Registration for the Temporary Business Energy Support Scheme is now open
One of the positive announcements for businesses in Budget 2023 was the introduction of the Temporary Business Energy Support Scheme (TBESS) to reimburse businesses for the increase in energy costs. Registration for the scheme opened on 26th November and claims can be made from 5th December 2022. The scheme will cover the period from 1st September 2022 to 28th February 2023 with the deadline for a claim being 4 months from the end of the month for which the claim relates (i.e. 31st January 2023 for a September 2022 claim). Where a business has seen an increase in energy costs of over 50% from the corresponding month in the prior year then it will be entitled to claim for 40% of the increase. A claim is limited to a cap of €10,000 per month per business line or €30,000 per month where more than two business lines with separate MPRNs exist. Given the significant energy cost increases for business we would anticipate a high participation in the scheme with the government setting aside €1.2bn for the energy bill subsidies. We would encourage you to speak to us about registration and submission of claims to ensure timely compliance with the scheme.
November 28, 2022
Finance Bill 2022
On 3rd November 2022, Brendan Murphy, tax partner at Roberts Nathan, analysed the Finance Bill as part of the annual Irish Tax Institute's Finance Bill seminar. A few of the key items discussed on the day were: 1. Full details of the Temporary Business Energy Support Scheme which will apply from 1st September 2022 to 31st December 2022; the first claim for which will be due by the end of January 2023. 2. The impact of the changes to the R&D tax credit and the cash flow impact of the new refund process. 3. New proposal on returns required by employers of reportable benefits provided to employees. For more information, please contact Brendan Murphy. [video width="1280" height="720" mp4="https://www.robertsnathan.com/wp-content/uploads/2022/11/RN_Finance_Bill.mp4" autoplay="true"][/video]
November 7, 2022
Are You Having Difficulty Opening a Business Bank Account in Ireland?
One of the most challenging aspects of setting up a business in Ireland today is opening a business bank account. This can be as true for a domestic business as for an international business however for those based abroad it can be particularly demanding. There are a number of reasons for this principally the difficulty in satisfying the particular banks KYC (Know your client) and AML (Anti Money laundering) requirements. The reality here is that many of these provisions and rules were brought in to rightly shore up illegal and questionable activities being conducted however what we see happening now is that these regulations are being used on all types of businesses. In my opinion, it is the equivalent of using a sledgehammer to crack a nut. The demands that are placed on potential customers in the current climate make it very difficult to open an account in what are known as the main pillar commercial banks if the proposal has any international or non-run of the mill flavour to it. We have over the past year encountered significant hurdles ranging from language problems, to face to face meeting requirements to cultural differences that can all lead to frustration for the client. While we in Roberts Nathan have a very high success rate it can take some time and anyone looking at potentially setting up a business/ company in Ireland would need to bear this in mind and allow for 6/8 weeks for the whole process to arrive at the point where the account is fully opened and online banking access operational. There is a simpler and easier set up option being the use of one the newer online banking platforms which we have considerable experience in but this may not be suitable for all types of entities - in particular if one is involved in multiple currency and or significant wire transfer transactions. If this can be made to work it can short circuit a lot of problems and time for the client.
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.
May 31, 2022
How SCARP Helps Small Companies Settle Debts with Creditors
SCARP, the Small Companies Administrative Rescue Process is a restructuring process similar to the Examinership process in Ireland, used to restructure companies in, or facing financial distress. Examinership, whilst it has saved thousands of jobs over the last thirty years, is expensive and complex for many small and medium sized companies. SCARP is the government’s response to the need to provide a restructuring process that is cost effective and more accessible to micro, small and medium sized companies. Its introduction is timely, as we emerge from Covid-19 many businesses are facing difficult and uncertain trading conditions. With government Covid-19 supports now tapering off, the commencement of repayment of warehoused tax liabilities, the impact of the war in Ukraine, increased energy costs, raw material shortages and labour supply issues, businesses are now heading towards what one might consider a perfect economic storm. Whilst the indications are ‘the economic headwinds’ will be short lived; companies and businesses will have to weather these storms and unfortunately some will not survive. SCARP provides a restructuring tool that will allow companies to restructure their debts whilst continuing to trade. The restructuring plan once finalised and agreed with creditors becomes legally binding. Key considerations Who is SCARP available to: SCARP is available to companies where:
- 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.
May 17, 2022
Company Registers – What You Need to do
Having seen a recent an increase in new company incorporations with many companies having been incorporated post Brexit by UK parent groups we are receiving more queries around the legal requirements around the statutory books to be maintained for these companies. Company registers are the official books kept by a company relating to legal and statutory matters and are often referred to as the statutory registers, combined registers or company books. There is a legal obligation under the Irish Companies Acts for every company to have and maintain their company registers which is a responsibility of the Company Secretary. Failure to keep the registers correctly is a category 3 offence by the company and every officer of it who is in default. The company registers are however often overlooked and not reviewed and updated on a regular basis. It is often only when there is a possible sale or a dispute within a company that the registers can suddenly become a priority which can lead to delays and issues between parties.
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
May 3, 2022
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).
April 26, 2022
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 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.
April 5, 2022
Annual Return Extension
The Companies Registration Office (CRO) recently made an announcement that saw an extension for companies who had an annual returns deadline between the 27th September - 14th October pushed to the 9th December.
This two week extension was made in a statement from the Department of Enterprise, Trade and Employment, who said this would give breathing room to firms who have yet to file their returns due to the pandemic. If you would also like to have a confidential chat with Aidan regarding the above topic, contact him on;
November 24, 2021
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 CATThere 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
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