Tax Compliance

Dáil Éireann Debate, Wednesday - 8 October 2014

Wednesday, 8 October 2014

Questions (64)

Eoghan Murphy

Question:

64. Deputy Eoghan Murphy asked the Minister for Finance if it was obligatory in 2002 for a purchaser of a house to pay stamp duty on the contract if all of the purchase money had been paid to the vendor and there was no purchase deed and the purchaser was in occupation; if this was the law at the time; if the Revenue Commissioners pursued those builders for the stamp duty where they had breached this law; if the Revenue Commissioners were unaware of the practice at the time, when was it brought to their attention subsequently; the cause of the delay of the activation of prepared legislation in this area; and the amount of money lost to the State on development land as a result. [38489/14]

Written answers

Minister for Finance

I am informed by the Revenue Commissioners that stamp duty, which is mainly chargeable on instruments, such as deeds of conveyance or transfers of property, was mandatory in relation to instruments executed in 2002. Where an instrument was executed in 2002 stamp duty was generally payable within 30 days of its execution. Interest and penalties were applicable where an instrument was not stamped within this time limit. The person accountable for payment of stamp duty was the purchaser or  transferee.

I take it the Deputy's  question  relates to a number of arrangements, such as the use of resting in contract, building licences and agreements for lease, whereby developers could, in effect, acquire and develop land without incurring a liability to stamp duty.  Legislation was introduced in Section 110 of Finance Act 2007 to address these matters, subject to a commencement order.  The then Minister for Finance commissioned a report on the potential effects of commencing these provisions. The report recommended that, on balance, the section should not be commenced at that time as it would have led to a rise in land prices with a knock-on increase in house prices, especially for first-time buyers, and possibly risked exacerbating the downturn in the property market. 

The legislation was further amended by Section 82 of Finance (No 2) Act 2008, taking on board the recommendation of the report. The redrafted provision exempted public private partnership arrangements from the scope of the legislation and commencement was again made subject to commencement from a date to be appointed by the Minister for Finance. In the light of the economic climate at the time, commencement of the legislation was deferred. 

The Deputy will be aware that, having regard to the subsequent reduction in the rates of Stamp Duty from up to 9% down to 1% to 2% and having regard to the economic climate in 2013, I introduced legislation (Section 78 of Finance Act 2013) which contained similar provisions to those not commenced in 2008.  The effect of these provisions is that if any of these arrangements were entered into on or after 13 February 2013, stamp duty would be payable on foot of the arrangements.