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.
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 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).
Corporation Tax Ireland: 15% Tax Rate
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 RateWith 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 IrelandGiven 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 email@example.com is available to discuss all aspects of Ireland’s position on international tax reform.
2021 Exchequer Results
Covid Restriction Support Scheme
RN Podcast: 2021 – What is in store for the Irish tax landscape in the year ahead
Cash flow benefit for companies importing stock from outside the EU (including UK/EU trade).
- 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.
Real Brexit 1 month in – From IT services to dresses to skincare and live Horses the VAT implications
The (European Union) EU and the United Kingdom (UK) finally reached agreement on a Free Trade and Cooperation Agreement (TCA), avoiding a hard Brexit at the end of December. However, this does not change the fact that the UK has left the EU and therefore is no longer part of the EU single market and customs union and is now regarded as a third country.The first real trading weeks since the UK departure have highlighted the very real issue for a number of clients and new contacts we are assisting on VAT matters. From understanding how VAT now applies on point of entry on the movement of goods and whether to remain as the ‘Importer of Record’ to the UK for Irish businesses. We have been advising Irish and UK based clients from a wide range of sectors around VAT treatments on trading from ladies dresses to skincare products and from IT services to live horses all in the last few weeks as trade items start to move between the UK and Ireland. Including assisting with potential registration for UK VAT with HMRC by Irish traders. If your business needs advice in these areas for B2B or B2C transactions between the UK and Ireland please contact us at firstname.lastname@example.org or email@example.com and we can assist.