The Gazette 1976

N O V E M B E R 1976

G A Z E T T E

5. First fixing (this includes the first fixing of carpentry electrical wiring and plumbing). 6. Glazing (which may sometimes be postponed until after the plastering). 7. Plastering (both inside and outside). 8. Second fixing of carpentry plumbing and electrical wiring. 9. Decorating and finishing. The Revenue Commissioners accept that prior to roof level there would be no question of ad valorem duty being payable, subject of course to evidence sat- isfactory to them being produced to that effect. The Revenue Commissioners do not have any hard and fast rule as to what exact stage they will decide that there is no longer substantial work to be completed on any particular house. Certainly if three quarters of the amount of money relating to any house had already been expended (ex- cluding the site value) they say that there will no longer be substantial work to be completed and ad valorem duty would be payable on the entire price. In between roof level and this stage, each case will be dealt with on its merits. Evidence of Stage of Construction The Adjudication Office were seeking evidence from Solicitors by way of Statutory Declaration as to the stage of construction of houses. The Law Society made representations to the Revenue Commissioners in this connection that it was inappropriate to insist upon declarations from Solicitors. The Revenue Commis- sioners have now indicated that for the future, they will accept the Certificate of such independent profes- sional person as would be acceptable to them. A Char- tered Engineer or Architect who is a member of the Institute of Architects or has satisfied the Revenue Commissioners that he is a practising Architect in good standing will be acceptable to them. Such Certificates would have to state specifically that it was being given on foot of inspection made personally. If the house had not been roofed, the content of the Certificate will be obvious. If it has been roofed, it would be advisable to give the greatest possible detail of the stage of con- struction of the house, detailing the work done and the work to be done. It would be helpful also to give particulars of the value of the work done as a pro- portion of the total. The Revenue Commissioners may require certificates to be verified by Statutory Declaration or other evid- ence in any particular case. Solicitors who act for builders who are purchasing lands for building develop- ment or are embarking on any project involving the building of houses in respect of which certificates of reasonable value are unlikely to be obtained, should advise their clients fully of the need to arrange for satisfactory evidence of the nature mentioned above to be available. The ideal way would be for the Estate Architect or Engineer to inspect each house at found- ation level, wall plate level, roofing and completion so as to be able to furnish detailed certificates if required. There are two other categories of cases involved. The first are the cases currently coming up for ad- judication where the evidence which the Revenue Com- missioners are now seeking is not available, and it is now too late to obtain same. The Revenue Commis- sioners have indicated that they feel that some indepen- dent evidence should be furnished, but that a reason- able view would be taken of such cases, provided of course that there was nothing on the face of the docu-

MEMORANDUM Re: Liability of new houses which are exempt from stamp duty to ad valorem stamp duty Changes in the conditions under which newly built houses qualify for Certificates of Reasonable Value (and as a consequence are exempt from Stamp Duty on the first assurance of such houses) have resulted in a notable reduction in the number of houses qualifying for such exemption. There are two key factors which affect the position. The first is the nature of the contractual relationship between the builder and the purchaser and the second the stage of completion of the house at the date such contractual relationship is entered into. If, under the contract for the sale or lease of the site, the purchaser is entitled to an assurance of the site, then ad valorem duty will be calculated only on the purchase price of the site together with the Stamp Duty on any Ground Rent (subject to what is said later about the stagi of construction of the house at the date of the contract). This is so, even if the assurance includes a covenant by the Purchasers to erect a dwellinghouse on the property to plans and specifications to be ap- proved of by the Grantor/Lessor and to enter into a building contract with John Doe & Co., Ltd., Building Contractors to build a house on the said site at a price of £ . . . If the Contract for Sale or lease provides that the obligations of the Grantor/Lessor are subject to com- pliance by the purchaser with the terms of a particular concurrent Building Contract, then ad valorem duty will be charged on the total consideration contained in both the Contract for Sales/Lease and the Building Contract, e.g. if there is a clause providing for the for- feiture of the right to the assurance if the builder is not paid on foot of the building contract. If there is a clause in the Agreement for Lease/ Sale providing for forfeiture of the right to the assur- ance if the Builder is not paid on foot of the Building Contract, ad valorem stamp duty will be paid on the price in the Building Contract. Such Duty would not be payable if the Agreement for Sale/Lease only pro- vided for such forfeiture if the house is not built on the site within a specified time. Many builders combine Building Agreements and Agreements for Lease in the one document. It is pos- sible to do this without attracting a liability for ad val- orem duty on the Building price but it is probably safer to use Agreements. Even if the Contract for Sales or Lease and the Build- ing Contract are not linked in any way, ad valorem duly will be chargeable if at the time the Contracts or agreements were entered into, the house was "sub- stantially completed". The test is not so much the amount of work done but whether there are "substan- tial works" to be completed on the house before it is finished. We have made inquiries from house builders and are advised that the usual stages of building of a dwel- linghouse on a Building Estate are: — 1. The pouring of foundations. 2. The completion of the sub-floor and drains and con- struction of walls to damp-proof course level. 3. The construction of walls to the wall plate level (ready to take the roof). 4. Roofing (including the completion of tiling and gut- tering).

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