It is “illogical” that the government is shirking responsibility for notaries who fail to pass on the taxes paid by property buyers to the taxman, the ombudsman has said in a strongly-worded report.

At present, the only remedy available to those who have been bitten by a notary who has run off with the funds – short of taking legal action – is to again pay the taxes due on the property transfer, Ombudsman Joseph Zammit McKeon said. If they fail to do so, the property purchase would not be able to go through.

The ombudsman pointed out in his report that notaries are public officers, carrying out the functions entrusted to them by the government. Therefore, property buyers have no way of foreseeing that the notary would not have deposited the taxes they paid on property transfers to the Commissioner for Revenue.

“Claiming that the notary was chosen by the parties and that therefore government cannot be held responsible is illogical in the opinion of this Office,” the ombudsman said.

The ombudsman kickstarted an investigation into the matter several years ago, based on specific complaints that certain notaries – who as public officers are authorised by the government to collect taxes on property transfers – were failing to pass on their clients’ money to the tax authorities.

Complainants, having already paid these taxes to the notary, felt aggrieved by the Commissioner for Revenue’s policy to request repayment of these same taxes dues, the ombudsman said.

The Commissioner for Inland Revenue’s position resulted in double payments, adding financial burdens on purchasers

Despite having put forward a raft of proposals to solve the impasse almost a year ago, the ombudsman lamented that none of these suggestions had been implemented by the government.

These proposals included having the chief notary to the government step in to register the property transfer deed, without any further expense to the client whose notary defaulted, and the government reserving the right to take action against the notary in question.

“…the government is in the strongest position in applying the full weight of the law against the public officer designated by law to collect tax due to the Commissioner for Revenue,” the ombudsman said.

While acknowledging the current legal constraints, the ombudsman criticised the authorities for “neglecting” the plight of those finding themselves in this situation.

“The Commissioner for Inland Revenue’s position resulted in double payments, adding financial burdens on purchasers,” the ombudsman said.

Money for property purchases, including deposits, registration fees and taxes due to the inland revenue department, are handed to a notary, who acts as an intermediary in the property deal.

Over the years, several cases have arisen where notaries have misused the deposits and also failed to pass on the tax money collected from property buyers to the tax authorities.