Q&A

Following the death of my father in 1996, my brother discovered that he held an offshore account in the UK. We believe this was the proceeds of an inheritance from a family member who died there some years before. The account was closed and the proceeds divided equally between my brother, a sister and myself.

Offshore accounts

As far as I know, no taxes were paid on this account. At that time, both my sister and I were non-residents. We both lived in the UK. I have subsequently returned to live in Ireland and my sister remains a resident of the UK.

With the current investigation of offshore accounts, we are wondering what our liability is. Is the fact that my sister and I were non-residents when the account was closed a factor?

Mr J.P., Cork

The fact that the account was closed after it was discovered means that the three of you would not have any liability to tax and penalties in relation to deposit interest in your own right. The fact that you were non-resident at the time and that the account was closed before you returned home means you would have been exempt from DIRT on this account in any case.

However, it sounds as though your father's estate would have had some liability in relation to the account - certainly as far as DIRT goes and possibly, if the sum indeed originally came from an inheritance to him, to capital acquisitions tax.

That liability should have been settled at the time his affairs were put in order following his death. But, from what you tell me, it is possible that the executor of the estate never knew of the account. You say your brother discovered it and closed it, dividing the proceeds among you. If he were the executor, he would have a legal obligation to put together a full and fair statement of affairs before applying for probate.

On the basis that these issues should have been sorted before his estate was disbursed, it is likely that the Revenue would be able to claim the money owing back from those who benefited under your father's will, including the three of you.

I'd suggest you take a look at the Revenue booklet, Making a Qualifying Disclosure on an Offshore Related Tax Default to Revenue, which is available on the Revenue website or at any tax office.

You need to move fairly quickly as the Revenue has announced a cut-off point for voluntary disclosure on offshore accounts of March 29th, that's next Monday. I suggest you immediately get in touch with the executor of your father's will and take it from there.

Of course, given you are talking 1996 and that the account is long-since closed, you may be tempted to take a chance and stay schtum. If caught, you will pay higher penalties and face publication of your details.

Irish Nationwide

In April 1999, I opened an investment account with Irish Nationwide Building Society with an initial lodgment of £1,000. With the recent media coverage of the society seeking demutualisation, I enquired of them whether my account would be eligible for any windfall that may arise. They have advised me to my surprise that my account type is a 30-day deposit account and, regardless of the balance, this particular type of account would not qualify for any such windfall. They further advise that if I had opted for a 60-day or 90-day account, then I would qualify.

Surely all deposit or investment accounts that meet date opening and minimum balance criteria should qualify or can you explain the difference to me?

Mr T.F., Dublin

The first thing to note is that, in talking about a membership organisation such as a building society or a credit union, there is a key difference between deposit and share accounts. The latter indicates that the account holder holds a share in the company and is a member. As such they are entitled to the privileges of membership - the relevant one here being the right to benefit from any sale of the company of which they have a part.

Deposit account holders, by contrast, are simply customers of the society and do not have any rights accorded to a member - including the right to a windfall.

The truth is that accounts rarely have names that make it immediately clear whether they are one or the other, so it is always best to check. However, I am a little confused by your letter. You state that you opened an investment account, yet you now find you have a straightforward deposit account. It is unlikely that a financial institution would have suggested a deposit account as an investment at the time.

You should check on the status of your account now and at the outset to find out whether it has changed in that time. If you were originally in a share account and that was changed without your knowledge, you should be entitled to a windfall, assuming the society is sold. One indicator would be whether you received notification of the group's annual report and voting materials for its annual meeting. These would only be issued to members - i.e. those entitled to a windfall.

In the first instance, check with the company secretary's office at Irish Nationwide. As a back-up, it would be no harm to contact a group called the Campaign for Demutualisation of Irish Nationwide Building Society. It has a website, www.convertinbs.com.

There have been clashes over the precise status of accounts in the past but if you have always held a straightforward deposit account, I think you will find that you have no right of access to any future windfall.

Inheritance

tax liability

I received furniture from my late parents valued at approximately £70,000. I sold the same at difference stages from 1993 until 2002. What is my tax liability threshold on this? I understand that a sibling can get 400,000 from a parent exempt from tax.

Ms M.B., Westmeath

The key date for you is 1993, assuming that is the year in which you received the gift. As you have surmised, gifts and inheritances are treated as one and the same regardless of when they are received or whether they are in cash or in kind.

The exemption threshold changes all the time and also differs depending on the relationship between the person giving and receiving the gift.

Back in 1993, the threshold on gifts or inheritances from a parent to a child was £150,000. If you had previously received gifts and inheritances from the same or other sources, they had to be added together to assess liability, although the rules have changed somewhat since.

In your case, it is extremely unlikely that the £70,000 would take you above the threshold for capital acquisitions tax.

As to your subsequent sale of the furniture, that would come under the capital gains tax regime. You would need to assess the difference in the value of each piece at the time you received it and the time you subsequently sold it. You would be entitled to £1,000 gains free of capital gains tax in any given tax year (1,270 following the introduction of the euro).

Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.