The final report of the Commission on Credit Unions was published on 18 April 2012.

This report makes a number of far-reaching recommendations which will have a fundamental impact on individual credit unions and the sector as a whole.

A striking aspect of the report is the relatively short timescale it envisages for implementing the recommended changes.

We have set out below some of our observations on the report, its recommendations and what it might mean for credit unions. We strongly recommend that all credit unions read both the interim and the final report of the Commission in their entirety.

Restructuring

The report’s key recommendation is for the restructuring of the credit union sector. The restructuring process, which will be voluntary, is expected to result in a reduction of the number of credit unions in the country through amalgamation of viable credit unions and the resolution of non-viable ones.

The effect of the restructuring process on individual credit unions will very much depend on an assessment of each credit union which will be carried out by a newly established Restructuring Board (ReBo).

The initial assessment of credit unions will be based on information provided by the Central Bank. Capital adequacy is likely to be a key consideration in this regard but consideration will also be given to the credit union’s loan impairment and delinquency, investment impairment, cost base, liquidity, governance, etc.

ReBo will engage further with credit unions that have been identified as suitable for the restructuring process. At this stage a more detailed and forward-looking analysis will be undertaken to assess how the credit union is likely to fare into the future.

The Commission expects this initial assessment of all credit unions to be completed by the end of 2012.

Credit unions that wish to remain outside of the restructuring process will need to be able to demonstrate their ability to operate in an independently viable way.

It is clear however that whatever each credit union’s preference for their future status in the restructuring process, they need to plan and make the necessary preparations for their engagement with ReBo to ensure the best opportunity of achieving their objectives. The report expects the restructuring process for the entire Credit Union sector to commence almost immediately and to be completed within four years.

Governance

The Commission also makes fundamental and far-reaching recommendations concerning the governance of credit unions. Its proposed changes to the organisational structure of credit unions will impact on each credit union, its directors and the management. They will also impact on the composition of all Boards.

The legislation that will introduce these changes is required to be published before 30 June 2012 under the terms of the EU – IMF Programme. Credit unions will need to consider these changes carefully, assess their impact on the credit union and plan for their implementation.

The objective of the Commission’s recommendations is to create a clear distinction between the respective roles of the management (i.e. operational) and the Board and Supervisors (i.e. governance). To this end it proposes removal of the role of treasurer and the replacement of the Supervisory Committee by a Board Oversight Committee.

This will represent a significant change for many directors and supervisors who are accustomed to a more “hand on” role in their credit union.

Internal Audit and Risk Management

The recommendations concerning the establishment of an internal audit function by each credit union and for risk assessment as set out in the Commission’s interim report remain. The final report has not expanded on this requirement much further, other than to say that it should be proportionate to the size of the credit union.

The internal audit function will take on some of the roles and responsibilities formerly carried on by the Supervisory Committee. The full role of the internal audit function will not be clear until the Central Bank issues its regulations in this area. This is likely to form part of a new Prudential Rule Book.

We can however assume that the internal audit function’s role and responsibilities will be similar to those we are familiar with in other sectors.

Regulation

The Commission recommends the phasing in of a strengthened regulatory regime for credit unions.

The concept of a tiered regulatory approach rather than a “one size fits all” approach is preferred. This will mean that smaller Credit Unions with a simpler business model will operate under a simpler regulatory regime than larger and more complex credit unions.

Conclusion

The Commission Report is a hugely significant landmark in the development of the credit union sector. It will have a profound impact on each credit union in the country.

The future for each individual credit union will largely depend on how it copes with these fundamental and imminent changes.

The initial effects of its recommendations will be felt very shortly.

Credit unions now need to assess the impact of these recommendations, plan for their implementation and seek professional assistance if required.

If you would like to learn more or to set up a meeting to discuss these issues at your premises please contact:.

Tony Cooney
Partner
T: 021 4272900
E: tcooney@crowleysdfk.ie

To download a PDF of this article please click here.

Why do you need to address this?

The Commission’s final report was published on 18 April 2012 and presented to the Minister for Finance. It recommends that each Credit Unions will be required to develop their plans for internal audit and risk management within the following twelve months.

In addition, the Central Bank will be enforcing its Probability Risk and Impact System on Credit Unions.

What is internal audit?

Internal audit is concerned with the good governance of organisations. It focuses on the internal policies, systems and procedures of an organisation. It evaluates and makes recommendations for improving the effectiveness of the organisation’s risk management, system controls, and governance processes. It identifies possible risks faced by the organisation and examines the systems, policies and procedures in place to mitigate and manage those risks.

An effective internal audit function can be a key tool in helping the Board and Management to fulfil their duties.

Why talk to Crowleys DFK?

While many firms can demonstrate experience in auditing Credit Unions, few have the combination of internal audit and Credit Union experience and expertise that we possess.

Our experience in internal audit, the credit union movement and helping organisations implement an internal audit function for the first time, make us the advisors to talk to.

Our highly skilled and experienced internal audit team has been supporting organisations like yours to implement internal audit, risk assessment and corporate governance guidelines for over ten years.

For over twenty years we have acted for credit unions across the country, as auditors, advisors and in supporting their Supervisory Committees.

Our credit union team has a deep understanding of the ethos and objectives of the movement. We know the commitment of the volunteer workers as well as that of the professional and administrative staff.

How can we help your Credit Union?

Crowleys DFK is offering a one hour on-site complimentary workshop to inform you and your team about the impending legislative changes.

The workshop entitled ‘Introducing Internal Audit to Credit Unions’ will give you an understanding of what is involved in an internal audit, why this legislation is being introduced and the steps you need to take.

Introducing and maintaining an effective internal audit function can be a challenging and onerous task for an organisation.

We can help you with this process and are happy to refer you to our existing clients to learn from them how we manage this process with ease and professionalism.

Contact our Internal Audit Partner Tony Cooney today to book a time that suits you.

T: 021 4272900 or E: tcooney@crowleysdfk.ie

Please click here to download a pdf of this article 

The client is in the manufacturing sector and is the Irish subsidiary of a Nasdaq quoted US company.

Background

The client’s decision to change its local audit and tax advisors from one of the Big 4 firms, led to the appointment of Crowleys DFK as their local compliance providers.

Holding responsibility for their sister company in the UK, the client’s Irish finance team approached Crowleys DFK regarding the audit and tax compliance work for the UK subsidiary. 

The Assignment/Our Work

Crowleys DFK contacted the London DFK member firm Chantrey Vellacott DFK which led to their appointment as auditors and tax compliance advisors for the UK operation.  

The service was co-ordinated by Crowleys DFK in Cork. 

As the books and records were maintained in Ireland by the Irish finance team, Crowleys DFK undertook the audit field work, while Chantrey Vellacott DFK carried out the audit planning and review work as well as the tax compliance work.

Through clear communication and defined responsibilities within the DFK team, the audit work was completed efficiently; the reporting deadlines were met and client’s specific requirements were fulfilled.

Benefits

The client received a well co-ordinated audit and tax compliance service for their UK operation while still being able to to deal locally with a Crowleys DFK Partner.  They also achieved a significant reduction in their annual compliance costs.

Crowleys DFK and Chantrey Vellacott DFK have acted as auditors and tax advisors for this client for the past five years.

The client is a family property partnership.  In business for over 30 years, the partnership has a large portfolio of Irish, UK and German properties. 

Background

The Dublin based client, wished to set up an offshore trust structure in Jersey to facilitate asset protection and succession planning. 

As their existing advisors, Crowleys DFK were asked to organise the formation of the Jersey Trust and Jersey companies and to provide Irish tax advice on the implementation of the structure. 

A key requirement of the client was the completion of the offshore trust structure within a very short timeframe.

The Assignment/Our Work

Crowleys DFK contacted the Jersey DFK member firm Minerva. A meeting took place within a week in Dublin between the client and advisors from both DFK firms.  The speed of this response, together with the experience and demonstrated close relationship between both firms, was key to winning the work.

Through clear communication and close co-operation between the two member firms the client’s specific requirements were met in full and within the specified timeframe.

Benefits

A particular feature of the assignment was that the client was able to manage their international tax requirements using their Dublin advisor; saving them time and money. All meetings took place in Dublin.

Crowleys DFK further strengthened their relationship with the client and Minerva gained a new client.

Elevate – InterTradeIreland’s small business sales development programme

Elevate provides financial assistance to help Micro Businesses identify new cross-border markets/ customers across the island and win new business.  Its 100% funded by InterTradeIreland and the application process is very simple. We are currently looking to recruit 50 eligible companies.

All you have to do is complete a short application form. If approved for support you will then get to choose one of our approved experts who will work with you to develop a winning cross-border sales plan for your business, kick start your sales and get on the fast-track to cross-border trading!

You’ll benefit from free one-to-one advice and support from your very own expert within your industry or sector to develop your own sales development plan.

Spaces are limited. The next two submission dates are 30th April and 30th May 2012.

For more information and to apply – visit the InterTradeIreland website.

Acumen – InterTradeIreland’s Sales & Marketing Programme

Catching new business can be difficult at times, so InterTradeIreland has got a smart way to help. We can provide SMEs with the extra resources or funding to help them ‘net’ those all important new sales!

Acumen offers funding up to £15k/€18k to help SMEs to:

• Employ a full-time or part-time salesperson for their business or;
• Employ a graduate to undertake a 12 month project or;
• Explore opportunities in a new market by undertaking market research 

InterTradeIreland Acumen can source the right people to help SMEs increase their export sales North or South, improve their knowledge of the market and identify new business opportunities. 

For more information and to apply – visit the InterTradeIreland website.

If you are interested in pursuing the above and need advice with the application process, please contact us.

Mary Treacy
Tel: 021 4272900
Email: mtreacy@crowleysdfk.ie

(l to r) Angel Wong, David Coombes, Vincent Teo, Eyva Voon and Nathan Doherty

Crowleys DFK is delighted to announce the promotion of four key members of the firm’s Public Sector Services Division.  David Coombes, Eyva Voon, Angel Wong and Nathan Doherty have all been promoted to Assistant Managers within the Public Sector Services Division of the firm.

Widely regarded as one of the leaders in the sector, Crowleys DFK has over 12 years’ experience working with public sector organisations.  With expertise in the areas of financial reporting, financial management, risks and governance and internal audit, the firm has substantial experience dealing with clients’ special regulations and reporting requirements. 

David, Eyva, Angel and Nathan, all started their careers with Crowleys DFK and have played an important role in the continued development of the Public Sector Services Division. 

Vincent Teo, Public Sector Services Director, commented ‘Our staff are ambassadors for our business.  We endeavour to create a culture where staff are recognised for their hard work, dedication and ambition.  The four newly promoted Assistant Managers have displayed these qualities in abundance.’

Vincent continued, ‘In a changing public sector environment, our Public Sector team are working proactively with our clients to meet their changing needs and assist them in these challenging times.  The promotions announced today are key to building a stronger team and further enhance the quality of services offered to our clients.’

The firm acts for over 85 government agencies ranging from central government, semi state agencies, publicly funded organisations, not-for-profit entities and national quasi-autonomous non-governmental organisations.

