Dan Neville (Limerick, Fine Gael)
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Question 104: To ask the Minister for Finance the position regarding the legacy property based tax relief schemes for the high income earners, particularly section 23 type reliefs. [1118/12]

Michael Noonan (Limerick City, Fine Gael)
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I announced two proposals in Budget 2012 relating to "legacy" property-based tax relief schemes in line with the Programme for Government commitment to reduce, cap or abolish such reliefs which benefit very high income earners. The Budget measures comprise: a property reliefs surcharge and a cap on Accelerated Capital Allowance Schemes.

Virtually all the area-based and property tax incentive schemes have ended. However, there is still a significant on-going legacy cost to the Exchequer as the various tax reliefs which were originally given, are gradually being used up by investors. The Budget 2012 measures are aimed at curtailing this legacy cost and bringing it to an end in a shorter time period.

The measures reflect the Government's belief that large scale investors in property that attracts tax reliefs can and should make more of a contribution.

With effect from 1 January 2012, a USC surcharge will be introduced on all investors with annual gross incomes over €100,000. The surcharge will apply at a rate of 5% on the amount of income sheltered by property reliefs in a given year and will be in addition to any normal USC payable on this income. This USC surcharge will apply to all investors with this level of gross income regardless of whether they invested in Section 23 type investments or accelerated capital allowance schemes.

In addition, investors in accelerated capital allowance schemes will no longer be able to use any capital allowances beyond the tax life of the particular scheme where that tax life ends after 1 January 2015. Where the tax life of a scheme has ended before 1 January 2015 no carry forward of allowances into 2015 will be allowed. The delayed implementation of this measure is designed to give individuals time to adjust to the absence of the carry forward provision.

Full details of both measures will be contained in the Finance Bill 2012.

Nicky McFadden (Longford-Westmeath, Fine Gael)
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Question 105: To ask the Minister for Finance the estimated cost of the concession provided by section 76 of the Finance Act 1982 which provides for VAT relief in respect of the purchase of certain services; the reason this relief was introduced; and if those reasons continue to justify the provisions of the section. [1137/12]

Michael Noonan (Limerick City, Fine Gael)
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I am advised by the Revenue Commissioners that Section 76 of the Finance Act 1982 inserted a new subsection in what is now Section 28(2) of the Value-Added Tax Consolidation Act 2010. The measure dealt with the VAT treatment of the supply of services by barristers. When a barrister supplies a service he or she is not legally entitled to receive a fee in respect of that supply, even though appropriate steps may be taken at the time to secure payment. Accordingly, for VAT purposes, no part of the fee charged to the client may be regarded as consideration, which the barrister "becomes entitled to receive" in accordance with section 37(1) of the Value-Added Tax Consolidation Act 2010, and no liability to tax arises by virtue only of the supply of the service. Thus, section 28(2) of the Value-Added Tax Consolidation Act 2010 provides that a barrister's service is deemed to take place for VAT purposes when the consideration for the service is paid to him or her. Accordingly, a barrister will have no liability to VAT until he or she has both supplied a service and has been paid in respect of that supply. Also, the obligation to issue an invoice for the supply under section 66(1) of the VAT Consolidation Act does not arise until those two conditions have been fulfilled. In effect, the barrister operates VAT on a cash receipts basis. There is no cost, as such, to this measure, as the barrister must account for VAT when he or she has been paid in respect of a supply.