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ACCA Ireland (the Association of Chartered Certified Accountants) is welcoming some relief for house builders.

A new accounting standard has been issued which will allow builders delay the payment of tax on profits made on partially built homes. Aidan Clifford, Advisory Services Manager, ACCA Ireland "The old standard required builders to recognise profits on the construction of housing estates as the estate was built, the new standard allows the builder to defer recognise any profit until the house is completed and sold. This will postpone the payment of tax on any profits made by the builder."

The International Financial Reporting Interpretations Committee has just issued IFRIC 15 Agreements for the Construction of Real Estate. The standard requires builders to treat the sale of houses in a housing estate as if they were the sale of goods and to only recognise the profit on the sale when the house is complete and the sale agreed. Under the previous accounting standard the building was treated as a long term contract and profits were recognised in proportion to the stage of completion of the build. The new standard will allow builders delay paying income or corporation tax on the profit until the building is completed and sold.