The Gazette 1995

OCTOBER 1995

put into practice the Committee's recommendation in this matter.

To meet this situation, Section 4 ( 5) The V AT Act 1972 provides that a landowner who does not himself engage in any development work can, nevertheless, be treated as a taxable person in certain circumstances. The most common example of the application of this provision relates to the granting of building licences. Under such an arrangement, a landowner, in consideration of the payment of a site fine by a builder, permits the builder to erect a building on the site and undertakes to convey an interest in the site to the builder's nominee (i.e. the house purchaser). In those circumstances, the landowner is regarded as a taxable person and is accountable for VAT, firstly, on the site fine, and secondly, on the value of any interest conveyed to the purchaser. In addition, if a house purchaser bought an undeveloped site from a company and then entered into an agreement with a related company to build a house on that site, the original section 4 ( 5) ensured that V AT was payable on the disposal of the site. Between 1972 and 1994, Section 4 ( 5) of the V AT Act operated successfully to combat tax avoidance schemes o f this nature. However, in an Appeal hearing in 1994, the subsection was found to be defective. Section 122 of the Finance Act 1995 revised the wording of section 4 ( 5) to take account of this Appeal decision. It ensures that the sale of a site, as part of an overall agreement to develop it. continues to be taxable. This is in line with long-standing Revenue practice in this area. The new wording of section 4 ( 5) is simply intended to maintain the status quo obtaining between 1972 and 1994. The sale of an undeveloped site is not affected by this provision and will continue to be free from VAT unless disposed of in the precise circumstances outlined above. Thus, the new provision will not apply, for example, where a parent makes a gift of a site to a child, nor, generally, even where a parent sells a site to a child. Nor will the new provision apply where the parties to a gift are unrelated.

New General Conditions of Sale ( 1 9 9 5) Edition At their recent meeting the Conveyancing Committee considered a number of applications received from practitioners seeking the permission of the Law Society to input the new General Conditions of Sale in their entirety on to their WP or computer data bases for general use by their offices in conveyancing transactions. Having considered the matter at length, the Committee unanimously decided to recommend that the Law Society should not grant its consent to such applications as it considered that the adoption of such practice would place an unnecessary additional burden on other solicitors who would be required to ensure that the reproduced copies of the Contract would replicate in all respects the standard printed General Conditions of Sale. Furthermore, it was the unanimous view of the Committee that the use of the new Form of Contract as produced by WP ' s would add significantly to their bulk with little or no saving in financial costs to practitioners adopting this practice. The Committee is satisfied that the i universal use by the profession of the new Contract in its standard printed form will be in the best interests of practitioners as it will lead to an overall standardised procedure being adopted by the profession in conveyancing matters. The Committee is aware of the existing widespread practice of the first four pages of the Contract being placed on WP data bases. The Committee accepts the practical benefits of this practice and approves of the practice provided that the General Conditions of Sale in their entirety are appended to the first four pages of Contract. In this regard, the Committee emphatically repeats the recommendation expressed in clear terms both in the letter to the profession from the Chairman on the launch of the new Contract and also in the explanatory Memorandum accompanying the new Contract that the new Form of Contract in its entirety be used by practitioners.

Note:

There is a recommendation within the marginal note to General Condition 36 that certain matters be dealt with expressly by Special Condition. Practitioners are reminded that a corresponding recommendation extends to issues arising under any of the General Conditions, including, inter alia, points of difficulty or doubt on warranties or compliance or as to the I existence or nature of conditions referred to in General Condition 36 itself. In the latter connection the Committee considers it important for an intending Vendor, prior to contract, to put the prospective Purchaser in possession of all material information in the spheres of Planning, Building Control and kindred legislation, and that any inability to fulfil the requirements of General Condition 36 be dealt with through the medium of Special Condition. | The attention of members is directed to j the brochure "Registration/ Insurance/Compensation" published by i An Post. The registered post system is effectively | compensation of only £20.00. However, j it is possible to insure post for an amount higher than the standard registered post | fee. The compensation paid is directly 1 related to the registration fee. i Before compensation is paid, An Post must be satisfied that the loss occurred I in the post. However, it should also be noted that indicated that a claim for registration I fees incurred in replacing a document ; may succeed, but a claim for professional fees or loss to the client, i would not succeed. Niall G. Casey, Professional Purposes Committee. | an insurance scheme. The basic registration fee yields maximum ! compensation does not extend to consequential loss. An Post have Conveyancing Committee Documen ts Lo st by An Post

The Committee requests that in their own interests practitioners accept and

Taxation Committee.

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