Commenting on the promotions, James O’Connor, Managing Partner said ‘We are delighted to announce these promotions.  Our firm places strong focus on staff motivation.  With emphasis on formalised mentoring and the creation of specialist teams, we create the right environment to retain quality staff.’

The Minister of Foreign Affairs of Malaysia, Yang Bahagia Dato' Sri Anifah Hj. Aman with Vincent Teo, Crowleys DFK Director and Ireland Malaysia Association Council Member

The Minister of Foreign Affairs of Malaysia, Yang Bahagia Dato’ Sri Anifah Hj. Aman made a diplomatic visit to Ireland on Sunday the 5^th of March 2012. This is the first visit to Ireland by a Malaysian Foreign Minister and the first for Yang Bahagia Dato Sri Anifah since he was appointed as the Minister of Foreign Affairs of Malaysia in April 2009.

Yang Bahagia Dato’ Sri Anifah’s arrival was met by Minister Eamonn Gilmore, Tanaiste and Minister for Foreign Affairs and Trade of Ireland.

In conjunction with Yang Bahagia’s visit, His Excellency Dato’ Ramli Naam, Ambassador of Malaysia to Ireland with officials of the Embassy hosted a dinner reception on Monday 5^th March 2012.

Vincent Teo, Crowleys DFK Director and Executive Council Member of the Ireland Malaysia Association, addressed the gathering and met afterwards with Yang Bahagia Dato’ Sri Anifah Aman. Their discussion centred on strategies and actions to promote bi-lateral business relations between the two countries.

Vincent Teo, Crowleys DFK, Dr. Terry McWade, RCSI, H.E. Ambassador Ramli Naam, Edward Murphy, Chairman IMA and Crowleys DFK Partner, Cathy Holahan, Enterprise Ireland

A strong message from Malaysia, that ‘Ireland is a special trading partner’ was delivered by His Excellency Dato’ Ramli Naam, Malaysian Ambassador to Ireland, at a recent Ireland Malaysia Association (IMA) meeting in Dublin. 

Ambassador Ramli said ‘The Malaysian Government is committed to delivering a business friendly environment for Ireland.  In my capacity as Ambassador I will work closely with local businesses and educational organisations and share their experiences and difficulties with my colleagues in the Malaysian authorities.’  The Ambassador went on to discuss an investment seminar planned for the second quarter of 2012 that will involve Malaysian businesses coming to Ireland, accompanied by senior Government Ministers.   H.E. Ambassador Dato’ Ramli Naam is the Honorary Patron of the IMA. 

This message was corroborated by award winning exporters Niall Norton, CEO of Openet Global and winner of the 2011 Irish Ernst & Young Entrepreneur of the Year and International Category awards, and Dr. Terry McWade, Deputy CEO Royal College of Surgeons in Ireland.

Mr. Norton said ‘In six years, our staff numbers in Malaysia have grown from 20 to 150.  We employ young energetic people who are of the highest quality.  The culture in Malaysia is enterprising and vibrant.  For Openet it is also a doorway to other markets in the wider ASEAN region and Japan.’ He concluded ‘Malaysia is a stable and booming economy.  One of our biggest challenges there is hiring and developing our people.’  Openet Global employs over 820 people and in 2011 had total revenue of $126m. 

Dr. McWade addressed IMA members about RCSI jointly acquiring with UCD, their college in Penang and the experiences of the RCSI over the last 16 years of doing business with Malaysia. 

Dr. McWade said ‘The warmth, support and goodwill that exist through the circle of connectivity with Ireland can only benefit bilateral relations.  Building on these personal connections is vital for generating further trade and investment between both countries.’  Dr. McWade went on to give examples of senior political, education and business leaders in Malaysia who have strong links to Ireland. 

He concluded ‘After MOUs (Memorandums of Understanding) are signed and goodwill exchanged, the challenges lie in how to move on from that and raise necessary funding.’ In 2011 Penang Medical College was awarded a six-star rating from the Malaysian Quality Evaluation System for Private Colleges (MyQuest).  Only three from a total of 210 private colleges audited, achieved this standard. 

Closing the event, Edward Murphy, Chairperson of the IMA and Crowleys DFK Partner said ‘It is both encouraging and motivating for our members to hear the success stories of two of the country’s leading exporters to Malaysia.  We endeavour to work closely with Ambassador Ramli and government agencies in Ireland and Malaysia to build strong links for education, trade and investment between both countries.’

Background
Up to the year 2010 PRSI and the Health Contribution were collected together. 

Those earning less than €26,000 were exempt from the health contribution.  However, if you earned more than €500 in a given week the levy was automatically deducted from your pay.  

The refund therefore applies to those who earned over €500 in any a week – but less than the annual threshold of €26,000.

Department of Social Protection guidelines
The Department of Social Protection has issued the following guidelines in relation to Health Contribution Refunds to help clarify whether people are entitled to a refund: 

• If you earned more than €26,000 in 2008, 2009 and 2010 you would have paid the Health Contribution and you are not due a refund.
• If you earned less than €26,000 and never earned more than €500 in any one week then you wouldn’t have been charged the Health Contribution – so you are not due a refund.
• However, if you earned less than €26,000 in 2008, 2009 or 2010 and you also earned more than €500 in any particular week in those years, then you may be eligible for a refund.
• Your P60 Form will give you details of your earnings.
• Applications for refunds must be made within four years of 31 December of the year in which you paid the contribution.  For example you must apply for a refund of the Health Contributions paid in 2008 by 31 December 2012 and so on. 
• Any contributions paid prior to 1 January 2008 are outside the time limit for making a claim.
• The amount of refund you receive will vary depending on the amount of Health Contribution paid.  For example if you paid the Health Contribution for only one week in 2008 your refund could be €10.

It is important to note that a refund of the health contribution will not apply from the year 2011 onwards as it has been replaced by the new Universal Social Charge.

If you think you’re eligible for a refund you should write to the Department of Social Protection at Oisín House, Pearse Street, Dublin 2, and include your name, address, Personal Public Service Number and your date of birth.

If you require any further advice on this issue please contact us.

Bernadette Desmond
T: 021 4272900
E: bdesmond@crowleysdfk.ie

To download a PDF verison of this article please click here.

• Standard and higher rates of income tax remain at 20% and 41%.
• Exemption threshold for universal social charge increased from €4,004 to €10,036.
• Income Tax bands and Tax credits remain at 2011 levels.
• Employer PRSI relief on employee pension contributions to be removed from 2012.
• DIRT up 3% to 30% on ordinary deposit accounts.
• Annual imputed distribution from Approved Retirements Funds increased to 6% in respect of funds with asset values in excess of €2 million.
• Mortgage Interest Relief increased to 30% for first-time buyers between 2004 and 2008.
• Mortgage Interest Relief to be abolished for houses purchased from 2013 onwards.
• Surcharge of 5% on income sheltered by property-incentive schemes to be introduced for investors with income over €100,000.
• The use of accelerated capital allowances beyond the tax life of a particular scheme will not be available after 1 January 2015.

Duties/Levies

• Single rate of 2% Stamp Duty to apply on all non-residential property transfers.
• Carbon Tax up 1.4c/litre on petrol and 1.6c/litre on auto-diesel from 6 December 2011.
• Carbon Tax up €17.32/1,000 litres on Fuel Oil and €14.46/1,000 litres on Natural Gas from May 2012.
• Betting duty of 1% is extended to remote betting.
• Betting Intermediaries’ Duty introduced (Gross Profits Tax of 15%) to cover betting exchanges.

Business Tax

• Corporation Tax Rate remains at 12.5%.
• Corporation tax 3 year exemption for start-up companies is extended to companies commencing to trade in 2012 – 2014.
• 25% R&D tax credit for the first €100,000 of expenditure on R&D. The credit for incremental R&D expenditure in excess of €100,000 over the base year 2003 to remain.
• Current outsourcing limits for R&D tax credit to be increased.
• R&D tax credit can be utilised to reward key employees.
• Special Assignee Relief Programme to be introduced to encourage foreign direct investment.
• Foreign Earnings Deduction to be introduced for temporary assignments to BRICS region/countries.
• Employer Rebate from the Redundancy Payments Scheme reduced from 60% to 15%.

Value Added Tax

• Standard rate of VAT will be increased from 21% to 23% from 1 January 2012.

Capital Taxes

• Capital Acquisitions Tax and Capital Gains Tax increased by 5% to 30% for transactions after midnight 6 December 2011.
• Group A tax-free threshold for gifts/ inheritances reduced to €250,000, effective for gifts/ inheritances taken after midnight 6 December 2011.
• Relief from capital gains tax to be introduced for properties bought between 7 December 2011 and the end of 2013, where the property is held for more than seven years.
• Upper limits on retirement relief from capital gains tax to be reduced for business and farming assets disposed of by an individual aged over 66 years (subject to transitional arrangements).

Other Measures

• Old Age State Pension and Jobseeker’s Benefit to remain unaffected.
• Household charge of €100 to be introduced in 2012.
• Drugs Payment Scheme threshold increased from €120 to €132 per month in 2012.
• Entitlements to higher rates of Child Benefit for the third and subsequent child to be phased out.
• Payment entitlement for Jobseeker’s Benefit to be based on a 5 day week where a person is working for part of a week.
• 3% reduction in rate of student maintenance grant from 2012.
• Higher Education student contribution is increased from €2,000 to €2,250.
• Motor tax rates increased from 1 January 2012.
• Requirement that the domicile levy can only apply to Irish citizens to be removed.
• Current tax exemption for first 36 days of illness pay to be removed.

If you would like further information, please contact our Tax Department on
01 6790800/ 021 4272900.

To download a PDF verison of this article please click here.

Earlier in the year, the CRO introduced a new condition for companies seeking to avail of its voluntary strike-off procedure.  The condition specified that before any application is made, as well as a company having no assets or liabilities, they should also have an issued share capital of under €150 for the previous three years. This led to a number of otherwise dormant companies being unable to avail of the process if they had for example 100 shares issued at €2 each.

The Companies Office has now withdrawn the requirement in relation to the share capital and reverted back to the original provision of a director certifying that the Company has no assets or liabilities.

This move makes it more straightforward for a director to dispose of a company that is dormant and no longer required.

For more information on the voluntary strike off process please contact us.

Noel Wren
Tel: 021 4272900
Email: nwren@crowleysdfk.ie

However, in order to facilitate individuals who are paying the balance of the income tax due for 2010 using the Revenue On-Line Service (ROS) and who wish to avail of the credit for income tax paid against Domicile Levy, the Pay and File deadline for Domicile Levy for 2010 is extended to 15 November 2011. This date coincides with the Pay and File deadline for payment of the balance of income tax due for 2010 using ROS.

Further details can be found on the Revenue website.

The company is in the manufacturing sector and is the Irish subsidiary of a Nasdaq quoted US company.

Background

The parent company retained a Big 4 firm for group audit and reporting purposes.  The Irish subsidiary decided to select a non Big 4 firm for it’s local audit and compliance obligations.  They sought a firm with the resources and expertise to deliver a value for money audit within their specific timelines.  

