653AH Deferral of residential zoned land tax in certain circumstances

Summary

This section provides for the deferral of residential zoned land tax where residential development is commenced on a relevant site, and for the abatement of the tax so deferred if the residential development is completed within the timeframe set out in the grant of planning permission in respect of the relevant site.

Details

(1) This section applies where –

• (a) planning permission has been granted in respect of the development of a relevant site,
• (b) the development to be carried out is wholly or partly residential development. The portion of the relevant site relating to residential development is referred to as ‘relevant residential development’ for the purposes of this section, and
• (c) development has commenced, e.g. a commencement notice has been lodged with the appropriate local authority.

(2) Where more than one commencement notice is lodged with the appropriate local authority, the reference in subsection (1)(c) is a reference to the first commencement notice, in respect of which substantial activity in relation to the development has commenced.

(3) Subject to subsections (4A), (5), (5A) and (7), where this section applies, any residential zoned land tax, less any residential zoned land tax paid pursuant to subsection (5A), arising in respect of a relevant residential development on liability dates falling after the lodgement of a commencement notice in respect of such a development, shall, notwithstanding the payment date in section 653Q(2), not be due and payable until the happening of the earlier of –

• (a) the date on which works on the relevant site permanently cease, without the lodgement of certificates of compliance in respect of all of the relevant residential development with the appropriate local authority,
• (b) the date on which the relevant site, or part thereof, is sold or transferred,
  • where all of the relevant site is sold or transferred, before the lodgement of certificates of compliance in respect of all of the relevant residential development on the relevant site, with the appropriate local authority, or
  • where part of the relevant site is sold or transferred, before the lodgement of certificates of compliance with the appropriate local authority, in respect of the relevant residential development on that part of the relevant site, and
• (c) the date on which the planning permission granted in respect of the development expires, without the lodgement of certificates of compliance in respect of all of the relevant residential development with the appropriate local authority.

(4) In this section, residential zoned land tax deferred pending the earliest happening of any of the events specified in subsection (3) is referred to as ‘deferred residential zoned land tax’.

(4A) (a) For the purposes of this subsection, ‘group’ and ‘member of a group’ have the same meaning as they have in section 616.

(b) This subsection will apply where a member of a group of companies (referred to as the ‘transferor company’) transfers a relevant site, or part thereof, to another member of the group (referred to as the ‘transferee company’), where both the transferor company and the transferee company are within the charge to corporation tax.

(c) Where this subsection applies:

• the transferee company is deemed to have acquired the relevant site, or part thereof, which is transferred to them, when the transferor acquired it,
• any deferred residential zoned land tax relating to the transferred site, up to the date of the inter-group transfer, is deemed to become deferred residential zoned tax of the transferee company, and
• there is deemed to be no change in ownership of the transferred site in respect of the inter-group transfer for the purpose of subsection (3)(b).

(d) Where deferred residential zoned land tax becomes due and payable in accordance with subsections (3), (5A) or (7)(b) in respect of the site, or part of the site, which is transferred between group companies, the transferor company and transferee company will be held jointly and severally liable in respect of such tax.

(5) The residential zoned land tax that can be deferred in accordance with this section is the tax relating to relevant residential development, which arises in respect of a liability date which falls after the lodgement of a commencement notice and up until the occurrence of the first of the events listed in subsection (3).

The amount of tax deferred shall be –

• all residential zoned land tax due where the development relates to residential development only, or
• an amount of tax based on the portion of the site which has been developed for residential purposes, as determined by ‘A’ in the formula:
          A = B × C
  where –
  B is the market value of the part of the relevant site that is being developed for residential use (referred to in this section as the ‘qualifying part of the relevant site’), on the valuation date applicable to the liability date, and
  C is the rate of 3 per cent.

