VAT on Property, Finance Act 2010
- CHAPTER 2 VAT ON THE SALE OF A PROPERTY
- 2.3.1 First preliminary task: is the seller acting in the course of business for VAT purposes?
- 2.3.2 Second preliminary task: find out is there a “sale” for VAT purposes
- 2.3.3 Third preliminary task: find out if the sale is subject to the standard rules or the transitional rules
- 2.3.4 Fourth preliminary task: find out if you are selling a “building” or “a property other than a building”
- 2.3.5 Summary of Part I
- PART II - THE FIVE CATEGORIES OF EXEMPTION
- 2.4.1 Exempt Category 1: Property that has not been developed in the last 20 years”?
- 2.4.2 Exempt Category 2: “Old Buildings”
- 2.4.3 Exempt Category 3: “Used Second-hand Building”
- 2.5 Sale of property other than buildings
- 2.5.1 Exempt Category 1: “property that has not been developed in the last 20 years”
- 2.5.2 Exempt Category 4: “Old Property”?
- 2.5.3 Exempt Category 5: “Used Second-hand Property”?
- 2.6 Partially Completed Buildings or Properties
- 2.7 Compare and Contrast the Five Exempt Categories
- 2.8 Worked Examples of How VAT Applies to the Sale of an Ownership Interest
- PART IV - THE KEY DEFINITIONS
- 2.11 “Completed”
- 2.12 “Occupied”
- 2.13 “Development”
- 2.13.1 Planning permission
- 2.13.2 Area developed
- 2.13.3 Relevance of whether property is developed or not
- 2.13.4 The Emmen case
- 2.13.5 Section 639 of the Taxes Consolidation Act 1997
- 2.14 “Significant Development”
- 2.15 “Buildings”
- 2.16 “Freehold equivalent”
- PART V - SPECIFIC RULES FOR SPECIFIC TRANSACTIONS
- 2.17 Sales of Residential Buildings by Developers or Persons Connected with Developers
- 2.17.1 Why was this rule introduced?
- 2.17.2 The impact of letting the property on the developer's VAT recovery
- 2.17.3 What is the relief?
- 2.17.4 Does the relief apply to properties completed before 1 July 2008?
- 2.18 Connected Development Contracts: Anti-avoidance Law on Sale of Undeveloped Land
- 2.19 The Sale of a Freehold in Connection with the Transfer of a Business
- 2.20 The Sale of an Ownership Interest Within a VAT Group
- 2.21 The “Sale” of an Ownership Interest by Compulsory Purchase or by Seizure
- 2.22 The Mortgage and Repossession of an Ownership Interest
- 2.23 Options to Buy
- 2.24 Sale of a Private Asset by a Registered Person
- 2.25 Rent-to-Buy Schemes
- 2.26 The Forfeiture of the Deposit on Failure to Complete
- 2.27 The Self-supply of an Ownership Interest
- 2.28 Transfer to Private Use
- 2.29 Gifts
- PART VI - ACCOUNTING FOR VAT ON THE SALE
- 2.30 The Amount on which VAT is Charged on the Sale of an Ownership Interest
- 2.30.1 The majority of sales
- 2.30.2 Stamp duty
- 2.30.3 Market price
- 2.30.4 The interaction between the market value rules and the Capital Goods Scheme
- 2.31 The Rate at which VAT is Charged on the Sale of an Ownership Interest
- 2.31.1 The majority of sales
- 2.31.2 Composite or multiple supplies
- 2.31.3 What is a composite supply?
- 2.31.4 What is a multiple supply?
- 2.31.5 Apportioning the consideration
- 2.31.6 Composite and multiple supplies case law
- 2.31.7 Where are we now with composite and multiple supplies?
- 2.32 The Place of Supply - The Country in which the Sale of an Ownership Interest is Charged to VAT
- 2.33 The Time when the Charge to VAT on the Sale of an Ownership Interest Arises - The Triggering Event
- 2.34 The VAT Clause in a Contract for the Sale of an Ownership Interest
- CHAPTER 3 LETTINGS
- PART I - THE VAT TREATMENT OF LETTINGS
- 3.2 An Overview of the VAT Treatment of Lettings
- 3.3 The Two Step Approach
- 3.4 A More Detailed Look at Step 1 - Determining the Correct VAT Treatment to be Applied to a Letting
- 3.5 A More Detailed Look at Step 2 - Applying the Correct VAT Treatment to the Letting
- 3.5.1 Applying the standard rules
- 3.5.2 Applying the transitional rules
- 3.5.3 Applying the waiver of exemption
- 3.6 Remember the Capital Goods Scheme Implications of Granting a Letting
- 3.7 Summary
- PART II - A MORE DETAILED LOOK AT LETTINGS
- 3.8 The Exemption for Lettings
- 3.9 The Option to Tax
- 3.9.1 How do you opt to tax?
- 3.9.2 Remember the VAT clause!
- 3.9.3 Is including a VAT clause sufficient to exercise the option?
- 3.9.4 When can you exercise an option?