A key factor in winning the work was demonstrating our ability to provide the client with a team of skilled auditors with the required expertise levels who were able to complete the audit within the required timeframe.

Specifics of Work

Through clear communication and defined responsibilities within the team, the audit work was completed efficiently; the reporting deadlines were met and client’s specific requirements were fulfilled.

The client achieved a significant reduction in its annual compliance costs.

We have acted as auditor to this client for the past five years.

One of the key channels public sector organisations use to communicate financial information is through their management reports. 

In this new era of public sector reform, is there a need to introduce new models in public sector management reporting?

Management reports have to exhibit an understanding of the performance and sustainability of the organisation while at the same time reflect its culture and values.

Most public sector organisations recognise the role that management reports play in communicating their business performance and deliverables to their Boards. 

Traditionally management reports have been focused primarily on the organisation’s historical financial data and little else. As we head into a new framework of public sector accounting, we are already seeing changes to the format of management reports but is it enough to keep pace with the sector’s dynamics?

Business sustainability has become a key issue in the public sector since the beginning of the recession. Public sector organisations should perhaps consider implementing a reporting model that explains key business drivers as they pertain to them. 

This reporting model should also be flexible, especially when it comes to showing how the organisation is managed. It shouldn’t adhere exclusively to the prescribed format. Above all, it should avoid becoming a box ticking exercise.

We have seen many examples lately where the public sector has been pushed to embrace the need for a “comply or explain” concept. This may not be a bad idea in management reporting. When more people understand what this entails and are able to put it into action, we may be on our way to achieving behavioural changes across the sector.

As to what drives quality of management reports, users need to be put at the top of the list. However this needs to be supported by qualified staff and strong systems of internal control, effective communication and management of risks. Also the tone needs to be set from the top. This is immediately a challenge in the public sector, as in today’s Ireland public sector organisations are being asked to do more with fewer resources.

Are your reports relevant?
Business reporting is a process of gathering information, creating reports and delivering results. The information presented therefore needs to be relevant and accurate and preferably go beyond mere numbers.

A good rule of thumb is to keep reports simple and always look for feedback.

Organisations should also caution against having large amounts of information in management reports. More isn’t always better. Very often more information turns out to be less useful and may overwhelm users.

Instead focus on what is relevant. Ensure reports are clear. The key to successfully producing an effective report hinges on keeping it practical and meaningful.

But what it all comes down to is the calibre of those in charge of financial reporting.

Finally, no reliable and satisfactory report can be produced without the input of dedicated and knowledgeable professionals who understand the importance of producing meaningful and relevant management reports.

Is it time to re-model your management reports? Contact us now.

Vincent Teo
Tel: 01 6790800
Email: vteo@crowleysdfk.ie

CLICK HERE to download a PDF version of this article.

On 29 October 2010, the Accounting Standards Board published its proposals for changes to the financial reporting framework in the UK and Republic of Ireland.

This will involve a movement from UK/Irish GAAP to International Financial Reporting Standards (IFRS). The Accounting Standards Board recognises that one size of accounting standard does not fit all entities and therefore a three tier system is proposed:

≈ All entities can choose to apply a higher tier
** An entity has public accountability if:
             - As at the reporting date, its debt or equity instruments are traded in a public market or it is in the process of issuing
               such instruments for trading in a public market; or
            – As one of its primary businesses it is a deposit – taking entity and/or holds assets in a fiduciary capacity for a broad
               group of outsiders.
Examples of publicly accountable entities are Quoted Companies, Insurance Entities, Banks, Building Societies, Credit Unions and Pension Schemes

Effective date

We currently expect that these proposals will be effective for accounting periods commencing on/after 1 January 2014. However this may be subject to change.
This means companies with December year ends will have to apply the new proposals in respect of the financial year ending 31/12/2014. In real terms to comply with this, entities will need to prepare their opening balance sheet at 1 January 2013 in accordance with the new accounting framework.

Changes

The majority of entities are likely to fall into Tier 2 of the table above, i.e. IFRS for SME’s. Some of the changes that these entities will notice are as follows:

• The format and content of financial statements will change, e.g., all entities will now be required to prepare a cashflow statement.
• The entity will be prohibited from revaluing property assets.
• There will be changes to the manner in which the entity recognises government grants received.
• The entity will be prohibited from capitalising borrowing and development costs. This will impact both results and profits potentially available for distribution.
• Accounting for business combinations, including amortisation of goodwill, will change.
• There will be a fundamental change in the basis for the calculation of deferred tax.
• The recognition and measurement of financial instruments and related hedge accounting rules will be more complex.

Benefits and costs

The main benefit in the adoption of the new framework is that financial statements will be more consistent and transparent. This should aid decision making by investors, lenders and other users.

There will also be costs, many of which will be incurred in the transition process. This will involve training and up-skilling of finance staff, and costs associated in preparing transitional balance sheets.

How Crowleys DFK can help

• Assist in the implementation of and transition to the new financial reporting framework.
• Assist users of the financial statements (generally directors and senior management) understand changes to the accounts format and how this impacts on the reported results for the period.
• Identify the key accounting/technical differences and understand the implications that they will have on the financial statement.

If you require any further information or assistance on how this issue might affect you or your organisation please contact us.

Fiona O’Sullivan
Tel: 021 4272900
Email: fosullivan@crowleysdfk.ie

CLICK HERE to download a PDF version of this article.

All too often directors are of the view that if a company is no longer required; they can simply walk away and allow it to be struck off. There are, however, a number of possible consequences for not filing an annual return and failing to follow the required steps for an official dissolution. These include director disqualification, the automatic transfer of company assets to the state on dissolution and even prosecution.

At Crowleys DFK, we have noticed an increase in the number of cases being brought to the courts by the CRO for failure to file annual returns. The aim is to have an order granted to compel the company directors to settle any outstanding liabilities (i.e. legal costs incurred by the CRO in bringing such application and the costs incurred in investigating the matter) either personally or through the company, before any measures are taken to involuntarily strike off the company.

The cost of attempting to have a company dissolved involuntarily versus simply following the correct measures for official dissolution is not only financially higher but can also have long lasting professional consequences for the directors involved.

Please feel free to contact us to discuss any of the consequences or issues in relation to the strike off process.

Noel Wren
Tel: 021 4272900
Email: nwren@crowleysdfk.ie

Where a borrower feels that they have a viable business proposition and that their application for credit has been unjustifiably refused or reduced or their credit facilities have been withdrawn altogether, they may bring an application to the Credit Review Office to carry out an impartial review of the bank’s decision.

The following eligibility criteria apply:

• The business is an SME, sole trader or small to medium-sized farm;
• The business has applied for credit facilities from €1,000 up to €500,000 with one of the participating banks in the NAMA scheme; and
• The credit facility was refused and the business has exhausted the banks internal appeals process.

The Credit Review Office will review the facts and either overturn the banks decision and recommend that lending should be made or uphold the banks’ decision not to lend. In the latter case, the Credit Review Office will seek to provide alternatives and guidance to the borrower to help the business move forward.

At the end of July 2011, the ceiling for credit refusals was raised from €250,000 to €500,000. This development will significantly increase the number of businesses now eligible for the Credit Review Office’s help.

CASE STUDY

Overview
In one recent case where our client was refused extended credit from their bank, we made them aware of the existence and role of the Credit Review Office. We acted on their behalf in dealings with their bank and the Credit Review Office.

Process
Our client advised us that their application for increased credit was refused. We examined our client’s proposition and assisted them in preparing an appeal to bring to the banks internal appeals committee. The initial decision was upheld by the bank internal appeals committee and credit was refused. We then worked with our client to prepare an application to the Credit Review Office requesting that they carry out an independent review of the decision. The submission included a business plan and financial projections.

Outcome
The Credit Review Office reviewed the facts, the submissions of our client (the borrower) and the submissions of the bank (the lender). Based on the information available and the argument put forward by both sides the Credit Review Office’s decision was that the credit facility should be granted by the bank. The bank accepted this decision and granted the facility.

If you require any advice on any of the points raised above, please contact us.

Seamus McCarthy
Tel: 021 4272900
Email: smccarthy@crowleysdfk.ie

CLICK HERE to download a PDF version of this article.

From 1st January 2012 all your communications with the Revenue Commissioners regarding RCT must be made through on-line through ROS. You must also make any payments due to the Revenue Commissioners electronically using ROS.

It may take weeks to complete the registration process.

2. You must register all contracts with your sub-contractors using ROS. This will involve giving details of the contract to the Revenue Commissioners.

This will also apply to contracts that are on-going at 31st December 2011. You will be able to start registering your contracts from 28th November 2011 (known as “contract notification”). “Contract notification” will replace the current RCT1 form.

3. When you receive an invoice from a sub-contractor but before making any payment to him/ her, you must, using ROS:

(a) Notify the Revenue Commissioners of how much you intend paying the sub-contractor, and
(b) Request from the Revenue Commissioners confirmation of what rate of RCT to deduct from the payment. The rates will be either 0%, 20% or 35%.

It is ONLY when you have received this “deduction authorisation” from the Revenue Commissioners that you can pay the subcontractor and deduct the appropriate RCT.

You will need to give the sub-contractor a copy of the “deduction authorisation”.

This procedure must be completed for each and every payment you make to the sub-contractor.

You must pay any RCT withheld to the Revenue Commissioners electronically using ROS on a monthly basis.

4. Each month or quarter you will receive a statement from the Revenue Commissioners detailing what payments you have made. You should ensure these are correct.

If a statement is incorrect you should amend it on-line using ROS and pay the correct RCT.

You will no longer need to file monthly RCT30’s or annual RCT35 returns.

CLICK HERE TO GO BACK

2. When you are due to be paid, the principal contractor will apply to the Revenue Commissioners for confirmation of the appropriate rate of RCT to deduct from the payment.

This will either be 0%, 20% or 35%, depending on whether your tax affairs are up-to-date and your compliance history with the Revenue Commissioners.

If you previously qualified for a C2 certificate, you should have 0% RCT rate allocated to you.

You will have only one RCT rate allocated to you so all of your principals should deduct RCT at the same rate. 

3. It is only when a principal has received confirmation of the RCT rate (called a “deduction authorisation”) from the Revenue Commissioners that he will be able to pay you. 

4. You will receive payment of your invoice, with the appropriate RCT, if any, deducted, along with a copy of the “deduction authorisation” from the principal contractor.

5. You should ensure that the principal has withheld the correct RCT.

6. You will no longer receive pink RCT deduction certificates from principal contractors. Any RCT withheld will now be automatically credited to your account with Revenue.

You will no longer be able to submit pink RCT deduction certificates to the Revenue Commissioners to obtain a refund of any RCT withheld.

7. At the end of each calendar year, the Revenue Commissioners will use any RCT withheld to first pay any of your outstanding taxes.

When all of your tax returns have been filed and all liabilities paid, it is then and only then that any balance of RCT can be refunded to you by the Revenue Commissioners. 

CLICK HERE TO GO BACK

But what does this mean for you and what do you have to do to be ready for these changes?

