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.
Master Edmund Honohan wondered whether the view that all such loopholes have been closed off is accurate or "fake news".
He made the remarks when striking out a summons of Havbell Designated Activity Company seeking possession orders for a number of investment properties in Dublin secured against loans acquired by the fund.
Mr Honohan, 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 stamp duty had not been paid on the documentation concerning 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 they were exempt from paying stamp duty on the loans transfer. In his ruling, Mr Honohan disagreed.
Stamp duty
Under the 1999 Stamp Duties Consolidation Act, stamp duty must be paid on documents that go before the courts, he said. He also wondered if the exemption claim was another “loophole” being used by “vulture funds”.
Mr Honohan said he was under the impression all loopholes under section 110 of the Taxes Consolidation Act had been closed off after the issue had come to public attention. Now he wondered if that was “fake news”, he said.
He also wondered if any capital gains tax had been paid when loans were transferred to funds.
The properties at the centre of the application were mortgaged under loan agreements between a borrower and Permanent TSB several years ago.
It is alleged PTSB had in 1998 advanced loans of IR£244,000 to the borrower to acquire apartments in Dublin. The borrower, it is claimed, got into arrears and PTSB made demands in 2012 for repayment of just over €250,000, the total debt allegedly due on the loans. It also brought proceedings seeking possession of the properties.
After the loans were sold by PTSB in 2015 to Havbell DAC, it sought to renew the possession proceedings against the borrower.
