Lured by Ireland’s rudely healthy economy and the superior quality of life offered by their native land, an increasing number of Chartered Accountants are choosing to return home to Ireland. Barry O’Leary looks at some of the practicalities involved. Wanting to come home and actually making it happen are two very different things. Many people who yearn to bring up their families in Ireland and have also had the opportunity to do so, haven’t yet made it back. This is usually because of something quite simple, which could have been addressed with some advance planning. The best way to approach this life-changing move is to treat it as a project and plan accordingly. The first stage is to investigate the job market and assess the opportunities that may or may not be there. This is a relatively simple process and a routine scan of recruitment websites, as well as those of reputable recruitment specialists, will give a fair indication of the roles available. This should be backed up with further research to establish the quality of the opportunities. The Leinster Society Salary Survey will give an indication of salary scales, for example. Also, contact friends and reach out to LinkedIn contacts to hear what they have to say about the climate back home. Before you apply… If the results are positive, the next natural step is to start applying for roles. However, a few pieces of the jigsaw need to be put in place first. The first step is to figure out what you are going to do if you do get a job. Clearly, if you are going to start a job in Ireland, you are going to need a place to live, schools for children and so on. Of course, buying a house or even renting one back in Ireland while still living overseas and before you have even landed a new job is an expensive – and possibly unnecessary – step to take. Better to consult with family and friends first and establish if there is a possibility of staying somewhere temporarily, say for three months, while you get settled in the new job and make arrangements for your family to follow you back. That gives you the breathing space to sell up property and other assets overseas while going house-hunting in Ireland. Another essential early step is to speak to the banks about your prospects of getting a mortgage. Having preliminary approval in place will guide the house search. Next is to talk to estate agents and get them looking out for suitable homes. None of this costs money, but it can save a lot of time and heartache in the long run. The other issue to take care of at this point is insurance. Many Irish people returning home are surprised at how difficult, and expensive, it can be to get motor insurance. Shop around the insurance companies to get some prices to avoid nasty shocks later. That can also influence your job search as a company car can suddenly become a lot more alluring. Interview stage The next thing to think about is interview availability. People living in the UK might be able to hop on a Ryanair flight at fairly short notice to attend an interview and be there and back in a day but for those living further afield, more advanced planning is required. One option is to arrange to spend a week at home a month and inform prospective employers of your availability during that time window. Generally speaking, if they are sufficiently interested in you, they will do their best to accommodate you. Having gone through all of that, it’s time for the job hunt itself. This starts with updating your CV and your LinkedIn profile. It might be worth getting advice from a fellow professional or a recruiter back home at this stage. They can help with the design of the CV and what aspects to highlight in the context of the prevailing jobs market. After that, you’ve got to decide on the type of role you’re looking for, and where. Is it practice, industry, or the public sector? If it’s industry, what sector? And where? If it’s Dublin, can you afford housing and can you find schools for your children? You also have to consider your partner at this stage. Will they also be seeking a job when they return home? What area of the country and what sectors best suit them? Dealing with these questions probably requires the assistance of on an Ireland-based recruitment consultant who can help with the job search and move back home.  They can offer independent advice on the process and help ensure that you make the right decisions in all circumstances. The first job offer is not always the best one, and the best paid offer is not always the right one – an experienced consultant can help match the right role to the right person as well as assisting with some of the more practical aspects of the move, such as recommending insurance brokers, mortgage lenders and so on. If you follow this basic roadmap, you will give yourself a much better chance of making a successful move back to the auld sod. Barry O’Leary is the Co-Founder of ACCPRO. Taxing times One of the problems most frequently encountered by accountants returning home is personal taxation. If you want to avoid being subject to Emergency Tax of up to 41%, give your employer your PPS number (Irish people generally have one before returning home) so they can request a Revenue Payroll Notification (RPN) from Revenue. The RPN will show your total tax credits, tax rate band and USC rate band so your employer can make the correct tax deductions from your pay. If you are starting your first job in Ireland, you must register online though Revenue’s myAccount where you can view your personal tax record. You can read more about living and working overseas in Chartered Accountants Abroad, the publication from Accountancy Ireland for Chartered Accountants Ireland members abroad.

