Report on Multi-Unit Developments - Law Reform Commission

―the transfer in substance 50 of the right to dispose of immovable
goods as owner or the transfer in substance of the right to dispose of
immovable goods, and
transactions where the holder of an estate or interest in immovable
goods enters into a contract or agreement with another person in
relation to the creation, establishment, alteration, surrender,
relinquishment or termination of rights in respect of immovable
goods… are payable pursuant to or associated with the contract or
agreement.‖
4.50 As this indicates, the supply of property for VAT purposes involves
the transfer of ownership or the transfer in substance of the right to dispose of
the property whether as owner or otherwise. The transfer of the right to dispose
of property is usually regarded as taking place when the contract for the sale of
the property is completed. 51 The Value Added Tax Act 1972 did not state when
a disposal takes place. 52 However, ‗completion‘ in respect of property, with
effect from 1 July 2008 53 means that the development of the property has
reached the state, apart from only such finishing or fitting work that would
normally be carried out by or on behalf of the person who will use them, where
the property can be used for the purposes for which it was designed. It is also
useful to note that an essential requirement for completion is the connection of
all utility services required for the purposes for which the property was
designed.
4.51 The person who is accountable for and liable to pay the tax charged,
the ‗taxable person‘ is defined in the 1972 Act as a person who engages in the
‗supply‘ of the immovable goods in the course or furtherance of business, in
other words the developer.
50
51
52
53
The term ‗in substance‘ is taken to mean not only the freehold of a property but
also other interests in the property that amount to effective ownership. For
instance, many apartment owners do not hold the freehold of the property. For
property law reasons they generally have a very long interest in the property, for
instance a 99 or 999 year lease. VAT on Property Guide, Revenue
Commissioners April 2008.
VAT on Property Guide Revenue Commissioners, April 2008.
In practice this has been treated as the time of the completion of the contract.
Even where a deposit is paid in advance a VAT charge did not arise on the
payment of the deposit as an advance payment as it is held by a solicitor as
stakeholder and not released until the completion of the sale.
Section 4B (1) of the VAT Act 1972 as inserted by Section 88 of the Finance Act
2008 which will come into effect from 1 July 2008.
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