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Roberts Nathan News
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Roberts Nathan News
Are You Thinking Of Selling Your Business?
- Valuation of the business.
- How to structure any potential sales deal.
- The best way to advertise the business and which potential buyers should be prioritised as possible purchasers.
- The best time to sell.
- The formality of due diligence and legal matters involved.
- Executive Summary
- Background to the Company
- The products or services offered together with an outline of the business model in operation
- Details of the customers and market in which the company participates
- Future opportunities attached to the business going forward
- Key financial information and financial forecast, reasonably reflecting how the company is expecting to perform in the next one to three years.
Rewarding Your Key Employees – What are the Most Tax Efficient Share Schemes?
OverviewUnder the KEEP scheme, an employee will be given an option to acquire shares at a future date, at a fixed price which is the market value at date of grant. This allows the growth in value of the company shares between date of grant and date of exercise to not be taxable as a benefit in kind for the employee. KEEP applies to qualifying share options granted on or after 1 January 2018 and before 1 January 2024.
Taxation of KEEP sharesThe shares must be new ordinary fully paid-up shares which carry no present or future preferential rights regarding dividends, assets on winding up or redemption. The option price at the date of grant cannot be less than the market value of the shares at the date of grant and the option must be exercised within the period commencing 12 months after grant and ending 10 years later. The incentive associated with KEEP is that the uplift in market value from date of grant to date of exercise of the KEEP shares is not brought into the income tax net and will only be taxable on a future sale of the shares. The employee will pay Capital Gains Tax (“CGT”) on any future disposal of shares with the amount paid at the exercise date being the base cost of acquisition. 2. Growth Shares
OverviewGrowth shares are a very popular approach to reward one or more key employees who will be important to the future growth of the business. The shares are generally created as a new share class which allows the individual share in the future uplift in value of the company. A hurdle is set into the share class to only allow the individual share in value above that hurdle. When this hurdle is set at the market value on granting of the share, the value of the share should be minimal as all value is hope value.
Taxation of Growth SharesIncome Tax Once the shares are issued to the employee, PAYE would need to be operated on the market value of the share. However, if the employee pays the market value for the share no tax should arise. Given that a hurdle is included on the value of the share, this should decrease the current value being provided to the employee. Where the hurdle exceeds the current market value of the shares, it is likely that the value of the share is minimal, and no income tax would arise. Capital Gains Tax (CGT) If the shares are disposed of the gain will be subject to CGT. The base cost for the shares is the initial market value of the shares at the date they were awarded to the employee. Growth shares are a popular mechanism to ensure an employee is incentivised while also creating an efficient exit event from a tax perspective as the uplift will be subject to CGT rather than income tax. It can also be a more straight forward and simpler mechanism to implement than some of the more onerous share schemes. If you are looking to incentivise your employees through a share award you should talk to our tax team at Roberts Nathan to ensure you implement the most appropriate scheme for your needs.
The content of this blog is intended to convey general information and educational advice. It should not be relied upon as professional advice. We have done our best to ensure that the information provided by Roberts Nathan is accurate and up-to-date but unintended errors or misprints may occur.
If you wish to obtain business advice or taxation advice please do not hesitate to get in contact with a member of our team.
Does your Irish Company Require an Audit?
Subsidiary AuditsA frequent question we receive from international clients is in relation to what group and local Audit requirements apply for their Irish subsidiary or stand alone companies. We work with several large international groups to provide group and local audit services to those Irish subsidiaries.