 Principal contractors                             Sub-contractors

If you require any further information or assistance in relation to the above, please contact us.

Siobhan O’Hea
Tel: 021 4272900
Email: sohea@crowleysdfk.ie

CLICK HERE to download a PDF version of this entire article.

Inside this issue:

Hot Topics

• Jobs Initiative 2011 

Tax News

• Is it time to transfer to the next generation?

Insolvency News

• Can the Credit Review Office help you?
• An increase in CRO cases before the courts

Audit & Accounting News

• New financial reporting framework

Public Sector News

• Public sector management reporting: Time for a re-model?

The key elements of the CPCROC Act 2010 are:

• The establishment of a civil partnership registration scheme for same-sex couples.
• The conditions and manner in which these civil partnerships may be dissolved.
• The recognition of certain foreign-registered same-sex partnerships as civil partnerships from 13^th January 2011.
• A redress scheme for long-term opposite- and same-sex co-habiting couples who are neither married nor registered in a civil partnership.

Taxation changes for same-sex couples in civil partnerships:

The broad aim of the Bill is to ensure that couples in civil partnerships enjoy similar tax treatment to that which currently applies to married couples.

Couples in a civil partnership will be entitled to:

• Claim either joint or separate assessment to income tax;
• Share tax credits and standard rate band between members of the couple in the same way as married couples currently do;
• Claim the Home Carers Credit, if applicable;
• Be exempt from income tax if the couple’s income is less than the relevant limit;
• Be exempt from DIRT if either member of the couple is over 65 and the couple’s joint income is less than the relevant limit;
• Qualify for the same tax treatment as married couples currently do where one member of the couple dies;
• Qualify for the same tax treatment as married couples currently do in divorce/ separation situations, where the civil partnership is legally dissolved;
• Qualify for an exemption from gift/ inheritance tax on all gifts/ inheritances passing between members of the couple;
• Qualify for an exemption from stamp duty and capital gains tax on gifts passing between members of the couple.

This will commence from the tax-year 2011 onwards.

These changes do not apply to long-term opposite-sex and same-sex co-habiting couples who are not in a civil partnership.

Taxation changes for long-term cohabiting couples not in civil partnerships:

The taxation changes in the Bill for co-habiting couples who are not in a civil partnership are

• to grant relief to the payor for Court-ordered maintenance payments made to a financially dependant former cohabitant in certain circumstances, and
• to exempt from capital gains tax, gift/ inheritance tax and stamp duty transfers of property made as a result of Court-ordered property adjustment orders.

These changes only apply on the break-up of a cohabiting arrangement where the relationship has been ongoing for a period of at least 5 years or for at least 2 years where the co-habitants are parents of dependant children.

If you require any further information or assistance in relation to the above, please contact us.

Siobhán O’Hea
Tax Manager
Tel: 021 4272900
Email: sohea@crowleysdfk.ie

CLICK HERE to download a PDF version of this article.

Pictured at the launch of the Ireland Malaysia Association (IMA) were (front to back) Vincent Teo, Director at Crowleys DFK and Co-founder of IMA; Edward Murphy, Partner of Crowleys DFK and Chairperson of IMA; Declan Kelly, Irish Ambassador to Malaysia

Dublin, 8th June 2011:  The official launch of the Ireland Malaysia Association (IMA) was held at the spectacular Swai Malaysian Restaurant in Dublin’s IFSC this week.  It was attended by a gathering of key political and business figures from Ireland, Malaysia and London.  They included:

• The guest of Honour H.E. Ambassador Declan Kelly, Irish Ambassador to Malaysia
• The Chargé d’Affaires a.i. from the Embassy of Malaysia in Ireland
• Representatives from Malaysia External Trade Development Corporation (MATRADE) and Malaysia Industrial Development Authority (MIDA)
• Members of the Malaysian Irish Business Network (MIBN)
• Mr. Conor McCarthy, the Executive Chairman of Dublin Aerospace and Director and Co-founder of AirAisa, Aisa’s largest low fares airline
• Private sector companies from the software, IT, telecoms, healthcare and professional services sectors
• Heads of Education from Royal College of Surgeons, Dublin Institute of Technology and Griffith College Dublin

Speaking at the event, Edward Murphy, Chairperson of the IMA and Partner of Crowleys DFK, said ‘Latest CSO figures show that the total export and import trade between Ireland and Malaysia amounted to EUR1.39billion in 2009.  This was split between EUR1.28billion in services and EUR11million in merchandise trade.’

Mr. Murphy continued ‘Malaysia is a valuable portal for trade into the growing economic ASEAN Region.  Recognising this and the lack of a formal networking platform in Ireland to mirror the efforts of its counterpart, the Malaysian Irish Business Network (MIBN) in Malaysia, the IMA was born.’ 

Crowleys DFK Director Vincent Teo is a native of Johor, Malaysia and co-founder of the IMA.  ‘There is a strong appetite in Malaysia for Western culture and business skills,’ he commented. ‘We are experiencing a significant increase in queries from Malaysian companies looking to Ireland as a location for operations and R&D.  These organisations are primarily motivated by the access to our highly skilled workforce and the enviable low corporate tax rate.’

Mr. Teo continued ‘The objectives of the IMA are to strengthen economic links and promote trade between both countries.

‘The strong support from Enterprise Ireland has been paramount to the formation of the IMA.   Its existence comes at a critical time when building relationships with parties sharing mutual interests, both here and abroad, is key to the survival of our economy,’ Mr. Murphy concluded.

Finance Act 2011 introduced an overhaul of the Relevant Contracts Tax (“RCT”) system with the aim of encouraging greater compliance and reducing the administrative burden on businesses to which the RCT system applied.

Work is well advanced on developing the new scheme. Subject to a commencement order to be signed by the Minister for Finance, the scheme is expected to be introduced on 1st January 2012.

The key elements of the new scheme as outlined in Section 20 of the Finance Act are:

• Replacement of the current RCT rates of 0% and 35% with a three-rate withholding scheme: 0%, 20% and 35%.
•  Abolition of the monthly RCTDC repayment system and replacement with an offset system and annual repayment.
• Strengthening of the reporting system for RCT principals in order to enhance compliance and reduce the opportunities for fraud.
• An underlying feature of the scheme will be the mandatory use of electronic means for the transfer of information, data, payments and returns.

Overview of how the new scheme is expected to work:

It should be noted that all contact between the principal and Revenue will be through an on-line process.

• When a principal enters into a relevant contract with a subcontractor, s/he will be obliged to provide Revenue with details of the subcontractor and contract on-line, including confirmation that the contract being entered into is not a contract of employment. Revenue will then acknowledge the contact and will advise the principal and subcontractor of the rate to be applied, if available.
• Prior to making a payment under the contract, the principal must notify Revenue (by electronic means) of his or her intention to make the payment and state the gross amount to be paid.
• Revenue will issue a deduction authorisation setting out the rate of tax and the amount of tax to be deducted from the payment. The principal must pay the subcontractor in accordance with the deduction authorisation and provide a copy of the authorisation to the subcontractor.
• Revenue will automatically put credit for any tax deducted onto the subcontractor’s tax record. That credit will be available for offset as it arises or for repayment annually.
• If the subcontractor is registered for ROS, s/he will be able to see their own records through ROS.
• Revenue will now have all the details of the payments notified to them by principals. Depending on the filing frequency of the principal, a deduction summary will be issued to the principal, either monthly or quarterly, listing all of the payments Revenue has been made aware of. If the summary is correct, the principal needs only to arrange payment on or before the due date for the return. The return will be deemed to have been made on that date. If the summary requires amendment the principal can amend it on-line and arrange for payment on or before the due date.
• Payment should be made on-line by the due date. As all principals will be electronic filers, the due date is the extended date – the 23rd day after the end of the period covered by the return. The compliant principal will now have fulfilled his or her obligations.
• If the deduction summary is amended after the due date, the return will be late and a surcharge will apply. Revenue will issue a notice of the tax and any surcharge due.
• Revenue can assess the liability of a principal, normally following an investigation or audit. A notice of assessment will issue in such cases.

To ensure a smooth transition to the new RCT scheme, principal contractors will be able to register contracts on-line in the new scheme from 28th November 2011 (“contract registration”). This will be the only part of the new scheme that will be accessible prior to 1st January 2012. Principals will be expected to make payments to subcontractors and notify these payments to Revenue on-line from 1st January 2012

Key benefits of the new scheme for principals:

• The administration burden will be reduced, for example, principals will no longer need to: 
  - Order stocks of RCT forms,
  - Complete Forms RCTDC/RCT 46/RCT 46A,
  - Manually record payments on Forms RCT 48/RCT 47,
  - Complete the annual RCT 35 return,
  - Complete the paper copy of Form RCT 1 with the subcontractor (a streamlined contract registration procedure is incorporated into the new scheme).
• There will be clarity on the RCT rate for each subcontractor: When a principal notifies Revenue of a relevant payment to a subcontractor on-line, Revenue will confirm the subcontractor’s RCT rate and the amount of RCT to deduct from the payment, via an on-line “deduction authorisation” for the payment by return. A copy of this authorisation should be provided to the subcontractor. 

Key benefits of the new scheme for subcontractors:

• The standard RCT rate of 35% will be reduced to 20%. (In certain limited cases a subcontractor will be placed at 35% e.g. subcontractors who are not registered with Revenue or where there are serious compliance issues to be addressed).
• Only one rate will apply to a subcontractor at any point in time. Principals will be obliged to apply this rate to payments to the subcontractor.
• There will no longer be a requirement to jointly complete Form RCT46 with the principal in order to receive gross payments.
• Subcontractors will no longer have to submit RCTDC claims to Revenue. When a principal notifies Revenue of a relevant payment, Revenue will automatically put credit for any RCT deducted onto the subcontractor’s tax record. This RCT credit will be available for offset against other tax liabilities as they arise or for repayment annually.
  Please note that if you are a principal and have an in-house RCT software system this will need to be updated to cater for the new RCT system. Revenue has set-up the following e-mail address to deal with any queries which you may have in this regard, eRCTinfo@revenue.ie

If you require any further information or assistance in relation to the above, please contact us.

Mike Scanlan
Tel: 051 844441
Email: mscanlan@crowleysdfk.ie

CLICK HERE to download a PDF version of this article.

This exemption was abolished for 2011 and subsequent years by the Finance Act 2011 and therefore deemed a taxable benefit-in-kind subject to PAYE, PRSI and the USC. 

Following representations made by numerous individuals and professional bodies, Revenue has been asked to clarify:

• the extent to which a deduction may be available to employees under the general rule governing employee expenses in respect of annual membership fees paid to a professional body; and
• the extent to which, for ease of administration, employers need not make tax, PRSI and USC deductions where such professional membership fees paid by the employer on behalf of the employee would in any event be allowed as a deduction expense.

Tax deductibility of employee expenses
In general, a tax deduction is allowed in relation to expenses incurred wholly, exclusively and necessarily by an individual in the performance of the duties of his or her employment.

