Master of the High Court says vulture funds may be exploiting another tax loophole
The Master of the High Court has said “vulture funds” may be exploiting another loophole to reduce their tax bills by not paying stamp duty when purchasing loans from financial institutions.
Edmund Honohan SC made his comments when striking out a summons brought on behalf of Havbell Designated Activity Company seeking possession orders in respect of a number of investment properties in Dublin secured against loans acquired by the financial fund.
The Master, who deals with pre-trial matters before they go before a High Court judge, said he was striking out the summons because the fund’s “papers were not in order”.
He said that stamp duty had not been paid on the documentation concerning the transfer of portfolios of loans from financial institutions such as banks and building societies to funds that “had come into our country”.
Lawyers for the fund had argued that they were exempt from having to pay stamp duty on the loans transfer.
In his ruling, Mr Honohan disagreed with the fund’s argument.
Under the Stamp Duties Consolidation Act 1999, stamp duty must be paid on documents that go before the courts, he said.
He wondered if the claim it was exempt was another loophole being used by “vulture funds”. The Master said he was under the impression that all loopholes allowing parties to avoid paying tax under section 110 of Taxes Consolidation Act had been closed off after the issue had come to public attention.
However, he wondered if this was “fake news”. He also wondered if any Capital Gains Tax (CGT) had been paid on the transfers.
The properties at the centre of the application were mortgaged on foot of loan agreements between a borrower and Permanent TSB several years ago.
It is alleged in 1998 PTSB advanced loans of £244,000 to the borrower so he could acquire apartments in Dublin.
It was claimed the borrower got into arrears and in 2012 PTSB made demands for repayment of just over €250,000 the total debt it claims is due on the loans.
It also brought proceedings seeking possession of the properties, but the matter did not proceed.
The loans were then sold by PTSB in around June 2015 to Havbell Designated Activity Company, who sought to renew the possession application against the borrower.
Aodhan O’Faolain, Ireland International News Agency Ltd.