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While COVID-19 remains at the forefront of everyone’s minds, Budget 2021 was built on the assumption of a no-deal Brexit. Alma O’Brien reports. The key objectives of Budget 2021 were to provide supports to those affected by COVID-19 and Brexit. Taking into account recent political developments in the UK and the British Government’s stated intent to disregard parts of the Northern Ireland Protocol, it is not surprising that the Irish Government prudently prepared this year’s budget on the basis that the EU and UK would fail to conclude a bilateral Free Trade Agreement (FTA). We expected to see several targeted Brexit support measures announced on budget day. Instead, the budget provided for a flexible €3.4 billion recovery fund to be used by the Government to stimulate demand and mitigate the effect of Brexit and COVID-19 on the Irish economy. This demonstrates an acute awareness that the challenges we will face in the months ahead are not best served by rigid strategies but instead by diligent, dynamic and energetic Government responses. The recovery fund should provide the finances required to facilitate this approach. The Government has committed to access the €5 billion Brexit Adjustment Reserve, announced by the European Council in July 2020. This reserve is designed to support the countries and sectors most impacted by Brexit. Some of the more specific Brexit expenditure items announced in Budget 2021 include €340 million to support the improvement of infrastructure at Irish ports and airports, customs compliance activities and the hiring of 500 additional frontier staff. In addition to this week’s budget announcement, the Government is due to bring forward the Brexit Omnibus Bill, which seeks to: preserve access to priority services, benefits and reliefs relating to trade between Ireland and the United Kingdom; satisfy several obligations and commitments Ireland has made to the United Kingdom outside of EU membership; and prevent a cliff-edge scenario for Irish people and businesses after 31 December 2020. It is understood that it will apply regardless of whether or not there is an FTA. Minister Paschal Donohoe’s Budget 2021 speech contained the word “COVID” 12 times, and the word “Brexit” only five. More thought-provoking, perhaps, is the fact that Minister Donohoe’s Budget 2020 speech contained the word Brexit 41 times. This reminds us that, while this year’s budget may not have included the expected number of targeted Brexit supports, the supports announced must be viewed in light of the extensive suite of measures contained in the July Jobs Stimulus Package, previous budgets, and those to be provided for in the Brexit Omnibus Bill. Alma O’Brien is Partner and Head of Tax at Baker Tilly.

Oct 16, 2020
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With Brexit looming before us, how can asset managers ensure they are operationally ready for the end of the transition period? Trish Johnston outlines five key considerations that should help. The UK and EU remain at loggerheads when it comes to agreeing on the post-Brexit Trade Agreement. Many asset managers have been preparing for a no-deal Brexit and have successfully implemented a day-one action plan, ensuring they are operationally ready for the end of the transition period. Asset managers should now be implementing their day-two action plans, confirming that every detail has been examined in advance of 31 December 2020. For example, has the novation of all contracts to a newly established EU entity been completed? Have impacted investors been contacted to discuss and agree on actions and timings in relation to these points? For those firms that are a little less prepared than they would like, the five key considerations below can help determine the appropriate actions to be taken before the end of the year. 1. Equivalence The revised Political Declaration, which was issued after the finalisation of the Brexit Withdrawal Agreement, noted that the UK and EU should start assessing equivalence regulatory and supervisory regime frameworks with respect to each other. The aim was to conclude these assessments before the end of June 2020. However, this has not happened. It is worth noting that the third-country provisions of several EU regulations, which will apply after 31 December 2020, require an equivalence decision to have been taken. On a positive note, the EU has adopted a time-limited decision to give EU financial market participants 18 months to access three UK-based central counterparty (CCP) clearing houses under the European Market Infrastructure Regulation (EMIR). In the absence of such a decision, EU counterparties could not clear over-the-counter derivatives with these UK CCPs. This decision expires on 30 June 2022, and the EU is strongly encouraging EU financial market participants to reduce their reliance on UK CCPs during this period. 