With regard to annual professional subscriptions, Revenue states that whilst each case should be examined on its own facts and circumstances, Revenue will allow a tax deduction for the employee for the tax year 2011 and subsequent years in the following circumstances:

Where there is a statutory requirement for membership of a professional body etc.
Revenue have confirmed that where it is required by statute to be a registered member of a designated professional body, association, society, council etc. before an employee carries out the duties of their employment, tax relief is now available.

Therefore, where an employee pays their own annual registration or professional membership fee, it is deemed an expense which is wholly, exclusively and necessarily incurred by an individual in the performance of the duties of their employment.

In addition, where an employee has a right, by virtue of a registration or membership of a professional body to plead or be heard in representing a client of his employer before a court or tribunal, tax relief is also available.

Where there is a requirement for a practising certificate or licence
Where an employee is obliged to have a current practising certificate or licence issued by a professional body, association, society, council etc. before they can carry out the duties of their employment, tax relief is also available in respect of both the annual membership fees and the cost of the practising certificate or licence payable.

Other situations where membership fees of a professional body may be deductible
Revenue have also confirmed that tax relief is also available in respect of an annual membership fee payable to a professional body, association, society, council etc. where:

• the duties of the employee and the duties of the employment require the exercise or practice of the occupation or profession in respect of which the annual membership fee refers;
• the employee exercises or practices the occupation or profession in respect of which the annual membership fee refers; and
• membership of the professional body is an indispensable condition of the tenure of the employment.

Operation of payroll deduction
Finally, where an employer pays or reimburses a membership fee to a professional body on behalf of or to an employee; and tax relief would be available as outlined above, PAYE, PRSI and USC is not required to be deducted.
 
What now?
Employers should review any professional subscriptions paid since 1 January 2011 to ensure that the correct tax treatment is applied to such payments in accordance with Revenue’s new position.

If you require any further information or assistance in relation to the above, please contact us.

Mike Scanlan
Tel:  051 844441
Email: mscanlan@crowleysdfk.ie

CLICK HERE to download a PDF version of this article.

CLICK HERE for more information.

The code, which has been developed by the industry’s co-ordinating body Irish Charities and Tax Research, aims to provide guidance and a benchmark of good governance against which charities can measure themselves, as well as to clarify the roles, duties and responsibilities of board members and other governance bodies.

The code of practice is voluntary but the body is hopeful that most of the 5,700 charities operating in Ireland will sign up to it.

It believes the successful implementation of the statement of guiding principles for fundraising will show the charity sector is capable of self-regulation and pre-empt any need for statutory regulation, which is possible in the Charities Act 2009.

The code of practice covers all fundraising activities including door-to-door and street collections, telemarketing, direct mail, emergency appeals, internet donations, raffles, church-gate collections and bequests.

Five key elements of the new code of practice

•  Charities commit themselves to the highest standards of good practice and ensure fundraising activities are respectful, open and legal.
• A donor charter will be introduced, which provides a ‘‘bill of rights’’ to donors, including their right to know about the causes for which the charity is fundraising, how their donation is being used and if the fundraisers are employees of the organisation or third party agents.
• A complaints and feedback procedure will be set up to enable people to notify the organisation of their wishes, comments and complaints, with all feedback to receive a response within a specified timeframe.
• A monitoring group will be established, with a majority of independent members and an independent chair to actively monitor compliance with the code.
• Charities will produce an annual report and a statement of accounts, made publicly available every year.

Charities will have the opportunity to sign up to the code online, and the list of charities which sign up will be available publicly.

If you require any further information on how this issue might affect you or your organisation please contact us.

Tom Russell
Tel: 021 4272900
Email: trussell@crowleysdfk.ie

CLICK HERE to download a PDF version of this article.

1. VAT rate to be reduced to 9% on certain goods and services.
The goods and services are those mainly related to tourism including hotel & guest-house accommodation, restaurant & take-away meals, cinema, theatre admissions, printed matter like brochures & magazines and hair-dressing services.

2. Employer’s PRSI to be halved to 4.25% for all employees earning up to €356 per week.

3. A National Internship Scheme to be established to provide 5,000 work experience placements.
There is no additional cost for employers participating in the Scheme and the intern receives a weekly allowance of €50 on top of their existing social welfare entitlement.

4. Specific lending targets for the two pillar banks to be established and a partial credit guarantee scheme to be introduced.
This should encourage banks to lend to SMEs to grow their company, develop new products or expand into new markets.

5. Claiming the R&D Tax Credit to be made more flexible.
This existing scheme is available to all companies that carry out some R&D activities and allows them to claim back 25% of their expenditure on R&D as a tax credit.

If you require further information or advice on how this could help your business please contact us.

Siobhán O’Hea
Tax Manager
Tel: 021 4272900
Email: sohea@crowleysdfk.ie

Launched on 8 May 2011 to commemorate the selling of the first Coke in Atlanta, Georgia 125 years ago, the fund is open to non-profit organisations in Ireland to support projects that are having a positive impact on the quality of life in Irish communities.

Coca Cola is donating €125,000 to the fund. Ten applicants will receive €10,000 and five applicants will receive €5,000.

In order for a project to apply they must have met the following criteria:

1. Not for profit community, voluntary and charitable organisations must be classified under one or more of the following headings:
      • Charitable organisation with a registered charity number
      • Voluntary organisation working within the community
      • Not for profit community organisation
      • Local sports club e.g. GAA Club
      • A Foundation or a Trust
2. Only proposals relating to requests under one of the following three themes will be considered:
      • Social and Education programmes aimed at youth
      • Healthy and Active Lifestyles
      • Environmental Leadership
3. Organisations must have been in operation for a minimum of 12 months

The deadline for applications is midnight on 30 June 2011.  For more information about this fund please visit the coca cola website www.coca-cola.ie/125-thank-you-fund/

If you are interested in pursuing the above and need advice with the application process, please contact us.

Mary Treacy
Tel: 021 4272900
Email: mtreacy@crowleysdfk.ie

CLICK HERE to download a PDF version of this article.

The email is headed “Tax Refund Notification” and advises:

“After the last re- calculation of your 2010 fiscal activity we have determined that you are eligible to receive a tax refund of Euro 412,61″.

A link opens up a form seeking personal information, including debit/credit card details, that is attached to the frameset of the www.revenue.ie website.

Revenue have confirmed that this email, which is the latest in a succession of scams targeting Irish taxpayers, was not issue by them. Revenue never send emails which require customers to send personal information via email or pop-up windows.

Anyone who receives an email purporting to be from Revenue and suspects it to be fraudulent or a scam should simply delete it. 

Anyone who provided personal information in response to these fraudulent emails should contact their bank or credit card company immediately.

Prior to 20 July 2009, the Voluntary Strike-Off procedure was as follows:

• A director’s statement of intention was signed by a Director noting their intention to apply for voluntary strike off on behalf of the company. This statement certified that the company had no assets or liabilities and would not trade prior to being struck off.
• A letter of no objection needed to be obtained from the Revenue Commissioners giving their approval for the company to cease in this manner on the basis that the company had no outstanding taxes.
• A notice of the intended strike off had to be published in a national daily newspaper within one month of any application being made to the Companies Registration Office (CRO).

Since 20 July 2009, the statement of intention was replaced by Form H15 – developed so that it could be easily scanned onto the company’s public record. The subsequent two steps remained the same.

Earlier this month, the CRO announced an amended version of Form H15 where not only is the director who signs the form certifying that the company has no assets or liabilities and that it has ceased to trade but also that the issued share capital of the company is not worth more that €150 for any of the previous three years.

The new version of the H15 form came into immediate effect but the older version, which does not include the €150 issued share capital 3 year rule, will still be accepted until the 1 May 2011.

The CRO have stated however, that the new changes in relation to the share capital will only be applicable to private limited companies and will not affect unlimited companies.

If you require any further information or assistance on how this issue might affect you please contact us.

Noel Wren
Tel: 021 4272900
Email: nwren@crowleysdfk.ie

For more information, please click here.

Budget 2011 has expectedly delivered a €6 billion adjustment to the public finances through a variety of spending reduction and increased taxation measures.

For more information, please click here .

The aim of the Plan is to generate overall savings of €15 billion by 2014. €10 billion of this is to be achieved through reductions in Government spending. The remaining €5 billion is to be achieved through taxation measures.

For more information, please click here.

Inside this issue:

Tax News

• When the taxman comes calling
• Grants and supports

Insolvency News

• Closing down a limited company
• Retention of title

Service Area Spotlight

• Company Secretarial

Hot Topic

• Update on the Charities Act 2009

NERA has a total of 90 inspectors, who are currently carrying out ‘announced’ and ‘unannounced’ inspections nationwide.  These inspections arise as a result of complaints received of alleged breaches of employment rights.  Breaches are identified through targeted inspection campaigns and routine enquiries.

Their most recent campaign has been in the catering sector.  Colette Nagle, Partner in Crowleys DFK, commented on recent outcomes, ‘In 2009, the number of inspections in the catering sector alone was close to 450, identifying a low compliance rate of 21%.  Over 700,000 euro was recovered and paid to employees for underpayments in statutory minimum entitlements.’’

Download a PDF of this Press Release

1. Invoice Basis
The invoice basis requires traders to account for VAT on invoices issued in the VAT period in question.

This scheme can be disadvantageous from a cash flow point of view as traders must pay VAT to the Revenue Commissioners before they have received payment from customers.

2. Cash receipts basis
The cash receipts basis, also known as the monies received basis, allows traders to account for VAT on cash actually received by them in the VAT period in question.

This cash receipts is can be availed of if:

• annual turnover is less than €1,000,000 or
• 90% of the trader’s annual turnover comes from the supply of goods or services to those who are not required to register for VAT (the general public etc.)

The VAT rate applied is the VAT rate in force at the time of the supply and not when payment has been received. This can be disadvantageous for the trader if the VAT rate increases in the meantime.

Under both the invoice and cash-receipts basis, a trader is entitled to reclaim the VAT on invoices received from suppliers during the period in question, whether or not the trader has paid the invoice.

If you require any advice on any of the points raised above, please contact our tax department
Karina Janeczek
Tel: 021 427 2900
Email: kjaneczek@crowleysdfk.ie

Certain trading activities are VAT exempt. Traders who engage in these activities are not entitled to register for VAT. These activities include insurance services, the services of a doctor, dentist or optician and educational services.

Traders who supply VAT-able goods or services are obliged to register for VAT if their supply of goods or services exceeds the following thresholds in a continuous 12 month period:

a) €37,500 for the supply of services
b) €75,000 for the supply of goods

Traders who acquire goods or services must register for VAT where:

1. The acquisition of goods from other EU member states exceeds €41,000 in a continuous 12 month period. This threshold applies even if the trader is supplying VAT-exempt goods/ services.
2. The trader acquires a ‘new means of transport’ from another EU member state. This applies to persons buying new cars from other EU member states. Persons in this category must register for VAT regardless of the cost of the vehicle or regardless of whether it is in the course of business or for private use. 
3. The trader receives certain ‘fourth schedule services’ for business purposes from the EU. Registration for VAT is required regardless of the sum paid for the services. Such services include banking, financial and insurance services and also the services of solicitors, consultants and accountants. Persons acquiring ‘fourth schedule services’ for private purposes are not required to register for VAT. 

