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  Business Advice

Have you Planned out your Payments for the Debt Warehousing Scheme?

During the pandemic, the Government introduced a number of measures to help companies and individuals who were facing cashflow difficulties. One of the helpful and widely used measures introduced was the debt warehousing regime whereby companies and individuals could warehouse their VAT, PAYE and Income Tax liabilities that occurred before 31 December 2021. The main points of the debt warehousing scheme were as follows;
  • 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.
The scheme allowed for the deferral of these unpaid liabilities for an interest free period of 12- months which is ending in most cases on 31 December 2022 and will provide for a reduced interest charge of 3% on those debts from 1 January 2023.  In December 2021, Revenue announced that the scheme would extend from 31 December 2021 to 30 April 2022 for certain companies. In essence, the interest free period for debt warehousing will be  coming to an end later this year. If the debts are fully paid off by the end of the year, no interest will occur. Any debt outstanding from 1 January 2023 will have an interest rate of 3% per annum applied to the debt provided a Phased Payment Arrangement (PPA) has been agreed with Revenue in advance. Revenue have advised that anyone who will have outstanding debt in place going into 2023 will be required to contact Revenue with a payment plan before the end of 2022 outlining how they intend to pay the outstanding liabilities to Revenue. Given we will shortly be entering the second half of 2022 companies should begin thinking about their cash flow management now and the PPA proposal they intend to put forward to Revenue before the end of the year. If you require assistance in relation to contacting Revenue with your payment plan, we would be happy to assist. You can contact us at
info@robertsnathan.com To learn more about our services see our Personal and Corporate Taxation page. Contact Us
May 24, 2022
  Business Advice

Dealing with Inflation: Advice for Business Owners

Current inflation factors

The 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%.

Outlook

The 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

  • 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
Directors need to plot how they can manage the increase in overheads without impacting the profitability of the business.

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 help 

We 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 info@robertsnathan.com Contact Us
May 11, 2022
  General

Do you need to Switch your bank from KBC and Ulster Bank?

With the closure of KBC and Ulster Bank, over 120,000 customers will be searching for their new banking service. Ulster Bank will be issuing letters shortly to account owners to begin the process of transferring to a new bank. Ulster Bank will be providing account holders with 6 months to make the switch to their new bank. The moving process is expected to span over a year, which will be done on a staggered basis. KBC have sold their deposit accounts to Bank of Ireland. However Bank of Ireland have not agreed to take the current accounts, and they have to be moved elsewhere. You may be in the same position as some of our clients find themselves in as a current account holder with KBC or Ulster Bank, if so you may wish to consider the following when selecting your new 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).
If you wish to discuss further or require assistance, please contact us by booking a consultation, or email us at info@robertsnathan.com
April 26, 2022
  Corporation Tax

Corporation Tax Ireland: 15% Tax Rate

In October 2021 it was announced that Ireland would increase their corporation tax rate to 15% for certain large multinational companies. It was originally envisaged this increased rate would be implemented in 2023 provided agreement was reached at an OECD level. However, delays on approval in the US by the Biden administration and recent objections by Member States at an EU level have potentially deferred this implementation which we have examined below.

Why an increase in Corporation Tax?

In October 2021, members of the Organization for Economic Co-Operation and Development (OECD)/G20 Inclusive Framework worked on a global consensus-based solution to reform international corporation tax. It resulted in a
global agreement of 137 jurisdictions including Ireland. The proposal was made up of two key global tax initiatives referred to as Pillar 1 and Pillar 2. Pillar 1 addresses the partial re-allocation of taxing rights. This will result in the taxing rights being shifted towards the country of consumption rather than the country where the company is located. Some jurisdictions have already sought to impose digital taxes in advance of this measure. Pillar 2 addresses the minimum level of taxation applied on profits of multinational enterprises. After some initial negotiations around the wording of the minimum tax, ensuring the words “at least” 15% were removed to avoid future rate creep, Ireland agreed to adopt the minimum corporation tax rate of 15% for certain large multinationals. However, the proposed tax increase will only apply to any domestic and international group with a combined financial revenue of over €750 million a year.

Timing of new Corporation Tax Rate

With the EU presidency currently sitting with France they had pushed for EU States to implement the minimum tax rate quickly. However, the approval for this would need the unanimous support of all 27 States and recently Poland, Sweden, Estonia, and Malta have raised their reservations until a clear position has been taken by the US. With Ireland in agreement to the proposal, Paschal Donohoe (Minister for Finance) wishes to legislate the bill for the beginning of 2023. However, with pushback from these other EU nations, suggestions have been made to change implementation to 2024 to allow companies time to adapt. French Minister for Finance Bruno Le Maire intends to readdress the proposal in April.  