2. UK market access after 31 December 2020 As of 30 September, the UK Temporary Permissions Regime (TPR) reopened and will remain open until 31 December 2020. This regime will come into effect from 1 January 2021. Therefore, EU managers who wish to market, or continue to market, into the UK after 31 December 2020 will need to apply to the TPR to enable this activity to continue, if they haven’t already done so. Firms that have already notified the Financial Conduct Authority (FCA) do not need to take further action. If, however, new funds have been added by a fund manager since earlier notifications were submitted, the new funds will not be included in the TPR unless the manager updates the TPR notification. It is also worth noting that if a new sub-fund of an Irish Undertakings for the Collective Investment in Transferable Securities (UCITS) umbrella is established after the transition period, but forms part of an umbrella that was registered under the TPR, the FCA will permit the new sub-fund to be added into the TPR so that they can market to UK retail investors. However, new Alternative Investment Fund (AIF) sub-funds established after the end of the transition period cannot access the TPR, even if the umbrella already had other AIF sub-funds registered under the TPR. Such AIFs can, however, be marketed using the National Private Placement Regime (NPPR) in order to gain access to professional investors in the UK (or via the Section 272 registration process if marketing to retail) without having to use the Alternative Investment Fund Managers Directive (AIFMD) passporting process. The TPR currently enables access for EU managers to the UK market for a period of three years, at which point the new UK overseas funds regime is expected to be effective. The proposed UK overseas funds regime intends to establish a more appropriate basis for recognising overseas retail funds, including EU UCITS. A critical issue for this regime is whether additional requirements will be placed on EU funds marketed in the UK to align with those applicable to UK UCITS (i.e. value assessments). 3. Portfolio management or delegation to the UK There has been some recent market noise about delegation as a result of the European Securities and Markets Authority (ESMA) letter to the Commission concerning the AIFMD review. However, it is important to note that the necessary Memoranda of Understanding (MoUs) are in place to enable delegation of portfolio management to the UK to continue after the end of the transition period. The FCA, ESMA, and national regulators have confirmed that the MoU put in place in February 2019 will come into effect at the end of the transition period. 4. Data In the case of a hard Brexit on 31 December 2020, data processing and data flows between the UK and the EU may require additional specific contractual requirements. The recent ruling by the Court of Justice of the European Union in the Schrems II case is also worth considering with respect to firms’ considerations concerning data transfers to third countries post-31 December 2020. The ruling has significant implications for all personal data transfers between EEA member states and third countries whose data protection regimes have not yet been assessed by the European Commission as equivalent. This will be particularly relevant for firms who transfer personal data to the UK. The Schrems II ruling means that businesses planning to rely on Standard Contractual Clauses (SCC) to continue to transfer personal data to the UK post-Brexit will have to conduct due diligence. They may also need to put additional safeguards in place to meet their obligations under GDPR. The Data Protection Commissioner in Ireland has produced guidance on the transfer of personal data from Ireland to the UK in the event of a hard Brexit. 5. Fund documentation It is essential to consider any changes that may be required to fund documents as a result of Brexit and to implement any necessary changes before the end of the transition period. In the run-up to previous Brexit deadlines, the Central Bank of Ireland issued reminders concerning updates to fund documentation and set deadlines for the receipt of same. It is therefore likely that they will issue a similar request in advance of the end of the transition period. Trish Johnston is Leader of PwC Ireland’s Asset & Wealth Management Practice.

