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Roberts Nathan News

  Taxation

Thank your Employees with a Tax Free Gift this Christmas

As Christmas approaches you may be looking for a way to thank your hard-working employees. But as we all know Christmas bonuses can be costly to employers, while employees don’t always receive the full benefit.For example, if you wanted to give an employee a cash bonus of €500 it could cost up to an additional €650 in related taxes.Example
Employee Cash Benefit€500
Treated as net salary so must be re-grossed and taxed by the employer through payroll€540
Employer PRSI€110
Total Cost€1,150
 What if this year you could reward your employees completely tax free?Free Money – What’s the Catch?There isn’t one. Under the Small Benefits Exemption Scheme Company directors and employees can receive a non-cash bonus of up to €500 each year – completely tax free!Fine PrintAs always, there are a few conditions:
  1. It must be a non-cash bonus – Most companies opt for gift vouchers to avail of the Scheme.
  1. The gift voucher must be purchased from company funds – For example from the company bank account or credit card. You cannot purchase the voucher yourself and then seek reimbursement.
  1. Each individual can only receive one tax-free voucher per annum – Even if the full amount is not utilised. For example, if you give a voucher of €200 in May and €300 in December, the second will be liable to tax. To maximise the tax relief use the full €500 in one go.
 Win – WinSo what is the incentive for companies and business owners/directors to implement this Scheme? Here are a few:
  1. Employees avoid PAYE, PRSI and USC, and employers don’t have to pay PRSI.
  2. It’s a tax-efficient way of rewarding your staff as these payments can be deducted from year end profits when calculating the Corporation Tax liability.
  3. Owners/directors whose spouse is also an employee/director can effectively double their benefit to €1,000 in gift vouchers.
  4. It makes sense to use as a Christmas bonus as the voucher can only be gifted once a year.
This Scheme is ideal for companies in a good cash-flow position, as it simultaneously enables employers to reduce any upcoming Corporation Tax liability while also rewarding reliable staff.There’s still time to avail of this year’s benefit – if you have a calendar accounts year end you have until 31st December!If you would like more information on the Small Benefits Exemption Scheme, please do not hesitate to
contact us for an initial discussion around this and other tax efficient recommendations.*Example based on a single employee with a salary of €60,000 per annum, standard tax credits and PRSI Class A1.
December 17, 2019
  Stocktake

How to Complete a Successful Year End Stocktake

As the financial year end approaches for many businesses preparations will begin for the annual stocktake.A stocktake is a physical count of inventory on hand and provides a business with an accurate reflection of stock held.  It is advisable that stocktakes be carried out regularly, however some businesses choose to do so only at their year end.We outline here some suggestions and recommendations for carrying out an efficient and effective stocktake.Why Conduct a Stocktake?There are many advantages to conducting regular stocktakes in your business, including:Improved cashflow Cashflow can be improved by identifying slow moving stock items thus reducing the level of such stock and working capital tied up.Accurate profit margins Regular stocktakes enable you to accurately monitor profit margins across the whole range of products for sale.Identify slow moving stock Regular stocktakes help to identify items of stock that are slow moving and change future stocking decisions.Improve stock management Understanding your stock levels will enable you to minimise waste and to identify if there is a problem with misappropriation or theft.

Suggested Method for Completion of a Stocktake

Plan AheadBefore you commence your stocktake you should have a full understanding of the resources and time required, so as to reduce the level of interruption to your business.  To minimise disruption to your business a stocktake should be conducted during the quietest time of the day, with most businesses conducting stocktakes outside of business hours.As part of your planning procedures you should also ensure you have:
  • A plan of how the stock count will be performed and controlled setting out counters and checkers and the overall objectives
  • Stock sheets to enable a full systematic count of stock held
  • Recording methods for stocktaking Pens / Calculators /Hand Held Scanners
Organise Staff
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December 4, 2019
  Company Compliance

CRO Deadlines

Annual Return (Form B1) is required to be submitted by all companies, whether trading or not to the Companies Registration Office (CRO) at least once a year. After the initial 6 month return all other returns must have financial statements attached.The Annual return date is set in the following ways:
  • After incorporation – The Company’s Annual Return date (ARD) is set as 6 months after this date and is exempt from uploading Financial Statements.
  • When the financial year/period end is set for a company the ARD must be submitted 9 months plus 28 day after this date.
The CRO introduced mandatory e-filing for Irish companies in June 2017 for the following documents:
  • Form B1 – Annual Return
  • Form B2 – Change of registered office
  • Form B10 – Change of directors or secretaries details
  • Form B72 – Nomination of new Annual Return date
An Annual Return must be submitted to the CRO no later than 28 days after the Annual Return date. Where the Annual Return date falls on a Saturday, Sunday or a bank holiday Monday the 28 day period is extended to the next working day. The Annual Return must be e-filed online and payment must be made by the customer account or debit/credit card.After submitting the Annual Return, if Financial Statements are required (all subsequent annual returns except initial 6 month post incorporation return) you have a further 28 days to upload them and issue the relevant documents to the CRO. (Confirmation of e-filing and Signature Pages)Where an Annual Return or if the Financial Statements are uploaded late the full Annual Return is deemed as late, resulting in late filing fees and where relevant the company will lose its audit exemption for the following two years.  Late filing penalties apply at €100 + €3 per day up to a maximum of €1,240 per return.Where an annual return is sent back by the CRO for corrections or for fees, the CRO require the corrected documents to be delivered to them within 14 days of the request letter from them.
Contact us about your company secretarial and Annual Return requirements and we can assist in establishing your return and filing requirements.  We also maintain an early warning list for our client’s companies to ensure all filings are made on time and your company is maintained in good standing. 
November 18, 2019
  Taxation

