24 Values agreed

Summary

This section is designed to reduce compliance and collection costs in connection with the 1% annual discretionary trust tax charge. It provides that in relation to houses and lands or shares which are not quoted on a stock exchange, the values agreed between the taxpayer and the Revenue Commissioners for one chargeable date will, subject to certain exceptions, apply to the following 2 chargeable dates where the same property is liable to the 1% charge.

Details

The following conditions must be met before a value, which will stand for a chargeable date and the following 2 chargeable dates, may be agreed:

• (1)(a) a 1% discretionary trust tax charge must arise on a chargeable date (the first chargeable date),
• (1)(b) an accountable person must have furnished all the information necessary to enable the Revenue Commissioners to ascertain the market value of houses, lands or non-quoted shares in the taxable inheritance taken on that chargeable date,
• (1)(c) the market value of that property must be agreed between the accountable person and the Revenue Commissioners on foot of an application in writing by the applicant to the Revenue Commissioners,
• (1)(d) a 1% discretionary trust tax charge must arise on either or both of the following chargeable dates, and
• (1)(e) the same property must be subject to a 1% discretionary trust tax charge on these subsequent chargeable dates.

(1A) Where the market value of property is determined in accordance with subsection (1) in respect of the valuation date 5 April 2006, then that market value will be treated as the market value of the property on the valuation date 31 December 2006.

(2) An agreed value will not be binding in the following circumstances:

• where there is failure to disclose material facts either in respect of the property in question, or any other property, comprised in a relevant discretionary trust on any of the 3 chargeable dates covered by the agreement,
• where, before the third chargeable date—
  in the case of houses or lands, there is a change in the tenure under which the property is held or let (e.g. where a discretionary trust holding a leasehold interest in a house acquired the fee simple interest), or
  in the case of non-quoted shares, there is any change in the capital or the ownership of the capital of the company or of the rights of the shareholders between themselves (e.g. where the company passed a resolution altering the rights attaching to the shares and, therefore, altering the rights of the shareholders between themselves).

The trustees can opt out of the agreement if, before the third chargeable date—

• there is a change which would materially alter the value of the real property over and above normal fluctuations in value, or
• there is a material change in the company’s assets or in their market value over and above normal fluctuations in value in the case of unquoted shares.

(3) An agreement made is binding on the persons who, as such, are accountable for payment of the tax on the first, second and third chargeable dates.

Relevant Date: Finance Act 2015