More and more people are returning to Ireland having worked abroad for a number of years. More often than not, this process also involves starting a new job and, inevitably, paying Irish tax. With that in mind, this article aims to provide a practical guide to some of the tax and pension issues our members should think about as they plan their return home. By Bríd Heffernan Back to basics First, let us briefly cover some of the basics of the Irish income tax system. Employees pay tax through the Pay As You Earn (PAYE) system which, since 1 January 2019, operates in real time. This means that income tax, pay-related social insurance (PRSI) and the universal social charge (USC) are deducted at source by your employer and subsequently paid to Revenue. As an employee, you can manage your taxes online through Revenue’s MyAccount system. If you have a new job, you will need to register your new role with Revenue in order to be taxed correctly. On your return to Ireland, one of the first practical steps to take is to apply for a Personal Public Service Number (PPSN). As a returner to Ireland, you should already have one but your children (if they were born abroad) or your partner (if he or she is not an Irish citizen) will require one. The PPSN will provide access to social welfare benefits, public services and information in Ireland. Tax residence  On returning home, your liability to Irish tax depends on your residence, ordinary residence and domicile position in Ireland. Residence for tax purposes depends on how many days you spend in the country. Even if you are not actually resident in a particular year, Ireland can still be your ordinary residence as this term refers to the country where you are usually resident over a number of years. The country that is your permanent home is known as your domicile. If you are tax resident in Ireland for a tax year, you pay Irish tax on your worldwide income and any gains you make in that year. Worldwide income is the total income that you earn anywhere in the world. Residence and domicile are taken into account for a number of taxes including income tax, deposit interest retention tax, capital acquisitions tax and capital gains tax. For more information on determining your residence status in any year, visit www.revenue.ie. Tax reliefs You may return to Ireland mid-way through a tax year and therefore, have income on which you may have to pay Irish and foreign tax. In this instance, it may be possible to claim relief from the foreign country if it has a double taxation agreement (DTA) with Ireland. Or, you can avail of a tax relief called “split-year treatment” for the year you return to Ireland. Split-year treatment has the benefit of taxing employment income for only part of a year (any foreign employment income earned before returning to Ireland and becoming tax resident again is not subject to Irish tax), while affording the full range of tax allowances and credits and rate bands of a resident. To avail of this treatment, you will need to contact Revenue in writing. Another relief available to individuals returning home is the Special Assignee Relief Programme (SARP). This provides income tax relief for certain people who are assigned to work in Ireland from abroad up to the year 2020. A number of conditions must be met in order to claim SARP and where you qualify, a proportion of your employment earnings are disregarded for income tax. To claim this relief, your employer must send Form SARP 1A to Revenue within 90 days of your return to Ireland. Social security and pension considerations There may be significant differences between the Irish social security system and the system in the country you are moving from. It is therefore worth familiarising yourself with these differences in order to protect your social security entitlements. In the EU, each country has its own social security laws. However, EU rules coordinate national systems to ensure that people moving to other EU countries do not lose security cover and can amalgamate their contributions from member states when applying for a pension. If you are returning to Ireland from a country within the EU or EEA, you should bring an E104 and U1 form back with you as it will provide details of the insurance contributions you made in that country. Ireland also has bilateral agreements with a number of countries outside the EU including the USA, Canada, Australia and New Zealand. Consequently, contributions paid in these countries can be added to your Irish social insurance contributions. When it comes to protecting your pension contributions made in Ireland or abroad, there are a number of things to consider. While working abroad, you may be able to claim Migrants Members Relief. This provides relief on pension contributions paid to a pre-existing qualifying pension scheme. If you have made contributions to a foreign pension fund while living abroad, it is important to note that the rules for transferring or accessing the pension’s funds when you return to Ireland are usually determined by the foreign country. Each country will have different rules for such transfers, and you should contact your pension administrator in the foreign jurisdiction to discuss the options available to you. In general, Revenue will allow foreign pensions to be transferred to an approved occupational pension scheme or Personal Retirement Savings Account (PRSA) provided a number of conditions are met. Conclusion These are just some of the tax, social security and pension considerations to think about on your return to Ireland. It’s important to be familiar with these issues to avoid situations where you could end up paying double tax and to ensure that you protect your social security and pension contributions. Bríd Heffernan is a Tax Manager at Chartered Accountants Ireland. You can read more about living and working overseas in Chartered Accountants Abroad, the publication from Accountancy Ireland for Chartered Accountants Ireland members abroad.