Preliminary Tax – What is it?

Preliminary Tax is an estimate of the tax that you expect to pay for the year. Our clients have asked us the following questions on several occasions. What exactly is this payment for? What happens if I don’t pay? And when is Preliminary Tax due to be paid?We have outlined below some details which we hope answers these questions.What exactly is this payment for?All taxpayers, whether a self-assessment individual or a company, are liable to pay it and it is paid in advance of the relevant tax year.Preliminary Tax is calculated on either:
  1. 100% of your previous year’s liability, OR
  2. 90% of your current year liability, OR
  3. 105% of your pre-preceding year’s liability.
As estimating the current year’s liability can be both time-consuming and costly the majority of clients opt to pay 100% of the previous year’s liability.What happens if I just don’t pay?If you fail to return and pay your Preliminary Tax by the due date then you are liable to a series of penalties, interest and surcharges. The interest alone is charged at a daily rate of 0.0219%, and in addition to this a surcharge of 5% – 10% of the liability may be applied.When is Preliminary Tax due to be paid?Preliminary Tax is due to be paid as follows:
  • Individuals
For example, self-assessment taxpayers are required to file and pay their Income Tax and Preliminary Income Tax liabilities as follows:
Income Tax Year ending 31st December 2018File and Pay your Income Tax by 31st October 2019
Preliminary Tax for 2019File and Pay Preliminary tax by 31st October 2019
The above deadline may be extended if you opt to file and pay using Revenue’s Online System (ROS). In 2019 the extended deadline is 12th November 2019.
  • Companies
The Preliminary Tax return and payment, for companies, is due 11 months after your accounting year end. For example, if the accounting year end is 31st December 2018:
Accounting Year-end31st December 2018
Corporation Tax Deadline23rd September 2019
Preliminary Tax Deadline23rd November 2019
Don’t Forget!!Even if you did not have a tax liability you will still be required to file a Nil Preliminary Tax Declaration on ROS.If you are unsure about your tax obligations, or require assistance calculating your liability, please do not hesitate to
Contact us
November 4, 2019
  Business

Some Highlights of Budget 2020

Minister for Finance Paschal Donohoe delivered his Budget 2020 speech on Tuesday which included a €2.9bn budget day package. Also confirmed is a €1.2bn Brexit-proof fund.Whether you are for or against it, carbon tax will be the most controversial element of the package and a talking point for many. Below we have outlined the main tax highlights of Budget 2020.Personal Taxes
  • Income tax rates and bands and the USC rates and bands remain unchanged. The Minister for Finance did not want to commit to personal tax cuts in the lead up to a no-deal Brexit.
  • The Home carer credit has increased to €1,600 and the Earned income credit has increased to €1,500.
  • The Group A threshold for CAT has increased from €320,000 to €335,000. The increased threshold applies to gifts or inheritances received on or after 9 October 2019.
Payroll Taxes
  • There was no mention of employer’s PRSI however Budget 2019 announced this would increase from 10.95% to 11.05% from 1 January 2020. Employer’s PRSI has steadily increased over the last few years and represents a significant cost to businesses.
  • SARP relief and the Foreign Earnings Deduction have been extended to 31 December 2022.
  • In 2018, the Government implemented a 0% BIK rate for electric vehicles subject to a value limit of €50,000 in comparison to a rate of 30% of the car’s original market value for non-electric vehicles. This initiative has been extended to 2022.
Business TaxesThe R&D tax credit regime has been amended so that it is more accessible to micro and small companies in Ireland. These amendments include the following:
  • An increase in the credit from 25% to 30%.
  • The ability to claim the credit on qualifying expenditure before the company commences trading. It should be noted that any credit claimed in this period can only be offset against VAT and payroll liabilities.
  • An increase in the outsourcing limit applicable to third level institutes from 5% to 15%.
  • Farm restructuring relief, a capital gains tax relief due to expire at the end of this year, has been extended to 31 December 2022.
  • Several amendments will be made to the KEEP scheme to incentivise take-up in the scheme. This includes a change in the definition of a qualifying company so that the scheme applies to group structures and a change in the definition of a qualifying individual so that it applies to part-time and flexible employees.
  • EII relief, an income tax relief for individuals who invest funds in certain companies, will also undergo changes which apply from yesterday. The amendments will allow individuals to claim full relief in the year of investment and the annual investment limit will increase from €150,000 to €250,000.
  • The Minister for Finance announced there will be a significant overhaul to the DWT regime. From 1 January 2021, real-time date collected under the new PAYE Modernisation regime will be used to create a personalised rate of DWT on distributions received by individuals. In the meantime, an increase in the DWT rate from 20% to 25% will apply from 1 January 2020.
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October 9, 2019
  Taxation