Impact for Ireland

Given the new rate will only impact large multinational groups with turnover in excess of €750m, Ireland’s 12.5% corporation tax rate will primarily remain intact. How the increased rate will affect Ireland’s FDI will be watched with interest. The government have stated projected figures of €2billion being the decrease in tax revenue arising from the increase tax rate. Ireland has been at the forefront of all recent international tax reforms introducing items such as interest limitation rules, anti-hybrid measures and increased transfer pricing focus. These items, along with Trump tax reforms in the US, had all led to anticipation of Ireland’s FDI being impacted which did not materialise to any significant level. Roberts Nathan’s Tax Partner, Brendan Murphy brendan.murphy@robertsnathan.com is available to discuss all aspects of Ireland’s position on international tax reform.    
April 5, 2022
  News

2021 Exchequer Results

As we kick off 2022, our tax team review the 2021 exchequer figures recently published by the Department of Finance. Overall, the exchequer results are exceptionally strong given the continued impact of the Covid-19 pandemic on many businesses during 2021, with an overall reduction in the exchequer deficit of €5bn compared to 2020.  The exchequer results figures released by the Department of Finance show an increase in tax revenues across almost all tax heads, giving rise to a total increase in tax revenues of 19.7% compared to 2020. Corporation tax receipts have continued to increase at unexpected levels, which has led to corporation tax revenues coming within €100m of VAT revenues for the first time. However, recent comments from the Minister of Finance suggests corporation tax receipts are expected to decline from 2023 when the new 15% corporation tax rate for large multinationals takes effect.  Understandably, given the major impact of Brexit from a VAT and customs perspective, customs duties increased by over 90% in 2021 compared to 2020. However, it is worth noting that customs receipts would generally have been at a very low level prior to Brexit and therefore this level of increase is unsurprising.  Most notable from the exchequer results released is the significant increase in capital gains tax receipts. CGT receipts for 2021 increased by 72.6% in 2021 compared to 2020. Considering CGT is a well-established tax base, and no major legislative changes were made in 2021 compared to 2020, this increase in revenues is most likely attributed to rising property prices, along with the significant increase in activity and prices obtained in the merger and acquisition (“M&A”) sphere which has been evident over the past 12 months. Derek Dervan, Partner in Roberts Nathan, leads the firm’s corporate finance function and has observed this increase in M&A activity first-hand in 2021. Derek expects the transactions market to remain strong, with 2022 starting where 2021 left off.   If you are considering a sale of your business, the acquisition of a new business or a restructuring of your current operations, Derek and Roberts Nathan’s Tax Partner, Brendan Murphy, would be delighted to speak to you to ensure that your business is structured and transaction-ready, to ensure that the best results can be achieved. 
January 12, 2022
  Uncategorized

Covid Restriction Support Scheme

As many businesses begin reopening their doors this week, the Revenue have confirmed those eligible for the Covid Restriction Support Scheme should be able to avail of two weeks double payment of the scheme in order to assist with restarting their businesses. See details of the Revenue press release here. As Revenue have reiterated in recent times, all reliefs such as the CRSS require up to date tax clearance certificates which mean the taxpayer must have all tax returns filed and payments made or debt arrangements agreed. At Roberts Nathan we continue to assist our clients both applying for and maintaining Covid reliefs. Feel free to contact us if you wish to discuss any Covid supports or any issues arising for your business as the economy reopens over the coming weeks.
May 12, 2021
  Uncategorized

RN Podcast: 2021 – What is in store for the Irish tax landscape in the year ahead

Vivian Nathan, Managing Partner, welcomes Brendan Murphy, Tax Partner, to Roberts Nathan. Brendan joined the firm at the beginning of 2021 to continue the firms expansion and our commitment to providing our clients with dedicated specialist within specific sectors. On this podcast, Viv and Brendan discuss the opportunities Brendan sees for businesses from a tax perspective in the year ahead and what will be the key areas of focus for tax advisors. They also look at the impact to date of Brexit and how this will continue to effect trading between Ireland and the UK. Finally they will look at the cost Covid-19 is having on the Irish economy and what the future Irish tax landscape may look like.
We hope you enjoy listening to our podcast and if you have any questions regarding any of the points raised please let us know.
 
April 19, 2021
  Legislation

Cash flow benefit for companies importing stock from outside the EU (including UK/EU trade).

As a result of Brexit and the UK becoming a third country, postponed accounting for VAT can now be applied to all non-EU imports of goods for resale since 1 January 2021.  This treatment is now available to all VAT registered traders and applies to imports from all non-EU countries and not just the UK. Trading businesses who historically have had to pay VAT at point of entry for stock arriving from outside the EU can now save the cash flow of the VAT that would have applied on the landing of this stock (23%). This scheme benefits all traders in that:
  • provides for postponed accounting for VAT on imports from non-EU countries
  • enables you to account for import VAT on your VAT return
  • allows you to reclaim VAT at the same time as it is declared in a return. This is subject to normal rules on deductibility.
The Revenue Commissioners may exclude traders who do not fulfil certain conditions and requirements from using this scheme which will include compliance with tax and customs law. A business may also be required to satisfy Revenue of the viability of their business operations and their capacity to pay their VAT liabilities. To use postponed accounting, an importer should enter a code on the import declaration. This code will allow the VAT on import liability to be accounted for by the importer in their VAT Return. The VAT Return will contain new boxes (fields) to capture this information. Talk to us on your requirements in this area and how we can assist your business. We have advised a number of clients who are now saving on their working capital funding requirements and in particular on trade in goods between UK and Ireland.
April 13, 2021