Caroline McGroary went to Riyadh for four months, but stayed for six years – and her adventure isn’t over yet. How did you end up volunteering to go overseas? In August 2013, while working for Dublin City University (DCU) as a Lecturer in Accounting, I had the opportunity to travel to Riyadh in Saudi Arabia after DCU signed a partnership with Princess Norah Bint Abdulrahman University (PNU). PNU is the country’s foremost female educational institution and the largest women’s-only university in the world, with capacity for 60,000 students. DCU established a division of DCU Business School within PNU, delivering two undergraduate degree programmes in Finance and Marketing and one postgraduate degree programme in Business Administration. Eager to be part of this project, I volunteered as a member of an initial team of four DCU staff who relocated to Riyadh to initiate the collaboration. What did the role entail? My initial four-month appointment was as Programme Director at PNU and I also held the position of Lecturer in Accounting, Finance and Business Strategy. The task of establishing a women’s business school in a foreign country was in many ways similar to a start-up business venture. Leaving the cultural differences and language barrier aside, we assumed responsibility for all business school operations as well as lecturing responsibilities. We were required to train our Saudi academic colleagues and to liaise with the senior management of PNU, on behalf of DCU, on a regular basis. Navigating the challenges of the first semester required immense teamwork and organisation. At the end of the term, I took the decision to extend my contract for the remainder of the academic year. Six years on, having overseen the graduation of over 500 students with DCU degrees, I am still living in Riyadh and embracing the opportunities and experiences that this collaboration continues to offer. What in particular struck you about life in Saudi Arabia? Saudi Arabia is routinely portrayed in mainstream Western media in a negative light, primarily due to its strict legal, religious, cultural and societal norms. However, the experience of living in Riyadh at a time when the country is undergoing dramatic economic and societal change has given me a very different perspective on life here. Through my position, I’ve both educated and worked alongside Saudi women and I’ve witnessed first-hand my Saudi students and colleagues undergo increased empowerment and social participation, contributing fully to the development of their country. How did you benefit as a result? While there are many highlights from my time here so far, there are a number of key experiences that have benefited me both professionally and personally. First, the most notable has been educating young, bright, tenacious Saudi women, which is an extremely rewarding experience. Second, participating in initiatives such as setting up the Irish Business Network in Saudi Arabia (IBN-SA) in partnership with the Irish Ambassador, His Excellency Tony Cotter has served as an important platform for my professional engagement with the Irish business community, the Saudi business community and other communities in the Kingdom. This has led to many other opportunities, such as working with high-profile companies and governmental bodies on projects that have had educational, economic and social impact, with much of this work achieving international recognition. You took up some non-profit work while in Riyadh. What was your experience of volunteering overseas? Since moving to Saudi Arabia, I have actively sought out ways to give back to the local Saudi and Irish communities. I am one of the founding members of the IBN-SA and I volunteer with the local Gaelic Athletic Association (GAA) club (Naomh Alee), teach Irish dance classes, engage in charity events – including the ‘Riyadh Darkness into Light’ event which raised funds for Pieta House in Ireland – and regularly create opportunities for my students to engage in local community events, such as the promotion of physical activity among their local communities and engaging with local charities. What advice would you give someone who is considering moving overseas? The prospect of moving overseas can be very daunting. However, my time in Riyadh has taught me to be open-minded about new experiences and to use challenges as a platform for growth and development. Personally, my time living in Saudi Arabia – one of the most conservative countries in the world – has been the experience of a lifetime. Not only has it allowed me be part of a historical movement centred around the empowerment of women through education, it has also afforded me the opportunity to immerse myself in a new culture, contribute to the local community and to travel extensively. The experience has enabled me to meet people from so many different backgrounds and cultures, which has been an incredible personal as well as professional journey. For these reasons, I’m a strong advocate of gaining international experience and I actively encourage anyone who has this opportunity to embrace it.   You can read more about living and working overseas in Chartered Accountants Abroad, the publication from Accountancy Ireland for Chartered Accountants Ireland members abroad.