Oct 16, 2020
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With the end of the Brexit transition period is just weeks away, Colleen Flanagan shares her six top tips to help Irish businesses prepare for a new trading relationship with the UK.  The economic and social chaos caused by COVID-19 left few aspects of life unaffected, but one thing has not changed: the date on which the Brexit transition period will end. With 31 December 2020 just weeks away, businesses must prepare for the inevitable changes and disruption that lie ahead. Much like COVID-19, the economic impact of Brexit will not be felt evenly by all businesses, but almost no business will remain untouched.  Brexit Readiness Action Plan In September 2020, the Irish Government launched a Brexit Readiness Action Plan. Measures being taken to support business include: a Customs Roll-On Roll-Off Service, facilitating just-in-time business models; Authorised Economic Operator status, allowing traders to enjoy certain customs-related benefits throughout the EU; potential deferral of import duties until the month following import; and the proposed introduction of deferred VAT accounting. However, the plan also highlights the need for businesses to help themselves by finalising their contingency planning and taking preparatory action. Six key preparation steps for Irish businesses trading with the UK The following actions should be taken to prepare for the end of the transition period: 1. Register for an EORI number An EORI (Economic Operators Registration Identification) number is a tax reference number and is available from Revenue. It is essential for any Irish business intending to trade between Ireland and the UK after 31 December 2020. 2. Utilise available supports  Supports for businesses include: Enterprise Ireland’s Ready for Customs grant, which allows businesses to claim up to €9,000 for each eligible employee hired/redeployed to a dedicated Customs role. Enterprise Ireland also provides a range of financial planning supports, notably the Act On Initiative, Be Prepared Grant, Strategic Consultancy Grant, Market Discovery Fund, Agile Innovation Fund and Operational Excellence Offer. InterTradeIreland’s advisory services and Brexit Planning Voucher worth up to £2,000/€2,250 per business; one-to-one Brexit mentoring and training workshops organised by the Local Enterprise Offices; and the Brexit Loan Scheme for businesses with fewer than 500 employees. Budget 2021 also provided €100 million to enable departments to provide Brexit supports. These include: €8 million for new market surveillance and certification; €15 million to help businesses respond to changes to customs and tariffs; €7 million to help the food processing industry adapt; €11 million for Local Enterprise Offices to work with local businesses; and €675,000 for InterTradeIreland to provide practical help to businesses trading cross-border. As such, we will likely see further business supports announced in the months ahead. 3. Understand the impact on your supply chain The origin of goods will be key in determining the amount of duty payable on goods moving between the UK and Ireland. It is imperative that you understand from where goods originate, the value of the goods, and the relevant customs classification code. If any materials are likely to be significantly impacted or no longer authorised for sale in the European single market, you may need to identify alternative certified sources. If significant supply chain disruption is likely, you may need to consider alternative routes. 4. Communicate with suppliers, agents, clients, customers, and staff Hold discussions with your suppliers and Customs/logistics agents. The roles and responsibilities of each party must be clearly defined and understood. If using the UK landbridge, work with your bank to ensure you have the necessary financial guarantee in place. If increased costs must be passed on to your customers or clients, or if there is likely to be a significant impact on lead time, discuss these changes with customers in advance. Ensure designated personnel within your organisation are clear on their responsibilities and have sufficient knowledge and training to comply with the additional regulatory and certification requirements. 5. Determine the cash flow implications Prepare a cash flow forecast that incorporates potential tariffs, duties, and VAT. Expected exchange rate fluctuations should also be included. Consider whether your current banking facilities are sufficient to support any additional cash needs. Financial supports are available to facilitate cash flow planning. 6. Consider additional regulatory requirements From 1 January 2021, UK bodies will no longer be authorised to certify compliance with EU regulatory standards. If your business relies on certification from a UK notified body, it is vital that you now source an EU-based notified body. This may impact on the marketing and labelling of goods. There are also potential implications for the recognition of EU professional qualifications in the UK (and vice versa) and the transfer of personal data between Ireland and the UK. Engagement with regulators is key to ensuring continued regulatory compliance after 31 December 2020. Colleen Flanagan is a Manager at PKF-FPM Accountants Limited.