(5A) (a) Where a transfer of part of a relevant site, referred to in this subsection as a ‘part ownership change’, is the earliest event to occur of the three events referred to in subsection (3), the amount of the deferred residential zoned land tax relating to the transferred part of the relevant site, which :

• arises in respect of a liability date falling in the period from the date the commencement notice is lodged with the local authorities to the date of the part ownership change, and,
• that becomes due and payable in accordance with subsection (3) on the date of the part ownership change, and referred to in this subsection as a ‘part ownership change liability’, is the amount represented by A in the following formula:
          A = (B – C) × D/E
  where –
  B is the deferred residential zoned land tax in respect of the relevant site before any change in ownership,
  C is the sum of the part ownership change liabilities arising in respect of the relevant site prior to the change in ownership in question,
  D is the area in square meters of the part of the relevant site which is transferred pursuant to the part ownership change, and
  E is the total area in square meters of the relevant site as it was comprised immediately prior to the change in ownership.

(b) Following the part ownership change, the part ownership change event is deemed not to have been the earliest to occur of the events referred to subsection (3). This ensures that the subsequent occurrence of an event referred in subsection (3) will trigger a crystallisation of the balance of the deferred RZLT in the normal manner.

(6) Where an apportionment of the tax to be deferred is required in accordance with subsection (5)(ii) –

• (a) the market value of the qualifying part of the relevant site (B in the formula in subsection (5)(ii)) on the first liability date after the lodgement of a commencement notice is calculated using the formula used to calculate the market value of the ‘liable part of the relevant site’ in section 653AG(4), and
• (b) for the purposes of calculating the amount of residential zoned land -
  
  1. the part of the relevant site that is being developed for non-residential use will have as its valuation date the next liability date after the lodgement of the (first) commencement notice. The market value on that valuation date will be calculated using the method outlined in subsection (6)(a).
  2. the valuation date in subparagraph (i) will continue to apply until 1 February in the year immediately following the first occurrence of any of the events listed in subsection (3).

(7) Notwithstanding the provision in subsection (3) setting out the earliest date on which deferred residential zoned land tax becomes due -

• (a) residential zoned land tax deferred on an account of the commencement of residential development is not due and payable where the liable person makes a claim on the basis that all relevant residential development is completed within the life of the planning permission granted in respect of the planning permission site, or
• (b) that residential zoned land tax deferred on an account of the commencement of residential development on a relevant site may only be partly due and payable where the relevant residential development is partly completed within the life of the planning permission granted in respect of the site. Where the percentage of the relevant residential development completed, calculated in accordance with subsection (8), is within any of the percentages in column (1) of the Table to this section, then, on the making of a claim by the liable person, the percentage of the deferred residential zoned land tax relating to the relevant site which is due and payable shall be the corresponding percentage, set out in column (2) of the Table.

(7A) Where deferred residential zoned land tax becomes due and payable in accordance with subsections (3), (5A) or (7)(b), the liable person must amend each return in respect of each liability date to which section 653AH refers and pay any tax and interest due.

(8) For the purposes of determining the amount of deferred residential zoned land tax due (8) and payable in circumstances where relevant residential development is partially completed within the lifetime of the planning permission in accordance with subsection (7)(b), the percentage of relevant residential development completed on the expiry of the applicable planning permission is determined by ‘A’ in the following formula:

        A = (B/C) × 100

where -

B is the total gross floor space of the relevant residential development completed at the expiry of the planning permission, less the total of such gross floor space, if any, of the part of the relevant residential development on a part of a relevant site in respect of which there has been a part ownership change as referred in subsection (5A), and

C is the total gross floor space of the relevant residential development, as set out in the planning permission less the total of such gross floor space, if any, of the part of the relevant residential development on a part of a relevant site in respect of which there has been a part ownership change as referred in subsection (5A).

(8A) References in subsection (8) to a relevant site, are to the relevant site as it was comprised prior to the lodgement of any certificate of compliance on completion in respect of residential development on the relevant site, notwithstanding that section 653O(5) provides that such part of the site is no longer to be a relevant site. This reference ensures that all relevant development completed on the original site, in respect of which planning permission was granted, is included in the formula (provided for in subsection (8)) and taken into account when calculating the amount of deferred residential zoned land tax which may be abated in accordance with this section on the expiry of the planning permission.

(9) A claim made under subsection (7) will be in form to be specified by the Revenue Commissioners.

(10) A liable person may only rely on the provisions of this section where a return is filed in respect of each annual liability date in the period to which this section applies.

            Table

Relevant Date: Finance Act 2024