Is there still value in UK car imports post-Brexit?

We have recently been asked to assist with VRT queries from a number of clients who have been considering importing cars from the UK, we have outlined below some information which may be of assistance to you if you are also considering this.Post-Brexit, if you import a vehicle from the United Kingdom (UK), this may be treated as an import from a non-European Union (EU) country.At importation you may have to:
  • Complete a customs electronic declaration

and

  • Pay Customs duty and Value-Added Tax.
Used vehiclesIn the event of a no-deal Brexit, the procedures for vehicle registration will remain unchanged for a period of 30 days. This is to facilitate the registration of vehicles imported pre-Brexit but whose registration appointments are scheduled for post-Brexit.After this period you will have to present a customs import declaration to register your vehicle.New vehiclesIf you are importing a new vehicle into the State it must always be accompanied by the following:
  • A valid Certificate of Conformity (CoC) that confirms European Union type-approval. Please note that the type approval number on the CoC must correspond to an EU Member State.
or
  • An Individual Approval Certificate issued by the National Standards Authority of Ireland (NSAI).
There will be implications for new vehicles, which have been type approved by the UK Vehicle Certification Agency post-Brexit. Guidance documents on the treatment of UK type approvals post-Brexit have been issued by the NSAI and Road Safety Authority.If you have questions regarding importing cars from the UK please
contact us for assistance.
October 3, 2019
  Taxation

Potential VAT and Customs Duty implications of trade with the UK post-Brexit

If you trade with the United Kingdom post-Brexit, the relevant rules of trade will likely change. It is important to consider and plan for the VAT and Customs implications on your business arising from the various methods by which the UK can leave the EU.Customs dutiesIt is likely that customs duties will become a reality for those trading and importing from the United Kingdom.The UK intends to negotiate a free trade agreement with the EU, but this is unlikely in the two-year negotiation period after Article 50 was triggered and would hopefully be underway in the transition period after the UK leaves the EU and which is currently likely to be 31 October 2019.Certain imports into Ireland will be particularly affected, such as the agricultural and food sectors, where duties tend to be much higher e.g. Cheddar cheese 55%.Beef 40%.Planning consideration would need to be given to available customs reliefs, to cut such costs.VAT and Customs implicationsThere will likely be significant VAT considerations which must not be overlooked in the event that the UK become a third country for trading purposes to the EU 27 block.The implementation of VAT at point of entry for goods from the UK means that Irish businesses will have to bear the cash flow cost of VAT on goods coming into Ireland. While import VAT is recoverable, there could be a significant cash flow burden as these amounts will need to be funded to have goods released into circulation.Contracts should be reviewed to assess their impact from a customs perspective, and to determine which party to the contract is responsible for fulfilling customs obligations. This would include the payment of applicable customs duty and import VAT.Do you foresee your business or supply chain interacting with the UK post Brexit?If yes, please contact us to discuss Tax planning.
September 27, 2019
  News