Oct 16, 2020
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The future of working practises has been significantly accelerated by COVID-19. How do we cope? Joe Davis says we must be ready to take action and be prepared for as many economic outcomes as possible.The American mathematician, Claude Shannon famously established a lower bound for the number of possible moves in a typical chess match: around 10120. That’s 10 with 119 zeroes after it. Reflecting on when the COVID-19 crisis began to unfold across the globe, I think the Shannon number adequately captures the breadth of possible economic outcomes at the time.The future acceleratedAs the crisis has evolved, however, two things have become clear: the pandemic has accelerated some trends already in place, and COVID-19 has implications that are opaque now but will become undeniably clear and meaningful over time.Before the pandemic sent office staff flocking to home workstations, employers were taking an incremental approach to remote work. Recent improvements in office technologies let them untether workforces on a timetable of their choosing. The pandemic took the decision out of employers’ hands.No longer could work-from-home arrangements serve as controlled experiments in productivity; they became indispensable. Ready or not, employers – for the most part – have successfully enabled secure and efficient work from home environments and redefined team dynamics. The office will never be the same. Meanwhile, significantly reduced demand for office square footage, which had grown on a per capita basis for 50 years, stands to redefine our cityscapes and suburban makeups.Similarly, the pandemic has ground business travel to a halt. Historically the most profitable business for airlines and hotels, such travel has been replaced by video conferences and virtual collaboration tools. Such a development tests airline and hotel business models that rely on less price-sensitive business travellers to help keep leisure traveller costs low.COVID-19 has also accelerated the challenges facing restaurants and shops. Online retail and food delivery, already growing in popularity before the pandemic, have become essential to consumers worried about face-to-face interaction. As with office work and air travel, restaurants and retail may not overcome heightened consumer reluctance until an effective vaccine or treatment is developed – something we’re not expecting before 2021. In some cases, the damage could be permanent.Interestingly, changes to commercial real estate, or at least how we invest in it, had already been occurring in plain sight. Over the last decade, office and retail property assets have fallen to 19% from 39% of all assets held by US-listed real estate investment trusts. In contrast, according to FTSE Nareit All REITs Index, residential, infrastructure, and data centres – sectors that are likely to benefit from the pandemic – now make up 45%.Post-pandemic questionsAlthough some implications of the post-pandemic world are evident, others, for now, are more opaque:Will massive stimulus, supply-chain disruptions, and pent-up demand give rise to inflation that has eluded developed economies for a decade?Is the globalisation trend that has defined the post-World War II era ending, and what would that mean for trade and economic growth?With interest rates pinned at historic lows and deficits and balance sheets expanding, what can central banks do to support employment and price stability?And what becomes of inequality, a statistically significant detractor from a nation’s economic health that, according to the OECD, increased after the 2008 global financial crisis? Our current crises (both health and economic) are disproportionately affecting people of certain races and socio-economic groups. Though I’m encouraged by emerging conversations that are both thoughtful and action-oriented, it’s not yet clear whether the pandemic will accelerate or reverse the inequality trend.These questions will demand our attention in the months and years ahead. It is likely that answers to some of these questions will materially affect the trajectory of others. In that sense, the number of possible moves left in our chess match still includes a whole lot of zeroes.Joe Davis is Global Chief Economist at Vanguard.

Oct 09, 2020
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Maximising the productivity and value a finance function provides can be a constant challenge for today’s CFO. Here are five examples of pitfalls that can be successfully navigated to optimise productivity. Increasing regulatory obligations, technological change and the ongoing challenge of attracting and retaining skilled staff have led to finance teams often playing catch up when it comes to adding strategic value to stakeholders within the business.  To compete and thrive in this environment, businesses should ‘rethink’ and optimise their finance and accounting function. That means identifying and addressing some of the productivity roadblocks that exist in almost all businesses – from ambitious, entrepreneurial right through to large corporate, multinational groups.We have outlined the top five productivity pitfalls experienced by many finance and accounting departments – and how you can unblock them.Failure to delegateBuilding a high-performance team and leveraging technologyA report by London Business School found that only 30% of managers think they can delegate well. The reason most managers have trouble delegating isn’t that they doubt the value of focusing more of their time on strategic tasks; it’s that managers don’t trust that their team members can successfully execute some of the non-core tasks that should be delegated.Delegation becomes easier once a strong team with experience and skills has been