If a trader’s VAT liability for the year has fallen below thresholds outlined above, they may apply to Revenue to de-register for VAT. 

If you require any advice on any of the points raised above, please contact our tax department
Karina Janeczek
Tel: 021 427 2900
Email: kjaneczek@crowleysdfk.ie

A caller (reported to have a non-Irish accent) claiming to be a Revenue official has been contacting businesses seeking PPSN numbers or addresses of named taxpayers.

Revenue have confirmed that they would not make this type of telephone call.

If you receive a telephone call purporting to be from Revenue about which you have doubts contact your local Revenue office.

Member firm fee income has risen consistently year on year throughout the last decade and DFK is now clearly established as one of the top 10 international accounting Associations. 

Commenting on these results, James O’Connor, Managing Partner said he is delighted with the growth of the association and that these results highlight the real strength of DFK International and its member firms.

Whilst reporting record results, DFK International also announces the appointment of its new Executive Director, Martin Sharp.  Martin has had a distinguished international career in the UK Royal Air Force.  He commented that “Against the background of continued worldwide recession, DFK has reported great results.  I have been very impressed by the partners I have met and their commitment to meeting the needs of clients with international operations – so I am not surprised by these results.  I relish the challenge of contributing to the further growth of such a dynamic international Association”.

The Association was formed in 1962 and will be celebrating its 50th anniversary in July 2012 in Paris ahead of the London Olympics.

For more information on expatirate tax please click here.

Residential properties liable to the charge include:

• Private Rented Property,
• Vacant property (except new but unsold residences),
• Holiday Homes,
• Residential Property occupied by a person other than owner and where rent is not paid.

Houses, maisonettes, flats, apartments and bedsits all come within the definition of a residential property.

You may pay on line from 31st March 2010 onwards at www.nppr.ie or at your local City/ County Council offices.

• Bi-annual returns may be made by traders whose total VAT payments for the year are €3,000 or less.
• Four-monthly returns are an option for those whose yearly VAT payments are between €3,000 and €14,000.
• Revenue may, by concession, allow traders to file annual VAT returns. A trader has the option in this case of aligning their VAT year end with their accounting year end. This concession is only available to smaller traders.
• It is also possible to pay your VAT liability by monthly direct debit. This option is open to those whose bi-monthly VAT liabilities do not exceed €50,000. You need only make one annual VAT return. Where the direct debit payments have not covered the VAT liability for the year in full, there will be a balance of tax to pay at the year end. You should note that where the balance of tax is not paid on time, interest will be applied. Where the amount underpaid exceeds 20% of the final liability, interest will be backdated to middle of the VAT period. Where the direct debit payments have exceeded the final liability for the year, there will be a refund of tax paid.

If a trader’s VAT liability for the year has fallen, they may apply to Revenue to reduce the frequency of the VAT returns that must be filed during the year.

VAT returns must always be made by the 19th day of the month following the end of the VAT period. E.g. If the VAT period is 1st March 2010 -30th April 2010 the return must be filed and any liability paid by the 19th May 2010. This date is extended to the 23rd of the month for returns filed and paid using ROS (Revenue Online Service).

If you require any advice on any of the points raised above, please contact our tax department
Karina Janeczek
Tel: 021 4272900
Email: kjaneczek@crowleysdfk.ie

A US based NASDAQ listed company in the semi-conductor industry with European subsidiaries in Germany, UK, France, Italy and Sweden.

Our Brief

The company wished to establish a Research & Development facility in Ireland and contacted Chantrey Vellacott DFK (its UK auditors). Crowleys DFK were introduced to the client by Chantrey Vellacott DFK.

Specifics of Work

We performed the initial set up of the Irish Research & Development company. We recommended lawyers to advise on employment and property issues. We registered the company for Irish taxes. We assisted in a successful application for grant aid from Enterprise Ireland. We arranged banking facilities. We provide ongoing support in the form of bookkeeping, monthly reporting, VAT, payroll, tax compliance, company secretarial and audit.

We were appointed by a multi million dollar International US company to assist them with all aspects of setting up an Irish organisation

Our Brief

We were asked to provide all accounting services: management and quarterly accounts, bookkeeping and payroll bureau services.

Specifics of Work

Our initial work involved heavy negotiation with Irish banks on behalf of the client, setting up the corporate and financial function. We also set up effective internal financial controls.

An existing client wanted to purchase a division of a large multinational communications company.

Our Brief

We were appointed to value the target and assist with the purchase.

Specifics of Work

We prepared a business plan and financial projections. We carried out the financial and commercial due diligence and prepared a comprehensive report to the directors. We provided financial advice on the structure of the new business and assisted in raising finance.

A well established interior design company serving a very niche market wished to move firms and contacted Crowleys DFK. They required assistance with financial planning and budget projections.

Our Brief

We were asked to review their previous accounts and internal financial control systems. There was also an immediate requirement for a re-organisation strategy.

Specifics of Work

We immediately implemented corrective action to remedy inadequacies found within the accounting function. One of the directors was nearing retirement age. Our tax specialists advised all the directors on efficient individual and company tax planning matters. The directors also requested our assistance regarding a more efficient organisational structure within the company. All of the above was delivered by a multi-disciplined team of tax specialists, advisory consultants and auditors from within the firm.

Health & Safety Authority

Background

In 2009, Crowleys DFK was awarded a third consecutive contract with the Health and Safety Authority for the provision of a fully outsourced internal audit service. Each 2 year contract was awarded following a lengthy tender process and had the option to be extended for a further year (subject to satisfactory performance). On each occasion to date the Authority has exercised its option to extend the contract for a further year.

Our Brief

Review and determine the adequacy and effectiveness of existing internal control. Provide a risk assessment of the internal infrastructure.

Specifics of Work

To date we have prepared three strategic 3-year internal audit plans, each following an initial risk assessment. All phases of the plans have involved discussions with management and key staff; documentation and testing of systems and procedures; reviewing progress on implementation of any agreed changes to systems/controls resulting from findings at earlier phases of the plan; documentation of results and observations, written reports of key findings and recommendations and reporting relevant findings and recommendations to the Audit Committee. The topics audited relate to both financial and non-financial controls. We have ensured that each plan has included a minimum number of financial areas on an annual basis so as to enable the Chairperson to sign off on the Statement of Internal Financial Control.

As well as attending approximately 4-5 Audit Committee meetings per year, we also provide the Authority with on-going advice on various issues as they arise and have carried out a number of special investigations as requested by the Audit Committee.

A multi million euro construction company experienced trading difficulty due to a sudden reduction in new contracts. The company had fixed costs which could not easily be reduced. These included costs associated with the financing of plant and equipment which was now surplus to the requirements of the business. This, together with delays in getting paid for work completed, meant the company could not pay its creditors.

Our Brief

Crowleys DFK was asked to undertake a review of the business.

Specifics of Work

Working closely with our client we implemented a voluntary scheme of arrangement with the company’s creditors. This resulted in the creditors agreeing to write off a portion of their debt, which provided the company with time to dispose of surplus assets and continue trading.

We were asked by a financial institution to review asset values, bank debt and cashflow of a property developer client who was unable to meet loan repayments.

Specifics of Work

The review led to the restructuring of bank facilities, disposal of assets and the introduction of new capital.

We were asked by the legal advisors to a family sportswear wholesale business to act as liquidators under a creditors voluntary winding up.

Specifics of Work

We disposed of fixed assets and stock and collected debts to maximise the return to secured, preferential and unsecured creditors.

We were appointed by the stakeholders of a bakery & chain of confectionery shops as liquidators under a creditors voluntary winding up.

Specifics of Work

We continued the business as a going concern for a number of months leading to the sale of the business. This maximised the purchase consideration for the benefit of the company’s finance providers and creditors and led to the business being sold as a going concern. It also resulted in many jobs being saved.

An existing client in the medical sector was seeking advice on the purchase of an additional business.

Brief

We were asked to act on behalf of the purchaser and assist in the valuation and negotiation of the terms of purchase.

Specifics of Work

We liaised with the vendors advisors in negotiating a purchase price. We assisted in dealing with the new landlords and carried out a review and valuation of the existing business. Our tax and finance specialists advised the client on a suitable funding strategy.

Our client is a medium-sized retail pharmacist and has 3 full-time staff and a number of locum pharmacists engaged since early 2008.

Background

The Revenue Commissioners had recently issued a briefing document on the tax treatment of “locums” in the medical and pharmacy sectors. Our client was concerned that they weren’t treating the locums correctly for tax purposes.

Our Brief

Our client asked us  to review the nature of the locums’ engagements and to advise them on whether they should be treated as employees or self-employed consultants going forward. We were also asked to advise them on how they should rectify any incorrect treatment in the past.

Specifics of Work

We reviewed the terms of the each locum’s engagement to establish the relationship between the parties. We then formed an opinion as to whether they were an employee or self-employed.

We assisted our client with implementing procedures to ensure the correct treatment for all locums going forward. Where applicable, we provided them with a letter for each locum outlining the reasons for their tax treatment changing.

We calculated the PAYE/ PRSI underpaid and advised our client to make a “self-correction” in respect of the underpayment. As the “self-correction” was made within 12 months of the due date for the 2008 P35 return, our client was able to avoid any penalty on the underpayment. If the error had been discovered during the course of a Revenue audit, our client would have been liable to penalties.

Our client is a medical professional both employed by the state and earning consultancy income from his private clinic.

Background

A recent development in tax legislation means that our client must now apportion his contributions to his employment and personal pension plans in a very specific manner in order to obtain maximum tax relief.

Our Brief

Our client asked us to examine his contributions to both his employment and personal pension plans in a particular year to establish what additional sums he could contribute to each to obtain maximum tax relief.

Specifics of Work

We:

• Examined the breakdown of the client’s income for the particular year.
• Established what contributions he had already made in respect of his employment and consultancy income.
• Calculated the optimal contribution he could make in respect of each pension plan.
• Lodged the appropriate return with the Inspector of Taxes.
• Secured significant refund on the client’s behalf.

Group A €414,799 – Applies where the beneficiary is a child (including adopted child, step-child, and certain foster children) or minor child of a deceased child of the disponer. In certain circumstances parents also fall within this threshold where they take an inheritance from a child.

Group B €41,481 – Applies where the beneficiary is a brother, sister, niece, nephew, or lineal ancestor or lineal descendant of the disponer.

Group C €20,740 – Applies in all other cases.

The Group Thresholds are indexed annually by reference to the Consumer Price Index.

Inside this issue:

Budget 2010

• Highlights from the Budget

Tax News

• All is not lost! – the way in which losses can be used to minimise income tax, corporation tax and capital gains tax liabilities

Hot Topics

• Early public sector retirees and the state pension
• Why creditors should attend creditors meetings?

Service Area Spotlight

• Outsourcing your payroll

The e-brief sets out the criteria that Revenue will apply in reviewing whether a person is a self-employed locum or an employee. The tax treatment of both is different for the employer/contractor and the employee/locum.

