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News Uncategorized

  Taxation

Business Succession Planning

Business Succession Planning As many Irish businesses reopen following the lifting of Covid restrictions, the discussion around the succession of the business may be back on the table for many business owners and their families. Obviously tax plays a major role in these discussions and we have touched on some of the key areas of tax to consider in this regard below.  However, a commercial decision also needs to be made around what the future plans for family members are and their desire to be involved in the business. Not all situations result in the next generation being actively involved in the business and sometimes an external sale may be considered as a more appropriate solution for everyone involved.    We will look at business sales to external purchasers in a later article but for now we will focus on the situation where a business will be passed onto the next generation.  The first thing which needs to be considered when passing over a business is the market value that would be attributed to the business or the shares in the company running the business if it has been incorporated. This value will then be used for capital gains tax, capital acquisition tax and stamp duty considerations as outlined below.  Capital Gains Tax Capital gains tax is deemed to arise at market value to the vendor when passing on assets but retirement relief may be available to mitigate the liability in many instances. The thresholds for retirement relief change from the age of 66 therefore, owners are generally encouraged to consider their plans in advance of reaching this milestone. However, the threshold for passing on business assets or shares to your children after 66 is €3m so can still be useful for businesses not valued above this level. In advance of reaching 66 there is no upper cap on value hence for larger businesses the age of 66 is an important timeline in relation to planning.  Should the conditions of retirement relief not be met, entrepreneur relief may still be available to limit the capital gains tax to 10% on the first €1m of consideration.  Capital Acquisitions Tax A child has a tax free lifetime gift limit from their parents of €335,000 currently. However, for many children involved in a business, a relief may be available which reduces the value being received to 10% of the market value. This is referred to as business asset relief and has a number of conditions around ownership and involvement in the business to qualify. Given this reduction and the current lifetime gift limit, this could result in a business valued as high as €3.35m being passed onto a qualifying child free from capital acquisitions tax. For the successor of the business another major advantage of the relief is that they will have a base cost for a future sale of the market value transferred before any relief is applied. This can help significantly reduce their capital gains tax charge on a future sale. 

Interaction of CGT and CAT

There is a requirement in both retirement relief and business asset relief for the assets to be held by the successor for 6 years, otherwise these reliefs may be subject to a clawback. It is also important to note that where both CGT and CAT apply on a transfer, a tax credit may be available for the CGT suffered against the CAT due. This is referred to as same event credit and is only available where the assets are held for two years by the successor from the date of gift.   Stamp Duty A recipient of a gift may suffer stamp duty at market value of the assets. Stamp duty on business assets is generally applied at 7.5% whereas shares in a trading company would be subject to stamp duty at 1%.  Conclusion Where there is a plan to allow a new generation take over a business it is important to consider the tax implications in advance. Retirement relief and business asset relief may result in value passing without a significant tax leakage.  Now may be an opportune time to consider such a transfer. Many businesses which have had limited trade in the past 18 months may have a lower market valuation and it is always a fear that there may be changes to capital taxes in future budgets as the government try to ensure a strong exchequer take given the cost of covid reliefs.  In Roberts Nathan we have experienced teams in both tax advisory and corporate finance advisory to help you with such business decisions. Please use the link to contact Brendan Murphy for any questions on any part of the above:
https://www.robertsnathan.com/member/brendan-murphy/
August 19, 2021
  Uncategorized

BRSS Scheme

Revenue have recently published guidance on the new Business Resumption Support Scheme. Applications for this scheme can be made between 1 September and 30 November 2021. The scheme provides a once off payment to cover trading expenses of businesses which have reopened for business but have still seen turnover facing a significant decrease from pre-Covid times. The scheme will be available for corporates, individuals or partnerships that are actively trading.  Any business claiming the relief must not be entitled to claim the CRSS from 1 September 2021. Therefore, this scheme should be available for many non-essential retail providers that were forced to remain closed until 17 May 2021 but have now reopened for business.  The scheme will provide a once off payment up to a maximum of €15,000. To qualify under the scheme, a business must be able to demonstrate that the turnover from its trade, in the period from 1 September 2020 to 31 August 2021, will be no more than 25% of a reference turnover amount. This reference amount will be the turnover for the calendar year 2019 for any longstanding business.  The payment will be calculated as three times the sum of 10% of their average weekly turnover from 2019 up to €20,000, and 5% of any excess of average weekly turnover above €20,000. Subject to a maximum payment amount under the scheme of €15,000. Therefore a company with an average weekly turnover in 2019 of at least €80,000 should be in a position to claim the full €15,000.  As with other Covid supports the business must have a good tax compliance record and have an active tax clearance certificate. The application for the BRSS will be made via ROS and we would be happy to provide businesses with any advice and assistance needed in relation to the application using our details in the link provided.  https://www.robertsnathan.com/member/brendan-murphy/
July 19, 2021
  Business Advice

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
  Business Advice

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
  Uncategorized

Aidan Scollard appointed as Chair of BITA

Congratulations to Aidan Scollard, Partner with Roberts Nathan on his appointment as Chair of the Dublin Chapter of the British and Irish Trading Alliance (BITA). The British and Irish Trading Alliance is an exciting non-profit networking organisation with a vibrant community of businesses that are invested in each other's success. BITA host networking, educational and social events online and in venues across all chapters in the UK and Ireland, and have a Global Forum which includes the USA and Australia. Their mission is to help more people and influence further; as a collective. Commenting on his appointment, Aidan Scollard said: “I am delighted to be involved in BITA at an especially important point in time in the UK / Ireland business relationship. As I have actively been involved in assisting Irish and UK companies expand in each other’s jurisdiction for a number of years I am pleased to be appointed and help to drive this continued interaction of business owners and to grow the alliance.
April 12, 2021
  Business Advice

UK Businesses – Do you have the correct Irish VAT number?