built. Similarly, many non-core tasks that prevent finance functions performing at a high level can be automated by technology, so a review and adoption of new tools may be necessary to unlock those sought-after productivity gains.Viewing financial data through a reactive lensFocus on extracting and analysing the real-time dataThe finance function of the future won’t be one that places a priority on looking backwards at quarterly or yearly financial reports. The adoption of real-time connectivity and cloud-powered tools have made it possible to monitor and analyse activities in nearly all parts of the business both on the move and as soon as they happen.Having access to real-time data that gives a full view of relationships with suppliers and customers will allow CFOs to have more productive conversations and make informed decisions more efficiently.Not leveraging data analytics and the cloudThe status quo can hold businesses back – look to leverage and embrace the ‘new normal’Many businesses still rely on legacy accounting and financial systems and processes. A reluctance to invest the time and energy needed to adopt new tools can be a significant blocker – but what impact will that have on business’ competitiveness? In an era of disruption, can they afford to stand still?  It’s important to recognise that investments made in learning and implementing a new system or process that helps finance functions operate more efficiently will pay dividends in terms of streamlining operations and decision-making.Failing to maximise existing capabilitiesTake time to fully utilise the functionality of existing toolsFinance functions of today most often have access to tools that can streamline or automate financial processes. These may already be embedded in existing technology tools, but often businesses haven’t the time or the resources to properly explore the full functionality available. Software vendors will continually add valuable features, new integrations and plugins that can further automate processes and eliminate unnecessary manual entries – but is it expected for finance teams to keep up with the updates?Not formally documenting the use of systems and processesTest, test and re-test to improve the ways a finance function performsThe old adage goes “if you can’t measure it, you can’t improve it”. In addition, if businesses fail to document finance and accounting processes, that knowledge could be lost with the individuals in the team should they decide to move on. Taking the time to detail end-to-end processes will allow businesses to spot gaps and identify ways to make workflows more efficient through automation and other technology-driven tools.  This article has been developed by BDO as part of their Rethink framework.

Oct 09, 2020
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With working remotely becoming commonplace, how can we effectively onboard new members of a team in a virtual environment? Judith Kelly gives three tips on how to handle the onboarding process while working from home.  Onboarding has suddenly become an everyday word in the vocabulary of recruitment and now plays an even bigger part of the recruitment process.One of the major cultural shifts has been the move to remote work, as social distancing rules have forced people into working from home. Before the COVID-19 crisis, virtual or remote onboarding was largely reserved for employees with remote contracts or those living in a different country. With remote interviewing and working, this has become a crucial element of our new normal. How, then, do we ensure we successfully onboard new members of a team while working remotely?Finding the right fit is always challenging, but the next hurdle is onboarding a new hire and integrating them into a company. Unfortunately, without the benefits of the water-cooler chats and the coffee machine moments, this can be difficult to achieve. Companies will have to update training and orientation procedures for all new employees now working remotely for the foreseeable future. The basics, however, remain the same. 1. Infrastructure and trainingIt is imperative to provide a new employee with all the tools needed on their first day. Hardware delivered and installed on time, software and access to the right platforms and information required for IT (passwords, anti-virus, etc.) is essential in preparing and welcoming them, showing them you are committed to helping them succeed and you want them onboard. Use interactive training where possible and ensure follow-ups and feedback are made regularly. 2. Communication and connectingCommunicating and connecting people is crucial to successful onboarding. For example, introducing and integrating new employees into the team with one-on-ones, video conference calls to assist in training and introducing company procedures. Assigning a ‘buddy’ will also help integrate them into the community of the business, even if remotely. A buddy will lead by example on communication procedures within the network and what is and what is not deemed appropriate. Great companies have always provided a platform for employees to build collaborative relationships and, even though this is not face-to-face, we still need to build these relationships.3. EmpowermentNew employees will be enthusiastic as they begin their journey. It is critical to get them involved in contributing and collaborating from the outset. People typically want to prove themselves and demonstrate that you’ve made a good decision hiring them. It may be tough to give them an independent project but assigning tasks with the opportunity to engage actively in reasoning, decision-making, and problem-solving shows them a positive early experience to achieving long-term success.Judith Kelly is a Director at FK International.

Oct 09, 2020