.e. individual payments of less than ₤100 need not be aggregated). For this purpose a transaction should not be regarded as genuine if it is split to keep the value below ₤100, (This limit does not apply to “office account” items).
  3. (i) Rents reflected in apportionment accounts on the closing of sales or rents collected (whether initial rent or a deposit) on the drawing up of new leases need to be reported
    (ii) Ground rent collections for clients which are less than ₤500 in aggregate for a return period need not be report
  4. Payments made towards the maintenance of a child or his/her parent (e.g. in circumstances which might have given rise to an affiliation or maintenance order being granted against the payor) need not be reported.
  5. Debts collected need not be reported in the following Circumstances
    1. Debts collected which are incidental to the main services provided for a client
    2. Debts collect on behalf of
      • Any of the persons listed in the Second Schedule to the Finance Act, 1992. (Accountable Persons - Withholding Tax).
      • Building Societies
      • PLCs.
    3. Debts collected for a client which do not exceed ₤3,000 in aggregate for a return period.
  6. The cost of special software to facilitate Third Party Returns reporting requirements may be treated as a revenue item rather than a capital item.

Subparagraphs (c)(ii), (e)(ii) and (iii) and (f), have general application to all persons required to make third party returns.

2.2 Personal Representatives of deceased persons

Where a solicitor or other professional, as personal representative, is a chargeable person either I respect of pre or post death income, the question of a third party return in respect of that income will not arise. (In very limited circumstances, e.g. executor trading, a third party return in respect of payments made by the executor in that capacity would arise in the normal way).

As regards specific legacies, or where in accordance with existing practice the date of death is regarded as the date of ascertainment of the residue for residuary legatees and income is attributed accordingly to the beneficiaries, a third party return will not be required provided the Inspector is advised regarding the estate, how the assets and income are being distributed, etc.

2.3 Third Party Return Forms

The following are the forms in use for the different categories of third party returns:

Form 46G
Return of payments by individuals and bodies of persons, other than companies (Section 173, ITA 1967).

Forms 46G (Company)
Equivalent form for companies (Section 173, ITA 1967).

Form 8-2
Return by persons (other than companies) in receipt of income belonging to others (Section 176, ITA 1967)

Form 8-2 (Company)
Equivalent form for companies (Section 173, ITA 1967).

Form 8B
Return by financial institutions paying or crediting interest without deduction of tax (Section 176, ITA 1967)
Return by intermediaries who act in, or in connection with, the opening of foreign accounts with deposit holders (Section 230, FA 1992).

Form 21R
Return by nominee shareholders (Section 21, FA 1983)

Form 19
Return by intermediaries of relevant facilities prodded by relevant UCITS (Section 19, FA 1989).

A general issue of Forms 46G was made in March 1993. The general issue of Forms 46G (Company) is made to coincide with the general issue of Forms CT1 for each accounting period.

The other forms, which apply to limited categories of persons, are being issued on a selective basis.

The third party reporting obligations operate on an automatic basis. Practitioners requiring forms for clients who may not have received them, can obtain them form any tax offices.