How to Calculate Annual Leave Entitlement

Annual leave can be a tricky area for employers to navigate, particularly with regard to employee contracts or those leaving the business. In this article we answer some of the most frequently asked questions, helping to provide employers and managers with a better understanding of the calculations behind annual leave entitlement.Firstly, let’s cover the basicsThe legislation provides a basic annual leave entitlement of 4 weeks. If the normal working week is 5 days, the employee entitlement is 20 days. However, if the normal working week is 6 days, the annual leave entitlement is 24 days.There are 3 different methods for calculating the duration of the annual leave entitlement.
  1. Based on the employee’s working hours in one year. An employee who has worked at least 1,365 hours in the leave year is entitled to the maximum of 4 working weeks’ annual leave.
  2. By allowing 1/3 of a working week for each calendar month in which the employee has worked at least 117 hours.
  3. 8% of the hours worked in the leave year, subject to a maximum of 4 weeks.
How do you calculate holiday pay?Firstly, if the employee is paid by salary or by time rate, the amount due for one week of annual leave will be the amount paid to him/her for a normal working week prior to the commencement of holidays.In cases whereby the amounts are variable for a normal working week (i.e. commission), the average of the last 13 weeks immediately prior to taking the leave should be used to calculate the amount.This payment includes any regular allowance and bonus but does not include overtime.What are the holiday pay entitlements when my employee leaves?When your workers leave a job they must receive pay for any statutory leave they are entitled to in the current leave year but have not taken. You can calculate this using our convenient Annual Leave Days Calculator below.[CP_CALCULATED_FIELDS id="1"]You will need to consider the total annual leave in days, the total amount worked in months and the amount of leave taken in days. The calculator will display the number of days due to the employee upon leaving the business. Can annual leave be carried forward to the following leave year? The employer must ensure that employees take their annual leave entitlement within the leave year or, in exceptional circumstances, within six months of the following year with the employee’s agreement. It is the responsibility of the employer to ensure that employees take their full statutory leave allocation within the appropriate period.Can an employer pay in lieu of annual leave? The Act does not allow an employer to pay an employee in lieu of annual leave. The Act only provides for payment in lieu of annual leave where the employment relationship is terminated.Please get in touch if you have any further questions with regard to annual leave entitlement and we’ll be glad to assist you.Our dedicated Payroll team provide a number of clients with Payroll services using a wide variety of methods.We have the systems in place to facilitate your business with a reliable service at a competitive rate. Please contact us via the live chat icon to discuss outsourcing your businesses Payroll. 
July 23, 2019
  Business Advice

Are you a UK Based Director of an Irish Registered Company?

While the potential deal or no deal scenarios of Brexit continue to play out, a very real risk has arisen for a number of companies and their Directors in the UK and Ireland.Although there are more than 60,000 Irish Directorships of UK registered companies there are also a significant number of UK based directors of Irish companies for which Brexit will create significant changes.In this article, Roberts Nathan Partner Aidan Scollard reviews the potential significant changes for UK resident Directors of Irish registered companies where the UK becomes a third country to current EU legislation.EEA Resident Director Requirement Companies Registration Office have alerted service providers to the fact that under Irish company law an Irish registered company must have at least one European Economic Area (EEA) resident director on the board on an ongoing basis.Many Directors based in the UK who are either of Irish decent or UK based companies who have established Irish entities as part of their Brexit planning will need to consider this likely change.Where an existing Irish company has fulfilled this Director requirement by appointing a UK resident director they should now consider replacing that director or adding an additional director who is an EEA-resident.It should be noted that this requirement is based on residency, not nationality. Thus for example, a company director of Irish nationality who lives in the UK and has done so for a number of years is unlikely to satisfy the EEA requirement in the future which is a question a number of our clients have been considering.S137 BondIt is possible for a company to put in place a Section 137 Revenue Bond which is an insurance policy that CRO approve in replacement of having an EEA resident individual on the board. This insurance policy covers against fines or penalties incurred to the value of €25,000 for non-compliance and covers the company for a period of two years at which point the company will either need to renew the bond or appoint a director who meets the requirement.The bonds are relatively easy to put in place but will have a premium cost to maintain for the two year period and which we have put in place for a number of clients recently.The Exception to the Rule – ‘Real and Continuous link’ It is possible for the Directors of an Irish Company who have no EEA-resident directors to apply to the Revenue Commissioners for a Statement under Section 140 of the Companies Act 2014 which, if granted, will relieve the company from the requirement to hold a Bond or to have an EEA-resident director.This Statement is granted based on the company having a ‘real and continuous link to the State of Ireland’. The successful company will need to satisfy one or more of the following two conditions:
  1. The affairs of the company are managed by one or more persons from a place of business established in the State and that person or those persons is or are authorised by the company to act on its behalf.
  2. The company carries on a trade in the State.
Furthermore, a company may be granted this Statement based on either of the following two conditions:
  1. The company is a subsidiary or a holding company of a company or other body corporate that satisfies either or both of the conditions specified in 1 and 2.
  2. The company is a subsidiary of a company, another subsidiary of which satisfies either or both of the conditions specified in 1 and 2.
This Statement is granted based on retrospective activity and will generally not be granted to a company that intends to have a real and continuous link to the state.Once the Statement is made by Revenue to the successful company, the Company Secretary can apply to the Registrar of Companies for a certificate that exempts the company from the Section 137 bond requirement or the need to have an EEA-resident director appointed to the board.Application for this exemption to Companies registration office must be accompanied by this statement from the Revenue Commissioners made within two months of the date of the application of the Revenue Commissioners statement.We have helped a number of clients in this area where they can clearly prove that there is a real and continuous activity here in the Irish state.Final WordCompany Directors need to consider the implications of the UK leaving the EU and consider their options. As with any legal or accounting issue forewarned is forearmed.Contact us if you wish to discuss the impacts of any of these potential imminent changes to your company structure and planning requirements.
July 9, 2019