- 3.9.5 Can you backdate an option?
- 3.9.6 The deemed option to tax
- 3.9.7 When can you not exercise an option to tax?
- 3.9.8 The option to tax can be exercised if the connected tenant/occupant is entitled to recover at least 90% of the VAT charged on the rent
- 3.9.9 What does “connected” mean
- 3.9.10 Terminating the option to tax
- 3.9.11 Automatic termination of the option to tax - connected lettings
- 3.9.12 The option to tax and premiums
- 3.9.13 The option to tax - letting by letting
- 3.10 The Waiver of Exemption
- 3.10.1 Introduction
- 3.10.2 So what is a waiver?
- 3.10.3 There was a choice
- 3.10.4 No new waivers after 1 July 2008
- 3.10.5 Existing waivers continue
- 3.10.6 Are waivers still restricted to lettings of less than ten years?
- 3.10.7 The impact of a waiver of exemption
- 3.10.8 The differences between the waiver of exemption and the option to tax
- 3.10.9 Cancelling a waiver of exemption
- 3.10.10 Selling a property before cancellation of your waiver
- 3.10.11 Finance Act 2009 changes
- 3.10.12 Letting a property after cancelling your waiver of exemption
- 3.10.13 Sale of a property after the cancellation of a waiver
- 3.10.14 The implications of making a taxable sale after cancelling a waiver of exemption
- 3.10.15 The implications of making an exempt sale after cancelling a waiver of exemption
- 3.10.16 The waiver of exemption and residential lettings
- 3.10.17 Backdating a waiver of exemption
- 3.11 Premiums on the Grant of a Lease
- 3.12 Reverse Premiums
- 3.13 Assignments
- 3.13.1 Assignments pre 1 July 2008
- 3.13.2 Assignments post 1 July 2008 - not transitional interests
- 3.13.3 Assignments post 1 July 2008 - transitional interests
- 3.13.4 Payment by the assignor to the assignee
- 3.13.5 Payment by the assignee to the assignor
- 3.14 Surrenders
- 3.14.1 VAT treatment of a surrender before 1 July 2008
- 3.14.2 Surrenders post 1 July 2008 - transitional interests
- 3.14.3 VAT treatment of a surrender after 1 July 2008
- 3.14.4 What if payment is made for the surrender?
- 3.14.5 Break clauses and surrenders
- 3.15 Lease Variations
- 3.16 Leases Within a VAT Group
- 3.17 Election to Register for VAT - Holiday Homes
- CHAPTER 4 THE CAPITAL GOODS SCHEME (“CGS”)
- PART II - A DETAILED LOOK AT THE CGS - THE TERMS AND FORMULA
- 4.5 When Does the CGS Apply?
- 4.6 What is a Capital Good?
- 4.7 Applying the CGS
- 4.8 The Four Calculations that Underpin the CGS
- 4.9 When does the Adjustment Period Start?
- 4.10 How do you Account for the Adjustment?
- 4.11 AGlossary of Terms
- 4.12 A Worked Example of a Capital Goods Scheme
- 4.12.1 Step 1 - Recovering the VAT paid
- 4.12.2 The second step - working out the “Total reviewed deductible amount”
- 4.12.3 Step 3 - The first adjustment
- 4.12.4 Step 4 - The second interval adjustment
- 4.12.5 Step 5 - The third interval adjustment
- 4.12.6 Step 6 - The fourth interval adjustment
- 4.12.7 Step 7 - The remaining intervals
- 4.12.8 The Capital Goods Record
- 4.12.9 The amount of VAT recovered - check
- 4.12.10 Summary
- PART III - OTHER CALCULATIONS UNDER THE CGS
- 4.13.1 What happens if a capital good is not used during the initial interval?
- 4.13.2 What happens if a capital good is not used in the second or a subsequent interval?
- 4.13.3 What does “use” mean?
- 4.14 What Happens if my Accounting Year-end Changes?
- 4.15 Why is the Initial Interval Set at the First 12 Months of Use?
- 4.16 Calculating the Interval Adjustment and the Annual Adjustment
- 4.17 Selling the Property During the CGS Period
- 4.17.1 The impact of making a taxable sale
- 4.17.2 The purchaser's position
- 4.17.3 The impact of making an exempt sale
- 4.17.4 The purchaser's position
- 4.17.5 The interaction between the CGS and the Option to Tax a Sale
- 4.17.6 Sale of part of a capital good
- 4.18 A Significant Change in Taxable Use of the Capital Good - “The Big Swing”
- 4.19 The CGS Implications of Cancelling an Option to Tax
- 4.20 The CGS Implications of Opting to Tax
- 4.21 The CGS Implications of Granting a Letting and Not Opting to Tax
- 4.22 Some Points on the CGS and Transfer of Business Relief
- 4.22.1 The CGS implications of a sale between connected persons
- 4.22.2 The VAT status of the adjustment amount
- 4.22.3 The interaction of the connected party provisions with the market value provisions
- 4.22.4 Avoiding paying the adjustment amount
- 4.23 Refurbishments Carried Out by a Tenant
- 4.24 Destroyed Capital Goods
- 4.25 The Impact of Changing the Year-End During the Adjustment Period
- 4.26 Direct Tax Implications of CGS Adjustments
- CHAPTER 5 THE TRANSITIONAL MEASURES
- PART I - THE TRANSITIONAL RULES
- 5.2 Understanding When you need to Apply the Transitional Rules
- 5.3 The 4 Transitional Transactions
- 5.4 The 4TT Checklist
- 5.4.1 The First Transitional Transaction - The Transitional Sale
- 5.4.2 The Second Transitional Transaction - The Transitional Letting
- 5.4.3 The Third Transitional Transaction - The Transitional Assignment
- 5.4.4 The Fourth Transitional Transaction - The Transitional Surrender
- 5.5 A More Detailed Look at the Transitional Rules
- 5.6 What is a Transitional Interest?