Do I need an audit?The common initial question we are asked is whether the Irish company can avail of audit exemption due to its size. Where the company is a standalone company then this is to be considered under the Small company Audit exemption. Where the Irish company is a subsidiary or where there are a number of Irish companies (forming a sub group) then this would be an intermediate parent of the group and would need to consider the small group audit exemption:
Small Company Audit ExemptionIn order for an Irish registered company to qualify for the small company audit exemption the company must satisfy TWO or more of the following conditions in the current financial year and in the preceding financial year (unless it is its first financial year):
- Balance sheet total does not exceed €6m
- Turnover does not exceed €12m
- Number of employees does not exceed 50
The look through - Small Group Company Audit ExemptionHowever even if the individual subsidiary company qualifies as a small company, where it is part of a group then it must also consider whether it can avail of the small group company audit exemption. Thus, it is a ‘look through’ position and where the subsidiary forms part of a larger group it may still require to be audited. Audit Exemption applies to any group company if the group as a whole qualifies as a Small Group. The entire group and all its subsidiary undertakings must, taken as a whole, satisfy two of the following 3 conditions in order to claim a Group Company Audit Exemption. The conditions must be met in the year and also in the preceding year unless it is the holding company’s first financial year):
- The balance sheet total of holding company and subsidiaries taken as a whole does not exceed €6m net (or €7.2m gross)
- The amount of turnover of the holding company and subsidiaries taken as a whole does not exceed €12m net (or €14.4m gross)
- The average number of persons employed by the holding company and its subsidiaries does not exceed 50.
ContactAs many international groups now have Irish entities within their structures they should consider their local Irish Audit and Advisory needs and whether our specialist subsidiary audit services could work for them. With our services you have a professional and dedicated Audit team with local knowledge and international experience from a contactable team. We ensure that the local statutory audit and financial statements requirements of the subsidiaries are completed and filings maintained. For an initial meeting or discussion, please contact: Aidan Scollard FCA Partner and Registered Auditor - Roberts Nathan Email firstname.lastname@example.org Office + 353 1 876 4550 Mobile +353 86 25 23 026 The content of this blog is intended to convey general information and educational advice. It should not be relied upon as professional advice. We have done our best to ensure that the information provided by Roberts Nathan is accurate and up-to-date but unintended errors or misprints may occur. If you wish to obtain business advice or taxation advice please do not hesitate to get in contact with a member of our team.
Are You Having Difficulty Opening a Business Bank Account in Ireland?
Why is this happening one asks?It is not a uniquely Irish problem - certainly our experience with other jurisdictions would indicate to us that similar issues are felt across Europe, The USA, Asia and beyond. One of the key factors here is that the banks systems and software simply have not kept pace with technology and it seems that there is significant underinvestment here. In addition the lack of being able to directly liaise with the compliance officers within the bank is also an issue - in the most part one deals with a relationship manager employed by the bank who acts as the go between. It is hard to provide a roadmap or blueprint as to how to navigate this process as each case is very individual but over the past 20 years we have encountered almost all circumstances so a brief initial consultation with us on the matter should enable us to tease out what is required for your business or entity. It is certainly true that having an Irish resident director (which we can provide) helps no matter what the circumstances. Once the hard part of opening the business bank account has been achieved it’s operation is very straightforward and the online platforms for the three main pillar banks in Ireland are robust and easy to use. It should also be noted that Ireland is viewed very favourably internationally so it is akin to someone having a powerful passport in the business world. We would be delighted to discuss in further detail any queries you may have here on a one to one basis - in terms of fees it is challenging to be precise as the specifics of cases vary however once we have had the initial consultation we will be able to provide this prior to any engagement.
Have you Planned out your Payments for the Debt Warehousing Scheme?
- The scheme allowed for the deferral of unpaid VAT and PAYE debts for businesses restricted from trading due to the Covid-19 pandemic for a period of 12 months after a business resumes trading.
- The debt warehousing scheme also applied to Income Tax. This allowed for the warehousing of the Income Tax liability falling due on 31 October 2021 which comprised of the balancing payment due for the 2020 Income Tax year and Preliminary Tax due for 2021 Income Tax year.
- The debt warehousing scheme was also expanded to include the recovery of any overpayment of the TWSS and EWSS which was paid to employers during the pandemic.
How SCARP Helps Small Companies Settle Debts with Creditors
- Turnover does not exceed €12 million.
- The balance sheet total does not exceed €6 million.
- The average number of employees does not exceed 50.
- be unable or is likely to be unable to pay its debts.
- not be in liquidation or have a receiver appointed.
- have not used the process or had an examiner appointed in the last five years.
- The process is led by a qualified Insolvency Practitioner (IP). The IP will be appointed as Process Advisory (PA) and will be tasked with formulating a rescue plan for the company.
