Finance Act 2005

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Amendment of section 4 (special provisions in relation to the supply of immovable goods) of Principal Act.

100.—(1) Section 4 of the Principal Act is amended—

(a) in subsection (3)(a), by substituting “Subject to paragraphs (aa) and (b)” for “Subject to paragraph (b)”,

(b) by inserting the following after paragraph (a) of subsection (3):

“(aa) Where a person having an interest in immovable goods to which this section applies surrenders possession of those goods or of any part thereof in such circumstances that the surrender does not constitute a supply of the goods for the purposes of subsection (2), the provisions of paragraph (a) shall not apply when this paragraph and paragraph (ab) take effect pursuant to section 100 (2) of the Finance Act 2005.

(ab) Subject to paragraph (b), where a person having an interest in immovable goods to which this section applies surrenders possession of those goods or any part thereof in such circumstances that the surrender does not constitute a supply of the goods for the purposes of subsection (2), that person shall be liable for an amount, in this paragraph referred to as a deductibility adjustment, which shall be payable as if it were tax due by that person in accordance with section 19 for the taxable period in which the surrender occurred, and that deductibility adjustment shall be calculated in accordance with the following formula:

T × (Y-N)

————

Y

where—

T is the amount of tax which the person who surrenders possession of the goods was entitled to deduct in accordance with section 12 in respect of that person's acquisition of the interest in and development of the goods the possession of which is being surrendered,

Y is 20 or, if the interest when it was acquired by the person who surrenders possession of the goods was for a period of less than 20 years, the number of full years in that interest, and

N is the number of full years since that person acquired the interest in the immovable goods being surrendered or, if the goods were developed since that interest was acquired, the number of full years since the most recent development:

but if that N is greater than that Y, such deductibility adjustment shall be deemed to be nil.”,

(c) by substituting the following for subsection (6) inserted by the Act of 2004:

“(6) (a) Tax shall not be charged on the supply of immovable goods—

(i) which were used in such circumstances so that the person making the supply had no right to deduction under section 12 in relation to tax borne or paid on the acquisition or development of those goods, or

(ii) which have been occupied before the specified day and had not been developed between that date and the date of the supply.

(b) Paragraph (a) does not apply to a supply of immovable goods, being goods—

(i) to which subsection 5 applies, or

(ii) which were acquired by the person making the supply as a result of a transfer in accordance with section 3(5)(b)(iii) and if tax had been chargeable on such transfer the person making the supply would have had a right to deduction under section 12 in relation to such tax.”,

(d) by substituting the following for subsection (8) (inserted by the Finance Act 1997 ), and subsection (9) (inserted by the Finance Act 1998 ):

“(8) (a) Where tax is chargeable in relation to a supply of immovable goods which is a surrender of an interest in immovable goods or an assignment of an interest in immovable goods to—

(i) a taxable person,

(ii) a Department of State or a local authority, or

(iii) a person who supplies immovable goods of a kind referred to in paragraph (a) of the definition of ‘exempted activity’ in section 1 or services of a kind referred to in paragraphs (i), (iv), (ix), (xi), (xia), (xiii) and (xiv) of the First Schedule, in the course or furtherance of business,

then, the person to whom those goods are supplied shall be accountable for and liable to pay the tax chargeable on that supply and the said tax shall be payable as if it were tax due by that person in accordance with section 19 for the taxable period within which the supply to the person took place and for these purposes the person to whom the goods are supplied shall be a taxable person and the person who made the surrender or assignment shall not be accountable for or liable to pay the said tax.

 (b) Notwithstanding subsection (2A)(a) of section 8, if the supply referred to in paragraph (a) is to a Department of State or a local authority, that Department of State or local authority shall be accountable for and liable to pay the tax referred to in that paragraph.

 (c) (i) A surrender or assignment of immovable goods referred to in paragraph (a) shall be treated as a supply of goods made by the person to whom the goods are supplied.

(ii) Upon the surrender or assignment of immovable goods referred to in subparagraph (i), the person who makes the surrender or assignment shall issue a document to the person to whom the surrender or assignment is made indicating the value of the interest being surrendered or assigned and the amount of tax chargeable on that surrender or assignment.

(iii) For the purposes of section 12, that section shall apply as if this paragraph had not been enacted.

(9) (a) Where an interest in immovable goods is created in such circumstances that a reversion on that interest (hereafter referred to in this subsection as a ‘reversionary interest’) is created and retained, then any subsequent disposal to another person of that reversionary interest or of an interest derived entirely therefrom shall be deemed to be a supply of immovable goods to which subsection (6) applies, provided that, since the date the first-mentioned interest was created, those goods have not been developed by, on behalf of, or to the benefit of, the person making such subsequent disposal: but the provisions of this subsection shall not be construed as applying to a disposal of an interest which includes an interval.

(b) The Revenue Commissioners may make regulations specifying the circumstances or conditions under which development work on immovable goods is not treated, for the purposes of this subsection, as being on behalf of or to the benefit of a person.”.

(2) Paragraphs (a) and (b) of subsection (1) shall take effect as on and from such day as the Minister for Finance may, by order, appoint.