- 5.6.1 The first definition - freeholds and freehold equivalents
- 5.6.2 The second definition - legacy leases and legacy lease reversions
- 5.7 The First Transitional Transaction - Transitional Sales
- 5.8 The Second Transitional Transaction - Transitional Lettings
- 5.8.1 What is a deductibility adjustment?
- 5.8.2 Differences between a transitional letting and a letting covered by the standard rules
- 5.8.3 The hidden costs of a deductibility adjustment
- 5.8.4 The entitlement to an additional VAT credit on selling or leasing the property after paying a deductibility adjustment
- 5.8.5 The impact of making a taxable letting after paying a deductibility adjustment
- 5.9 The Third and Fourth Transitional Transactions - Transitional Assignments & Transitional Surrenders
- 5.9.1 Is it a Transitional Assignment/Surrender - The 20 year rule
- 5.9.2 Is the Transitional Assignment/Surrender taxable or exempt?
- 5.9.3 Calculating the VAT arising on the assignment or surrender
- 5.9.4 The VAT treatment of a premium paid for the assignment/surrender of a legacy lease
- 5.9.5 Opting to tax an exempt assignment or surrender
- 5.9.6 If you make a taxable assignment or surrender you may get an additional VAT repayment
- 5.10 Summary Check List for Assignments/Surrenders of a Transitional Interest
- 5.11 Reverse-Charge
- 5.12 The Document
- 5.13 CGS Implications for the Assignee/Landlord Arising from the Assignment/Surrender of a Legacy Lease
- 5.14 The Sale of a Property After the Surrender of a Transitional Lease
- 5.15 Lettings after the Surrender of a Transitional Lease
- 5.16 Use of a Property After the Surrender of a Transitional Interest
- 5.17 The Status of an Assigned Transitional Interest
- PART II - THE APPLICATION OF THE CGS TO TRANSITIONAL INTERESTS
- 5.18 To what Transitional Interests Does the CGS Apply?
- 5.19 Applying the CGS to Transitional Interests
- 5.20 The CGS Implications of Disposing of Your Transitional Interest
- 5.21 Amendments to the CGS so that it can apply to Transitional Interests
- 5.22 Transitional Interests Acquired After 1 July 2007
- CHAPTER 6 REGISTRATION, RECOVERY, INVOICING AND RETURNS
- 6.1 Registration
- 6.2 Recovery
- 6.3 The VAT Invoicing Requirements on the Sale of an Ownership Interest or an opted letting
- 6.3.1 Governing legislation
- 6.3.2 Requirement to issue an invoice
- 6.3.3 What should be on a VAT invoice?
- 6.3.4 Time limit for issuing the Invoice
- 6.4 For How Long do you Have to Hold on to VAT Records?
- 6.5 The Appropriate Return for VAT on the Sale of an Ownership Interest
- CHAPTER 8 THE IMPACT OF EU LAW ON IRISH VAT ON PROPERTY
- 8.1 Introduction
- 8.2 The Relationship between Irish and EU VAT Law
- 8.3 The Meaning of the Word “Letting” for VAT Purposes
- 8.3.1 The definition of “letting” given by the European court
- 8.3.2 Hotel sector or sector with a similar function - Blasi
- 8.3.3 Licences
- 8.4 ECJ Decisions on the Non-Business use of Business Assets
- 8.5 Using a Property for both Business and Non-Business Purposes - The Practical Implications
- APPENDIX I REVENUE VAT ON PROPERTY GUIDE - APRIL 2010
- APPENDIX II FAQs - VAT ON PROPERTY
- APPENDIX III TAX BRIEFING - ISSUE 69, SEPTEMBER 2008
- APPENDIX IV REVENUE EBRIEF NO. 37/09: 5 JUNE 2009
- APPENDIX V REVENUE EBRIEF NO. 40/09, 29 JULY 2009
- APPENDIX VI TAX BRIEFING - ISSUE 81, NOVEMBER 2009
- APPENDIX VII TAX BRIEFING - ISSUE 02, FEBRUARY 2010
- APPENDIX VIII TAX BRIEFING - ISSUE 03, APRIL 2010
- APPENDIX IX SERVICE CHARGES