Report on Multi-Unit Developments - Law Reform Commission

A contract for the sale of a unit in a multi-unit development will be
between developer and unit purchaser. The developer will agree to
procure the transfer of the legal title from the OMC.
The parties to the conveyance will be the developer (who will convey
the beneficial interest), the OMC (who will convey the legal interest)
and the unit purchaser. The consideration is payable by the unit
purchaser to the developer, 95% will paid immediately to the developer
on completion of the sale and the balance of 5% will be paid by the
purchaser to the OMC on the instructions of the developer to be held in
trust for the developer pending completion of the development. 45
4.48 The Commission now turns to examine the taxation implication of
these proposed arrangements.
(a)
Value Added Tax:
4.49 Under the Value-Added Tax Act 1972 a charge to Value-Added Tax
(VAT) arises in relation to property which must have been developed 46 and
must be supplied for consideration in the course of business (the ‗supply‘ of
‗immovable goods‘). 47 The building of a multi-unit development would therefore
be a circumstance where the land is developed or altered in such a manner as
to give rise to a charge to VAT. Until 2008, supply in relation to goods was
defined as ‗the transfer of ownership of the goods by agreement.‘ 48 Section 85
of the Finance Act 2008 49 amends this definition and provides that ―in the case
of immovable goods, ‗supply‘ shall be regarded as including -
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If completion of the development has already occurred before the sale of the unit
then 100% of purchase price is payable immediately to the developer.
S1(1) of the 1972 Act defines ‗development‘ and ‗developed‘ as follows:
―Development in relation to any land means - (a) the construction, demolition,
extension, alteration or reconstruction of any building on the land, or (b) the
carrying out of any engineering or other operation in, on, over, or under the land
to adapt it for materially altered use, and developed shall be constructed
accordingly.‖
Sections 2, 3 and 4 Value-Added Tax Act 1972.
Section 3(1) VAT Act 1972.
With effect from 1 July 2008 inserts a new Section 1C to the VAT Act 1972.
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