- The process will have a defined timeline lasting up to 70 days.
- There is no automatic court protection from creditors once a company enters the process. The PA can seek this court protection once appointed.
- A rescue plan is approved when a 60% majority in number and a majority in value of one class of creditor approves the scheme.
- There is the ability to repudiate onerous contracts (e.g. leases).
- State debt is classified as ‘Excludable Debt’. Essentially the state creditors (e.g. Revenue) has the option to opt out of the process. It has 14 days from the giving of notice to opt out, if there is no objection within that timeframe, Revenue may be included in the rescue plan.
- A rescue plan may require additional investment in the company. There is the ability to fund the plan over a period of time, subject to the approval of creditors.
- The PA is obliged to report to the Officer of the Director of Corporate Enforcement (‘ODCE’) on the historical conduct of the directors of the company.
Dealing with Inflation: Advice for Business Owners
Current inflation factorsThe Irish economy is going through an unprecedented period of inflation. This was initially driven by supply chain hangovers from COVID 19, which saw prices of building materials, materials for cars and increased costs of consumer goods. Since the start of 2022 there has been further inflationary pressure mainly as a result of the Russia/Ukraine conflict. This has resulted in a dramatic increase in energy costs and food product costs. Annual inflation in Ireland neared an almost 40-year high of 6.7% in March, a jump from 5.6% a month earlier. Diesel and petrol have increased by 46% and 35% respectively year-on-year while food prices rose by 3.1%. Electricity prices were up 22.4% while gas prices rose 28%.
OutlookThe Central Bank predicts that price growth will peak at 7.7% in the second quarter of 2022 before retreating to 5.1% towards the end of the year. SME’s have endured a turbulent few years as a result of COVID 19 and are still dealing with legacy issues as a result of the pandemic. There is now an additional headache as they navigate inflationary increases.
What companies need to consider
- How to deal with any Revenue warehoused debt
- A significant amount of SME’s took advantage of the Revenue debt warehousing scheme. The interest free period comes to an end on the 31 December 2022 and companies will need to engage with Revenue and agree as to how they intend to deal with these liabilities.
- As a result of inflationary pressures margins for businesses are likely to come under pressure due to:
- Higher raw material costs
- Higher energy costs
- Upward pressure on employee wage costs as staff deal with a higher cost of living
Steps companies need to take now
- Preparation of reliable management information will be crucial to help companies deal with the current headwinds. This information should include:
- Up to date Management Accounts
- Cashflow and Budgets which reflect accurately any cost increases and are reasonable in terms of increases in turnover.
- Engage with Revenue and agree how warehoused taxes are to be dealt with.
- In a high inflation economy, it is important to engage with suppliers and lock in prices as early as possible.
- Engage with customers / clients early and flag increased prices. Any lag in passing on price increases will affect margins and profitability.
How Roberts Nathan can helpWe have been assisting many of our clients recently with their plans to navigate through this challenging time with the preparation of the above-mentioned Management Accounts and Budgets. If you are concerned about these current challenges and would like to consider availing of these services we would be delighted to assist you. If you would like to discuss the above you can contact Brendan or email us at email@example.com Contact Us
Company Registers – What You Need to do
Company saleQuestions about the whereabouts of the company registers and their status usually arise when a company is to be sold and the purchaser requests the registers in order to conduct the company secretarial due diligence as part of the sale process. If the company registers have not been properly maintained, they will need to be reconstituted prior to the sale. Even if the registers were maintained, they should be reviewed as part of the pre-sale company health check to ensure that they correctly reflect the current position of the company to avoid unnecessary complications during the sale process. If there are any deficiencies that cannot be remedied, the purchaser may require the seller to indemnify the purchaser for any loss they may suffer due to the statutory registers not having been properly maintained. We frequently see that transactions in relation to the share capital of the company or changes in company officers have not been kept up to date in the registers of the company.