Chartered Accountants considering a career abroad can benefit from a number of mutual reciprocity agreements with fellow Institutes worldwide. Chartered Accountants Ireland, through the Common Content Project (CCP), has been working with leading European Institutes to develop a new education benchmark for professional accountants that is fully EU and IFAC compliant and which supports auditor mobility within the EU. Following the agreement of the new benchmark, the Institute’s own education and assessment processes were assessed, confirming compliance with the CCP requirements. If you are a registered auditor in Ireland, you can gain audit rights (and depending on the country, membership rights) through the passing of a local law and tax examination. Further details are available about the project at www.commoncontent.com.   Other agreements include: Access to membership Chartered Accountants Ireland has mutual reciprocity agreements (MRAs) with a number of other leading global Institutes, which allow Chartered Accountants Ireland members to apply for membership of those bodies and allow members of those Institutes to apply to Chartered Accountants Ireland for membership. Applicants to Chartered Accountants Ireland will usually have access to membership without examination. To do so, you will need to contact the relevant reciprocal body and provide evidence of good standing and pay the requisite fee. Retention of membership is a requirement of this process. Practice rights Access to practice rights is not automatic and will normally require the passing of local company law and taxation (or similar) exams. Should you wish to gain practice rights, it is suggested that you should preferably gain rights in Ireland before seeking rights overseas. In those jurisdictions where practice rights and membership are synonymous, an examination must be passed. Audit rights are not automatically covered by these agreements as there can be specific local requirements in some cases.  Irish Chartered Accountants who are planning on gaining audit practice rights should gain Irish audit rights first before leaving home.   Chartered Accountants Ireland has MRAs with the following Institutes: The American Institute of Certified Public Accountants (AICPA)/National Association of State Boards of Accountancy (NASBA). This agreement provides access to membership, practice rights and audit rights subject to members meeting the specific entry criteria and the passing of the IQEX examination. NASBA administers the IQEX and issues the AICPA license; Chartered Accountants Australia and New Zealand (CAANZ, formerly the Institute of Chartered Accountants of Australia and the New Zealand Institute of Chartered Accountants); Chartered Professional Accountants Canada (CPA Canada, formerly the Canadian Institute of Chartered Accountants); The Hong Kong Institute of Certified Public Accountants (HKICPA); The Institute of Chartered Accountants of Scotland (ICAS). No examination is required to gain practice rights); The Institute of Chartered Accountants in England & Wales (ICAEW). No examination is required to gain practice rights; The Institute of Chartered Accountants of Zimbabwe (ICAZ); The Institute of Singapore Chartered Accountants (ISCA); and The South African Institute of Chartered Accountants (SAICA). For more information, contact Paula Dreelan on +353 1 637 7216 or email registry@charteredaccountants.ie. For any technical queries, contact Ronan O’Loughlin, Director of Education and Training at ronan.oloughlin@charteredaccountants.ie or 01 637 7329. You can read more about living and working overseas in Chartered Accountants Abroad, the publication from Accountancy Ireland for Chartered Accountants Ireland members abroad.