Check your VAT number VIES VAT number validation
No, invalid VAT number for cross border transactions within the EU
Since June 2019, companies registering for VAT have had to specify whether they wish for a “domestic only” or “intra-EU” VAT registration. The domestic only registration has helped speed up registration process for business seeking to register for VAT however, we have seen a number of instances where businesses are unaware of the need to include an intra-EU registration within their application. In particular we have noted many UK businesses applying for Irish VAT numbers on the basis of being a non-resident company with operations in Ireland and obtaining an IE VAT reg.  If the company is importing goods into Ireland for domestic only supply, then the domestic VAT registration is sufficient and they are charged Irish VAT at the point of importation of the goods into the EU.  Thus the domestic VAT registration applies only if the company is importing goods into Ireland, storing and distributing them here and not further distributing outside of Ireland. However if your company is looking to use Ireland as a new trading base in dealing with EU customers this will not be an effective VAT number for EU wide trading. So check your VAT number.  If you get the above message on the VIES system then it is only a domestic VAT registration. This will cause issues if you are bringing goods into Ireland and then intending to export them to another EU country as you will need to apply for an intra-EU VAT number.  It will be the exact same number but will need to be validated as otherwise your customers will get the above notice when the VAT number is checked for EU trading.  This causes an issue for your EU customers as you will not have issued a valid VAT invoice. We have helped a number of clients with this by amending their VAT registration and getting the option for intra-EU VAT registration. This requires additional information for Revenue which we can assist with. If you would like to explore further options around your business, please contact Brendan Murphy who would be very pleased to assist you. Brendan Murphy:
brendan.murphy@robertsnathan.com
March 31, 2021
  Uncategorized

Overcoming Brexit; Case Studies on Overcoming Difficulties

In recent months we have been delighted to continue to help a number of UK businesses across various industries who approached us to assist them in dealing with the harsh realities Brexit has brought them. Below are three separate case studies of how we have helped.   Brexit Case Study 1: UK Based Food Processing Business Supplying High-Quality Goods to High Street Retailers. We provided assistance, including commercial and tax planning advice to a UK food manufacturer, who recently established a subsidiary company in Ireland. This enabled that company to continue trading with its EU customers in a straight forward and frictionless way. The Irish subsidiary company now handles all of the EU export business which had previously been operated by the UK parent company prior to Brexit on the 31st December 2020. As of January 2021, the manufacturer of goods for export to the EU was transferred to an outsourced food production facility in Ireland. A significant increase in jobs is now anticipated at that food processing facility because of this. This restructuring of the trading activities of the British company has helped to ensure that their existing EU market was held intact. The company believes that the Irish-based subsidiary, as an EU business entity in its own right, will enable the continued growth of the group's EU market. They strongly contend that future sales growth in Europe will be easier to achieve in this way, rather than through its UK-based marketing activities alone. The advice and guidance we were able to provide our new client, played a significant role in helping this UK company to evolve in a manner that enabled it to avoid the difficulties presented by Brexit.   Brexit Case Study 2: UK Based Fashion Exporter Supplying High Street Fashion Retails In Ireland and in Europe Up to recently, a UK wholesaler of high-end fashion clothing sourced all of their clothing products from outside the EU. Following Brexit, a difficulty arose regarding import duties because the country of origin of the goods is China. On this basis, import duty is applied on the export of such fashion goods from the UK company to its existing EU customers. The company found itself in a very difficult situation as it would have been forced to absorb the additional duty as part of its costs, giving rise to a significant reduction in the profit margin of the EU sales. In order to overcome this issue, the UK company established a subsidiary company in Ireland which instead, from February 2021, imports the goods from China into Ireland and in turn exports them to the existing EU customer base. We were very pleased to provide assistance to this client in terms of the commercial and taxation issues relating to the restructuring of the UK company's activities following the negative impact of Brexit.   Brexit Case Study 3: UK-based Supplier of Machinery Parts and Equipment to Municipal Entities in Europe. A UK-based equipment and parts supply company derived a high proportion of its revenues from its European customer base.  The goods it supplied were all sourced from within the EU as well. Prior to Brexit, the company was in a position to avail of Triangulation for VAT purposes, this is a simplified VAT mechanism available to EU member states where all three EU businesses involved in a transaction are VAT registered. Following Brexit, the UK company failed to qualify for the benefits of triangulation, giving rise to significant VAT difficulties. We were very pleased to of been of assistance to the company by providing them advice that allowed them to circumvent the problems they were faced with.   If you would like to explore further options around your business, please contact Peter Roberts or Tomas O’Leary who would be very pleased to assist you. Peter Roberts: peter.roberts@robertsnathan.com or Tomas O’Leary: tomas.oleary@robertsnathan.com Tel: +353214217940
February 19, 2021