Please click here for further details on this e-brief.

According to the Department of the Environment, the payment date was late this year as it took time to introduce the scheme.  Payment was due on September 30th, with one month’s grace before penalties of €20 per month were charged.  The Department states that from 2010 onwards, legislation provided for March 31st  as the ‘liability date’.  Payment of the charge would fall two months later on May 31st, with a further one month’s grace before penalties.

Further information about the €200 charge and payment options is available at http://www.nppr.ie/.

If you require any further information or assistance on how this issue might affect you please contact the Crowleys DFK Tax Department.

Edward Murphy
Tel: 01 6790800 / 021 4272900
Email: emurphy@crowleysdfk.ie

The UCC PLUS+ Programme provides support for students that have an academic ability to succeed at third level, but for a variety of socio-economic reasons may be prevented from doing so.  The Programme seeks to target students and to provide motivational and educational assistance to them throughout their secondary schooling to enhance their ability to compete for third level places.  To date over 311 students have graduated from the University through this Programme. 

Cal Healy, Development Manager at UCC said “I am absolutely delighted that Crowleys DFK are renewing their support of the UCC PLUS+ Programme.  Their involvement over the last four years has enabled a number of students to complete their undergraduate studies at UCC.  By continuing their support, they will give other students the same opportunity.  In the current economic climate young people from disadvantaged backgrounds will need our help more than ever to pursue third level education and reach their full potential”. 

Continuing its already close association with UCC, James O’Connor Managing Partner at Crowleys DFK, said “Crowleys DFK is delighted and proud to continue to support such a worthy educational initiative and give back to the Cork community.  Education is a key element of our Corporate Social Responsibility strategy.  We believe that education is essential for the country’s economic recovery and for our ability as a community to develop and grow the future of Cork”.

Commenting on the results Managing Partner, James O’Connor, said ‘2009 has been another great year for the Crowleys DFK trainees.  We are very proud of our students’ record of consistently achieving first class results in professional exams.  The invaluable experience our trainees gain from working with our diverse client base has proven hugely relevant and beneficial when sitting the difficult Final Admitting Examinations.’

James concluded ‘We have a strong ethos in the firm of both study and professional development.  We encourage all our staff and partners to grow their network of contacts.  In turn we can offer clients a vast amount of resources and expertise through our remarkable network of connections.’

The breakfast, which was aimed at business advisers, was coordinated by The Community Foundation for Ireland.  The Foundation is one of Ireland’s leading grant-makers. It makes grants on behalf of individuals, families, businesses and other institutions that have set up their charitable funds under the umbrella of The Foundation. In 2008 alone 30 grants were made to a variety of projects in Co Cork.

Topics included new opportunities and ideas for building local philanthropy; how and why Community Foundations work with advisers and donors, and how, when and why to introduce the topic of philanthropy with clients.

Among the other speaker at the event were John Rockett, former head of Private Banking at AIB and Niall O’Sullivan, Head of Fund Development, The Community Foundation.

Up until now, this hasn’t been fully exercised by the Revenue Commissioners.

However, with the increase of the fixed penalty rates in the last Finance Act, reports suggest that Revenue has begun to enforce penalties for non-compliance.

From the Revenue Commissioners’ perspective, enforcing the fixed penalty regime could result in a significant tax-take for relatively little effort.

A fixed penalty can be imposed even where a taxpayer does not have any tax liability or is in a refund situation.  It is in addition to any interest that may be payable on the late payment of tax.

There are many different penalties for a variety of compliance failures. Some of the more common ones are outlined below:

With all the difficulties businesses are currently experiencing, it can be tempting to put off filing returns.  However, avoiding these penalties should provide taxpayers with a strong incentive to keep their compliance up to date.

If you require any further information or assistance on how this issue might affect you please contact the Crowleys DFK Tax Department.

Siobhán O’Neill
Tel: 01 6790800 / 021 4272900
Email: soneill@crowleysdfk.ie

Please click here for further information on the key admendments to the new Act.

As completing the form can be a daunting task, we have outlined some key information to help you complete your application. Please click here to download our information sheet.

Managing Partner, James O’Connor, commented ‘Vincent has been a key part in the growth of our expanding practice and we are delighted to promote him to this important position’.

Vincent is an experienced chartered accountant who joined Crowleys DFK in 2002. Working with both public and private sector clients, Vincent is particularly experienced in providing practical advice on business matters, corporate governance, financial reporting and management information systems.

Vincent aims to offer clients practical workable solutions through technical expertise and a hand-on approach.

James concluded ‘Vincent’s promotion expands our outstanding team, and reflects the firm’s commitment to delivering the highest quality services to our clients.’

Download a PDF of this Press Release

The charge applies mainly to owners of private rental property and holiday homes. It also applies to vacant residential property unless newly built but unsold.

The Act provides certain exemptions from the concept of ownership, including:

• Sole or main residence
• “Newly constructed” residential property which forms part of a builder/developers trading stock and is unsold, never been used as a dwelling and no income has been derived from the building since its construction
• Certain social housing
• Properties in the Rental Accommodation Scheme
• Limited exemptions where a person is moving house and, in the process, owns two houses for a relatively short period
• Other exemptions deal with Local Authority housing, shared ownership housing (with a Housing Authority), and some heritage buildings
• In certain circumstances, joint ownership of a property after a divorce or separation agreement
• Residential property liable for commercial rates – although few instances of such properties are anticipated

The Act should be consulted about these exemptions.

Liability to pay the charge is assessed by the owners themselves. Ownership of a non-principal private residence on the ‘liability date’ (31 July 2009) determines liability to pay the €200 charge.

Payment is due by 30 September 2009. A €20 per month late payment fee will apply from 1 November 2009 in respect of each month/part of a month for which payment is overdue.

Payment can be made on-line at www.nppr.ie  or at the offices of any county or city council. You will need your PPS number and the address of relevant property to make a payment. Further information about the €200 charge is available at www.nppr.ie.

If you require any further information or assistance on how this issue might affect you please contact the Crowleys DFK Tax Department.

Edward Murphy
Tel: 01 6790800 / 021 4272900
Email: emurphy@crowleysdfk.ie

Commenting on the results Tax Partner Edward Murphy said ‘The firm has a record of consistently high pass rates among professional staff.  I am personally delighted that the tax team is continuing to maintain this trend.

In recent years the Crowleys DFK Tax Department has grown into a progressive and dynamic hub within the firm offering expert and specialist advice to clients. 

For the personal client, it offers compliance, wealth management and tax planning services.  The corporate client base spans across most industry sectors.  The team advises these businesses on all areas of Irish taxation including corporation tax, VAT and capital gains tax.  It works with many Irish subsidiaries and branches of overseas and multi-national companies, helping to structure their Irish operations and minimize tax burdens. 

Edward concluded ‘Our people are the core of our business.  Providing quality training and developing their individual skills equips us to deliver expert technical know-how and excellence in customer service.’

Download a PDF of this Press Release 

Among the less publicised measures of the Act is the introduction of a 1% levy on contributions made to certain investment, savings, assurance and pension policies issued by life assurance companies.

The levy will apply to all contributions to both new and existing policies, made on/after 1  August 2009.

Among the type of policies affected by the levy are investment bonds, savings policies, personal pensions PRSA’s, annuities, income protection policies, buy-out bonds and approved retirement funds administered by a life assurance company.

Certain types of self-administered pensions and group pension schemes are not affected.

If your pension policy is affected by the levy and if you intend making a contribution to your PRSA or AVC scheme to avail of relief against your 2008 income tax liability, you should consider making it before 1st August 2009.

If you are unsure whether the levy applies to contributions to your particular policy, you should check with your broker/ life assurance company.

If you have any queries on the levy or on any other issue raised in this article, please contact:

Siobhan O’Neill
Tel: 021 4272900
Email: soneill@crowleysdfk.ie

Cork 2009 – City on a rising trajectory

Business leaders in Ireland’s second city have identified a focus on traditionally strong sectors, multinational investment and start-up support as imperative for Cork’s constant growth.

Please click here to view the complete article

At Crowleys DFK we are strongly advising you to file your 2008 tax return before the summer months in an effort to improve your cash flow management.  Our recommendation is to file now with the option of paying later.  Full payment can be made by either instalments or a lump sum before the October deadline.  By acting early, you will avoid the stress of an unknown penalty with little time to pay, letting you get on with running your business. 

Contact our tax department today to ensure that we have all the necessary information for preparing your tax return.  We will prepare a draft computation taking into account the latest changes to income tax announced by the Department of Finance in the Supplementary Budget.  We will discuss with you ways of reducing your liability and offer advice for managing both your business and personal cash flow.

We are here to help you improve the running of your business by putting in place effective solutions for operating in today’s environment. 

Edward Murphy
Tel: 01 6790800 / 021 472900
Email: emurphy@crowleysdfk.ie

Client testimonial
Fiona Barclay, Root Marketing

‘In April, Crowleys DFK advised me to file my tax return for 2008, without full payment. I wasn’t aware that the option of filing so early and without having to make full payment was open to me.  This advice has made a huge difference to my cash flow management. It has allowed me to budget towards October, pay my tax in instalments and research loan options available to me if required nearer the deadline.  By acting on their advice, I also have peace of mind that I will not face any surprises of hefty penalties later in the year.’ 

Click here to view the Spring/Summer 2009 Newsletter in PDF format

Inside this issue:

Tax News

• Highlights from the April 2009 Supplementary Budget
• Mandatory Electronic Filing and Payment
• Reduce your Tax Liability

Audit and Accounts News

• The Focus for Audit and Accounts in 2009

Hot Topics

• Redundancy Payments
• Managing your Cash Flow

Service Area Spotlight

• Business Recovery and Insolvency

Please click here to for further details.

Please click here to read more about company directors’ annual return responsibilities, filing deadlines and penalites and audit exemption.

Click here to view: Revenue eBrief

Edward Murphy
Tax Partner

Whilst the April 2009 Supplementary Budget delivers in terms of its severity, it is not readily apparent if it delivers in terms of correcting our economic weak points. One of the fears remaining is that the tax-take on which the budget is balanced may be over optimistic.
 
On the business front, the introduction of new tax reliefs on the acquisition of Intellectual Property is a welcome attraction to our Foreign Direct Investors. Disappointingly however, is that there was very little offered by way of business incentives to help create and indeed protect much needed employment.

Click here to view our highlights of the Supplementary Budget.

Please click here for more information.

Click here for more information on the implementation of the Public Service Pension-Related Deduction.  This document takes the form of questions and answers and should be read alongside or in conjunction with the Act.

Janice Lau-Burke

On Sunday 1st March 2009 Crowleys DFK Partner, Janice Lau-Burke, was a guest speaker at the launch of the programme of events organised by Dublin City Council in celebration of International Women’s Day 2009. 

The event, which was opened by Dublin City Lord Mayor Eibhlin Byrne at the Mansion House, acknowledged and promoted the contribution of women to life in Dublin City.  Invited speakers presented their experience of community regeneration, inter-culturalism, senior citizenship, and the history of achieving social, political and economic equality for women.