What are the registers each company must have?Under European Legislation and the Companies Act 2014 there are seven mandatory statutory registers required to be maintained by all companies incorporated under the laws of Ireland. These are:
- Register of Members pursuant to Section 169 of the Act
- Register of Directors and Secretaries pursuant to Section 149 of the Act
- Register of Directors' and Secretaries' Interests in Shares or Debentures pursuant to Section 261 of the Act
- Register of Directors' Service Contracts pursuant to Section 154 of the Act
- Register of Directors' Interests in Contracts pursuant to Section 231 of the Act
- Register of Instruments creating Charges pursuant to Section 414 of the Act
- Register of Ultimate Beneficial Ownership pursuant to Article 30 of the 4th EU Anti Money Laundering Directive
Register of membersThe most important register is the register of members. The register of members shows past and present members and is evidence of who the current members of the company are and the number and classes of shares they hold. This information is vital for conducting company meetings and passing resolutions, especially in companies with large numbers of members or where members change frequently. It helps to ensure that all decisions are taken properly and to avoids decisions made to be challenged in the future. If there is a dispute in relation to the company’s shareholding, the Court will ask to see the register of members as evidence of who the existing shareholders are.
Inspection and location of the registersThe registers should be kept at a company’s registered office address or its principal place of business or another place within the State. The registers shall be open to inspection by any member of the company without charge. The members of the company are also entitled to request a copy of the registers and a copy of the minute book of the members' meetings. It should also be noted that any other person may also inspect the register of members, directors and secretaries and disposable interests and request a copy of those registers (for a small fee). The registers can be kept in paper or electronic format.
Rectification of company registers by Court OrderAs mentioned above any person has a right to request to view the registers of a company. If a person’s name is omitted from the register or entered without sufficient cause or the registers were not updated to reflect that a person ceased to be a member, the aggravated person may apply to the court for rectification of the register. The Court may then order rectification of the register and payment by the company of compensation for any loss sustained by any party affected. If the company was sold, the seller could also face a claim for breach of warranty and associated damages in respect of the cost to the company and the purchaser. It is important to note however that a company can rectify its registers without a Court Order. As soon as any omission or error has been identified, the company registers should be rectified.
How we can helpThese issues highlight the importance of maintaining the company registers in good order which reflect the current company position from the outset when a company is first incorporated. How Roberts Nathan can help – we can review and assist in an overall health check on your company registers and where necessary carry out a reconstitution, or rectification of the registers. If you would like to discuss the above you can contact Aidan or email us at firstname.lastname@example.org Contact Us
Do you need to Switch your bank from KBC and Ulster Bank?
Do I Require a Full Service Bank?A full service bank contains options for current, deposit, overdraft accounts etc. These banks include AIB, Bank of Ireland and Permanent TSB. You should consider and compare charges for transactions, monthly/quarterly fees, caps on savings and negative interests when choosing what bank suits your needs. There are also online banking options such as Revolut and N26 which have now acquired European banking licenses. These new licenses can provide you with an IBAN, allowing you to set up your salary, direct debits, etc. These services seem more cost efficient but there are higher withdrawal fees or a % fee applied to withdrawals that go over the free allowance limit. It will be up to the individual to inform employers, tenants or anyone who lodges money into their account of their new bank details. This also applies for direct debit transactions etc. Talk to your new bank about a new switching pack which will help move over any direct debits as seamlessly as possible. You should also ensure your account details on Revenue Online (ROS) are updated to allow you to make your tax payments from the updated account.
What Are my Next Steps?Once you have opened an account with your new bank, you must close your account with Ulster Bank and KBC. Ulster Bank have recently begun to issue closure forms to their account holders which can be filled out and posted back to the bank. Once the request is submitted it can take 5-7 working days for the account to close. In this time, you should not use your account as it may delay the closing procedure. Also check that there are no pending transactions and the account has been inactive for 24 hours.
After Closing your Account
- Securely destroy all cards, cheque books and pre-printed cheques associated with the account
- Update standing orders and direct debit payments with your new bank
- Inform originators of credits to Ulster Bank and KBC of your new account details
What do I Need to Set up a New Bank Account?
- Photo identification,
- A recent bank statement
- A recent utility bill
- Your PPS number (might not be mandatory).