Old inheritance - ownership of land never transferred nor pursued - CAT implications

The situation is as follows: mother-in-law died in 2012 and among her assets was an share in a small strip of land (shared with 4 others). Along with some other assets her interest in this land was bequeathed to my wife and her sister. My wife paid CAT on the other assets she inherited but this land was not included. It was never valued and ownership had not transferred from the mother to the daughters. As my wife was not interested in the land she did not pursue it and duly forgot about it until recently when the other joint owners noticed that deceased mother's interest had not transferred.

My wife is still not interested in this land, has always seen it as more trouble than its worth, but the recent communication got me thinking about whether or not she dropped the ball WRT the original CAT. The question is - does anyone know what the situation is in relation to 'historical' CAT - would she be liable for unpaid CAT and penalties on the land which was never transferred ?

I do realise that she will need to consult a solicitor.

Is it worth anything?

I believe there had been a recent offer in the region of 100,000 for its entirety. When divvied out would mean about 10,000 for herself and then take out fees etc. That said the land has been sitting with the group (its an extended family group ) since circa 2002.

Obviously any CAT liablity depends on the value of the interest in the land at the time she inherited it, the amount of other gifts and inheritances your wife had received up to that point, the thresholds in force at the time, etc, etc. We've no information about any of this. There could have been a nil liability, for all we know.

But if there was a liability, it wasn't avoided by the simple failure to follow through with registering the transfer, so the question of interest and penalties may well arise. There's a surcharge (maximum 10% of the CAT due) for the late filing of the relevant return, plus interest at rates which have varied from time to time but are currently I think about 8% p.a.

The other co-owners would of course face the same issue.

Thank you. That answers my question. She paid CAT on the other assets she inherited, as she breached the threshold, so she would be liable for CAT on whatever the value of the land was at the time plus whatever penalties apply. I assume the best way forward is to consult a solicitor, get a retrospective valuation and approach revenue.

I think so, yes. Your wife should be aware that her doing this may cause problems for her sister, who likely has the same unrecognised liability. It's generally easier to deal with the Revenue over arrears, interest and penalties if you come to them rather than them coming to you, so your wife's sister might like to make this a joint approach. (Plus, they can share fees for whatever professional advice they require.)

I can't imagine Revenue will be too worried at this stage about a very minor omission that happened 13 years ago and I suspect that an arrears, interest and penalties settlement at this stage may well be total overkill. Bear in mind too that asset values were seriously depressed in 2012 and many assets were unsaleable.

But it's very hard to be in any way definitive about this without having all the details to hand.

As others have said, devil is in the detail with something like this.

For example, arguably, the valuation date (which is the tax point) may not be in 2012 in the circumstances as described.

A pragmatic approach, if the land is to be sold and the value is relatively low, might be for a person to simply assign a negligible value to it at date of acquisition, and therefore they would have a relatively large gain for CGT purposes at the time of sale - they'd pay CGT on all (or nearly all) of their cut of the proceeds, but not be getting into any conversations about 10+ years of interest on a CAT back duty settlement.

The likelihood of anyone in Revenue looking at it in the first instance, or taking issue with it in the second, if tax is basically being paid on the whole shebang, is vanishingly small.

Seek professional advice OP, a couple of hours of the time of someone who knows what they're at, would be worth it for peace of mind and minimization of risk.