Blockchain represents both an end and a beginning for the accountancy profession. By Fearghal McHugh and Dr Trevor Clohessy Transparency can be considered the holy grail of governance best practice. The codes, acts and markets demand it as it enhances the view of corporate transactions, which has in turn affected issues such as environmental and sustainability reporting. Transparency is the core of blockchain, which will affect accountancy while satisfying this core principle and driver of good corporate governance. The difference is that it will not take the blockchain elements outlined below as long to become mainstream as it has taken to impact on environment and sustainability concerns. The consensus is that blockchain and its technologies will change the people skills, the processes, the systems and the structure of accounting practice currently applied to any transactions involved in the recording of any information. This has big implications for those in the sector but, significantly, gives a market opportunity to those who are not. Indeed, this opportunity is further enhanced when artificial intelligence integrates with blockchain. Scale of disruption The potential disruption is on the same scale as Amazon, which competes with all retail shops in the country. The first to market with the ‘Accountazon’ brand, named here first, will dent the current position of large or small practices. Accountazon requires accountants, but the ability to scale, integrate and generate output based on fully transparent and rules-based decision-making at the lower level of processing while, at the upper level, having the decision-making and knowledge base of a collective of highly-paid accountants will affect the accounting industry. This can drive the accounting industry to build on specialisation and value proposition offerings at a higher level than those currently generating income. In other words, intelligent computer systems will do what accountants currently do. The impact will force the industry to seek a new place away from rudimentary transaction-type roles of fundamental audit and tax processes. This will require in-depth knowledge (which artificial intelligence can replace) to pure decision-making; in essence, the better the decision-making, the higher one’s revenue and reputation. The purpose and role of accountants will remain, but will be implemented at a higher knowledge application and analysis level and further away from the current operations position and perspective. A personal approach There is no need for panic yet. As with Amazon, retail shops have continued in business but the pricing, delivery, support, convenience and speed we enjoy from the online retailer may also need to be addressed in the accountancy industry; we need to make accountancy accessible, friendly, convenient, productive and transparent. Either the market or the technology will drive the change, or the accountancy industry will embrace it first and deliver value. A Ryanair approach, encouraging a more direct business model using technology, could be applied in the accountancy industry and is more likely now with blockchain and artificial intelligence. The middleman remains the accountant, however, and if it is deemed that a lot of processes don’t add value, the middleman needs to present a value proposition that cannot be offered by the system itself in order to add future value. In the Ryanair model context, so many travel agents adjusted and seem to have found that personal service, customisation and the time taken to provide a tailored travel package for customers is what many consumers want. The drive for digitisation An example of a driver of this type of change arose earlier this year when the then-head of the IMF, Christine Lagarde, urged central banks to launch digital currencies to satisfy public policy, financial inclusion, security, consumer protection and privacy in payments. While blockchain is mostly linked with cryptocurrencies, digitisation policies embraced by companies like Nestlé, Guinness and Glanbia are being encouraged by stakeholders but embraced in a controlled manner. Blockchain technology is part of the cryptocurrency system that actually worked. It is becoming embedded in many industries from manufacturing to web-based services, facilitating faster and more secure transactions on a growing scale. When companies and consumers have a better, easier, faster and more transparent way to do business, they will select it as time is a critical factor in corporate life. The practical elements and approaches to blockchain, as highlighted below, will be seen by clients as having the potential to reduce charges and the time involved in accountant reviews and advice, which Revenue could see as a means of speeding up returns. Public versus private Blockchain is not a mobile application, a company or a cryptocurrency. In its simplest terms, blockchain is a ledger that records transactions digitally and records details about the transaction. These details are recorded in multiple places on the same network. Blockchain comes in two flavours: public and private. A public blockchain allows anybody on the network to input transactions and data onto the blockchain. No single entity controls the network. A public blockchain operates like Wikipedia in that users have a composite view that’s constantly changing. Bitcoin, the tradename used to represent the familiar digital currency along with another called Ethereum are examples of public blockchains. Private blockchains work in a similar fashion to public blockchains, but with access restrictions that control who has access to the network. One or multiple entities control the network. Think of this in terms of a traditional database system that can only be accessed by specific authorised employees. Two features differentiate blockchain digital ledgers from traditional ledgers. First, the assets and transactions recorded in these digital ledgers are secured through cryptography. As an