As a female partner in a major accounting firm, Janice Lau-Burke is in the minority.  But as a Malaysian woman of Chinese origin working in a Dublin firm, it’s probably safe to say that she’s one of a select few.

Speaking at the event Ms Lau-Burke said “my parents were firm believers in the necessity for a good education as a foundation to prosperity and sent me and my siblings to be educated at the highly-regarded Anglo Chinese School in Perak, Malaysia.  Being there certainly gave me an insight into life in the west”. 

In 1980 Ms Lau-Burke moved to Ireland.  “Ireland is essentially a very different country to the one I arrived in 28 years ago.  It has dramatically changed into a multi-racial country.  It‘s inspiring to see increasing numbers of both Irish and International women succeeding in this country”. 

After finishing her second level education she went on to study Accountancy and became a member of The Institute of Certified Public Accountants in Ireland.  Commenting on her profession she said ”even though the accountancy profession continues to be very male-dominated at the top levels, I am pleased to see increasing numbers of women breaking through the glass ceiling and juggling career and family”.

In 2004 Ms Lau-Burke became partner at Crowleys DFK, the progressive Cork and Dublin based firm of chartered accountants and business advisors.  “I have been fortunate to work for an organisation that has embraced my origins and has encouraged me to develop it as part of our overall business model.  With my team in Crowleys DFK, I work closely with the many Chinese owned businesses”.

Ms Lau-Burke concluded ”I truly feel like an International Woman!  I am proud to call myself both Malaysian and Irish”.

Download a PDF of this press release

A skilled work-force and various Government support packages encourage firms to locate their research and development centres. The R&D tax credit is also an important incentive for both Irish and multi-national companies.

Please click here to read more about the R&D tax credit.

It is often said that choosing your exit strategy is the most important business decision you will ever have to make.

Please click here to read more.

Please click here to read more.

From 2006 onwards, the Government introduced legislation that prohibited landlords of residential properties from claiming a deduction for their mortgage interest from their gross rent unless the tenancy was registered with the “Private Residential Tenancies Board” (PRTB). The PRTB is a State board that has been in existence since 2004. It is a requirement that landlords with rented residential properties located in Ireland register their tenancies with the PRTB.

In order to claim a deduction for mortgage interest, landlords are obliged to tick a box on their annual income tax return indicating that the tenancies are registered. Until now, the Revenue Commissioners had no way of verifying on a large scale whether landlords were accurately reporting the registration of their tenancies.

The recent Oireachtas Public Accounts Committee’s report entitled “Taxation of Rental Income Receipts”, called for greater communication between State agencies to ensure greater tax compliance by landlords. Following on from this, in the past few weeks, the Revenue Commissioners have applied to the Minister for Finance for the power to automatically access the PRTB’s list of registered tenancies.

If this application is successful, the Revenue Commissioners will automatically have details of every registered landlord’s PPS number, address and the rental income from his/ property. It would greatly increase the ability of the Revenue Commissioners to monitor landlords and to pinpoint non-compliant taxpayers in receipt of un-declared rental income.

It remains to be seen when/ if this additional power will be granted to the Revenue Commissioners. However, in these tough economic times for the Exchequer, any measure to enable the Government to maximise tax revenue will surely be introduced sooner rather than later.

If you have any concerns about your tax compliance, please contact:

Siobhán O’Neill
Tax Manager
soneill@crowleysdfk.ie
01 6790800 / 021 4272900

The seminar was based around the four core pillars essential to business survival – Maintaining Equilibrium, Internal Cost Competitiveness, Managing Cash and Internal Cost Competitiveness.

Colette and James presented on the third pillar – Managing Cash. Please click here to view a copy of their presentation in PDF format.

Please click here to read more on this topical issue and learn ways in which you can reduce your risk to fraud.  

DFK International is a major international association of independent firms and business advisers that has been meeting the needs of clients with interests in more than one country for more than 45 years.  The association has over 300 offices across the world.

Crowleys DFK was recognised for its contribution to the development of DFK UK & Ireland during the year.  The firm has been an active and prominent member of DFK since 1992.
 
Commenting on the award Managing Partner James O’Connor said, “It’s a great honour to receive this recognition from our colleagues in DFK UK & Ireland.  This award is an acknowledgement of our continued commitment to quality and the provision of a proactive professional service to our growing list of local Irish and international clients, and we are delighted to receive it.”

With offices in Cork and Dublin the firm has seven partners and is experiencing annual percentage growth rates in the mid-twenties.  Crowleys DFK clients include owner managed businesses, branches and subsidiaries of overseas and multi national companies and public sector organisations.  The firm is particularly strong in advising family businesses.

James continued “In these challenging times, our international affiliation differentiates us from other medium sized practices.  It enhances our ability to provide expert business and tax advice to our clients that are trading in different jurisdictions”.

Please click here for more details on the options available to distressed companies.

Please click here  for a brief summary of the duties and responsibilities of directors of private companies in Ireland.

From 1st September 2008 onwards, where a principal contractor receives construction services from a VAT-registered sub-contractor, the principal is obliged to account for the VAT to the Revenue Commissioners on the supply of these services to him.

This is a change from the old system where the “principal contractor” paid VAT to the sub-contractor as part of the total cost of the services received.  

Significantly, “principal contractors” for the purpose of the new rules includes all government departments, local authorities, boards established under statute and certain other public bodies, which are required to operate relevant contracts tax (RCT).

For public sector bodies who receive construction services, this means they may have to register for VAT to enable them to pay the VAT to the Revenue Commissioners that previously, the body would have paid directly to the sub-contractor.

Public sector bodies are generally not entitled to reclaim any VAT on expenditure. The new rules have not changed this.
 
The new rules are important for public sector bodies as the definition of “construction services” is quite broad. It includes any alterations, repairs or extensions carried out to a building as well as the installation of heating and lighting systems, fire and burglar alarms and telecommunications systems, among others.

An example of how the new system will work in practice is as follows:

• A local authority engages a VAT-registered electrician to carry out some repair work. The cost of the work is €1,000 plus VAT.
• The electrician issues an invoice to the local authority for €1,000. The invoice indicates that VAT is to be accounted for by the local authority.
• The local authority pays the electrician €1,000 less any RCT (if applicable).
• The local authority must then register for VAT (if not already registered), and pay VAT of €135 (€1,000 at 13.5%) directly to the Revenue Commissioners through its bi-monthly VAT return.

For further information or advice, please contact Siobhan O’Neill at soneill@crowleysdfk.ie or phone 01 6790800 / 021 4272900.

The latest issue of the Bank of Ireland Business Start-up Barometer (July 2008), reports that despite the recent slowdown in the economy, over 4,000 new businesses have been established in the last quarter.  The Revenue Commissioners are said to be inundated with business expansion schemes (BES) proposals while applications for County Enterprise Board (CEB) Start Your Own Business funding are as numerous as ever.

According to the Bank of Ireland report, continued diversification in start-ups demonstrates the ability of Irish entrepreneurs to adapt to a changing economic environment.  Even in a downturn there will always be business opportunities. 

If you are considering starting up your own business, there are many issues you will need to consider. For example, you will require information regarding registering your business, employing staff and the taxation, legal and regulatory information that governs every business in Ireland.  A number of these issues are summarised as follows:

1.  Business plan
Before you think about setting up a business, it is important that you put together a business plan.  Your business plan is crucial as it helps you think through your business and what you actually need to do.  It is also a necessity when seeking funds from providers of finance.

2. The legal framework
There are three basic forms your company can take when considering its legal structure:

• Sole trader: Your main legal obligation as a sole trader is that you must register as a self-employed person with the Revenue Commissioners.  If you wish to use a business name you must register your business name with the Companies Registration Office.
• Partnership: This is where two or more people agree to run a business in partnership with each other. The partnership agreement should be drawn up by a solicitor.
• Limited company: If you set up your business as a limited company, the business is a separate legal entity and must be registered with the Companies Registration Office (CRO).  The company returns and accounts must be returned to the CRO each year.

3.  Tax obligations
How your business is taxed depends on its legal structure. A limited company is liable for corporation tax and a sole trader or partnership pays income tax.  It is necessary to notify the Revenue Commissioners as soon as possible of your business by completing the relevant tax registration forms.  This will register your business for various tax heads including corporation tax (limited company), income tax (sole traders/partnerships), employers PAYE/PRSI and VAT.

4.  Financing 
Financial support is a key requirement at the start-up phase of any business.  There are a number of alternatives available to finance your business, including:

• Debt financing 
• Equity financing
• Bank loans 
• Angel investors 
• Private lending
• Grants
• Leasing  
• Friends and family

5.  Financial Records
As the owner of a business you should be aware that the financial and accounting records you maintain are used to assess how your business is progressing.  Well organised financial records provide the basis for decisions made by any potential providers of finance.  It is also a requirement of Irish taxation law that these financial records be held for a period of 6 years.

For further information or advice on starting your own business, please contact Seamus Hayes at shayes@crowleysdfk.ie or phone 01 6790800 / 021 4272900.

For those who may currently pay them, tuition fees are the biggest financial burden, at approximately €3,500 a year.  Rent is the next biggest expense, with students living away from home spending approximately €3,300 per academic year.  Food averages at approximately €120 a month, with an average of almost €85 a month being spent on clothes, according to the Bank of Ireland research.

However, many parents and students may be unaware of the current tax reliefs available for a number of these expenses.

Tax relief is available to those paying tuition fees for certain approved courses in approved third level institutions. This is given at 20% on fees of up to €5,000 per course per academic year.

For those who pay college fees for more than one person, they are entitled to receive tax relief for the fees paid for each person up to the maximum limit per course per academic year.

Relief for rents paid for accommodation is also available. As with tuition fees, this relief is given at 20% subject to certain conditions and maximum limits which depend on your personal circumstances. This relief also covers rents paid for accommodation outside Ireland.

Naturally, the costs associated with going to college will rise substantially if the much talked about reintroduction of tuition fees goes ahead. A new system to make contributions to a university endowment fund tax-deductible is being suggested. This would prove welcome news to those parents who are looking for tax-efficient methods to provide for their children’s future education.

If you would like more information on any of the topics discussed in this article please contact Siobhán O’Neill at soneill@crowleysdfk.ie or phone 01 6790800 / 021 4272900

Irish capital gains tax may be payable on any profits arising from the sale of a foreign property by an Irish taxpayer.  Capital gains tax in Ireland is currently levied at 20%.

Where local taxes are also payable, a taxpayer will generally be entitled to claim an element of relief for these taxes against any Irish capital gains tax liability.  However, this will depend on a number of factors, including the personal circumstances of the individual taxpayer and the country in which the foreign property is located.

In all circumstances, to ensure that all reporting requirements and tax obligations are met and that all available reliefs are claimed, a taxpayer would be well advised to contact their accountant as well as their estate agent when contemplating a sale.

For more information please contact Siobhán O’Neill at soneill@crowleysdfk.ie or phone 01 6790800 / 021 4272900.