example, in season four of the Netflix drama, Narcos, Guillermo Pallomari’s financial ledgers records are taken as evidence by the Drug Enforcement Authority (DEA). However, due to the complicated coding system deployed by Pallomari within these financial ledgers, the DEA is unable to decipher the transactions and/or assets in order to use them as evidence. Pallomari holds the encryption key, which would enable the DEA to crack the code. In terms of blockchain, this also holds true. Due to sophisticated encryption keys, the transactions and assets are secure, immutable and unforgeable. Second, blockchain encompasses the disintermediation of traditional financial intermediaries (e.g. banks, brokerages, mutual funds). This disintermediation is made possible by smart contracts, which are complex algorithms that execute the terms and conditions of a traditional contract without the need for human intervention. This leads to a superior ability to prove custodianship and ownership of assets, which could potentially improve efficiency and enhance transparency while also reducing costs and income in the accountancy profession. Complexity and novelty Today, a number of multinational technology organisations enable businesses to implement blockchain practically. For instance, Microsoft currently offers a blockchain development solution that combines the advantages of cloud computing (e.g. virtualisation, scalability, pay-as-you-go pricing model) and blockchain. This service is called Blockchain-as-a-Service (BaaS) and comes with a set of development templates (e.g. smart contract development and integration) that users can deploy and configure with minimal blockchain knowledge. However, prior to diving into the blockchain sea, accountancy organisations should adopt a caveat emptor mantra. History suggests that two dimensions impact on how a new technological trend and its business use can evolve. The first is complexity, which is represented by the level of coordination required by the organisation to produce value with the new technology. The second dimension is novelty, which describes the level of effort a user requires to understand the problems that the new technological trend can solve. The more novel a concept is, the greater the learning curve. Accountancy organisations can develop adoption strategies that map possible blockchain implementations against these two dimensions. Complexity and novelty can vary from low to high in terms of the stage of technology development. For instance, accountancy organisations that are new to the blockchain concept may want to introduce a pilot initiative that is low in novelty and low in complexity. One such initiative could encompass the inclusion of cryptocurrency transactions in a firm’s transactions processes. New skills While blockchain is spread across many systems, it is not public. It protects transactions because they are shared and copied on many parts of storage devices, and would require all parts and copies of the transaction to be amended and/or deleted to have an effect. Deleting a transaction in one place is easy, deleting it from several locations and tracking each one – while not impossible – would require some work. This capability could potentially scare some in that transactions cannot suddenly be erased, but it is encouraging for others. Apply this concept first to the level of payments and receipts and build that up to management reporting, budgets and strategic reports to ensure a higher level of accuracy and clarity. This will eventually lead to a sense of integrity, another governance ideal. With reference to speed, this can move business from reliance on past information to live analysis and if it’s faster, it will be cheaper in the long-run to produce. While a positive for business, it will not require the skill of a finance professional but a computing-finance professional. In a 2018 Irish industry report, one of the authors, Trevor Clohessy, identified that IT/education providers must do more to demystify blockchain and expedite the learning process. The report outlined how the core competencies and skills required for blockchain are broader than the core technology and encompassed skill sets, which fall under the following categories: Foundational technology (e.g. cryptography, public key architecture); Distributed ledger technology (e.g. mining, consensus algorithms); Forensics and law enforcement (e.g. money laundering, dark-net); Markets, economics and finance (e.g. business modelling, cryptonomics); Industrial design (e.g. supply chain, Internet of Things); and Regulations and standards (e.g. smart contracts, governance frameworks). From an accountancy perspective, it is envisaged that certain traditional skills relating to accountancy will be eliminated or reduced (such as reconciliations or provenance assurance, for example). Blockchain transactions will enable new value-adding activities but while the range of extant skills required will change, this change need not be Byzantine. It is envisaged that the markets and regulations categories outlined above will be important for bridging the blockchain literacy gap between various business and technology stakeholders. Looking ahead, accountancy practices can examine their business models in order to derive value from blockchain. Janus, the Roman god, contained both beginnings and endings within him. That duality characterises blockchain too. It will put an end to traditional ways of doing things and usher in a new era for business and for the world at large. It will be divisive, pervasive and transformational all at the same time, and will encourage accountancy professionals to look ahead and not base their operations and decision-making on past data. The blockchain future is one with present and predictive transacting data systems with in-built transparency and integrity.   Fearghal McHugh is a lecturer in Chartered Accountants Ireland and GMIT. Dr Trevor Clohessy is a researcher and lecturer in GMIT.

Unconscious bias isn’t going away – and neither is the pressure for diverse and inclusive workplaces, writes Dr Annette Clancy. Companies are under increasing pressure to improve gender equality, level the pay gap and generally change their approach to workplace inclusion. Part of this demand stems from equality legislation, but there is also growing public pressure to act. However, research tells us that we prefer to be in the company of people who are similar to us. We assume that we will have more in common, that we will be understood and liked, and that there will be minimal conflict. Of course, most of these assumptions are in the realm of fantasy – we all know people who are very similar to us but with whom we have fractious relationships. We also assume that the opposite will be true when it comes to people who are dissimilar to us. Consider, for example, the many stories in the US media of white people calling the police to complain about black people going about their business in their neighbourhoods. Head over heels? Freud went one step further and told us that the relationship between leaders and followers was like the act of falling in love or the state of trance between hypnotist and subject. What Freud was getting at was that we are unconsciously predisposed (in our personal and work lives) to choose people with whom we have a strong emotional attachment. At first glance, none of that makes for very good practice when it comes to increasing diversity, improving recruitment practices or searching for a new job. Hiring the most qualified candidate based on their CV and how they interview for a position seems straightforward enough, but it isn’t just what’s written down or their skills that will always convince the panel to appoint a candidate. Biases based on gender, race and other factors can present unconsciously and influence the decision, even when the panel has the best of intentions. Quick judgements Unconscious bias refers to a bias that we are unaware of and is out of our control. Our brain makes quick judgements about people and situations, and our culture, experiences and background influence these judgements. Everyone has unconscious bias and although training can increase awareness, research suggests that it has a limited effect on behaviour. One of the reasons why training is limited in its effectiveness is because the bias is ‘unconscious’. One afternoon’s worth of instruction is not going to eradicate a lifetime and a society-worth of unconscious programming. What has shown some promise is holding managers, teams and companies to account for the decisions they take. Other strategies include regular discussions on bias, making it an ordinary reflection point and not a ‘once-off’ conversation that is forgotten as soon as it happens. A good starting point for discussion is Harvard’s Project Implicit Tests, which will give you immediate feedback on your biases towards a wide range of issues. Mitigating bias Biases can affect your expectations of different groups. In hiring processes, it’s important to ask if you hold male, female or non-binary candidates to different standards. Assessing candidates ‘blind’ by concealing their name, for example, is another way in which organisations can mitigate bias. Likewise, as a jobseeker, do you have biases towards particular companies that are out of your conscious awareness and may be hindering your search? Biases can also affect how you manage your staff and may be a contributory factor as to why you retain or lose staff. Do you, for example, welcome challenges to your management style? Is it possible that you harbour different expectations of male and female staff members? How open are you to questioning your own unconscious bias? Unconscious bias isn’t going away, and neither is the pressure for diverse and inclusive workplaces. Bringing both of these topics right into the mainstream might be the first step towards having the conversation.   Dr Annette Clancy is Assistant Professor at UCD School of Art, History and Cultural Policy. Annette’s research focuses on emotions in organisations.

Sharon Cunningham ACA decided to co-found Shorla Pharma as an answer to her need to do something meaningful. Now, this women-led company is working towards bringing oncology therapies to global markets. Name: Sharon Cunningham Age: 34 Title: Co-founder, Shorla Pharma From: Waterford Hobbies: Running, gym, fashion and reading Favourite quote: ‘If you’re offered a seat on a rocket ship, don’t ask what seat! Just get on.’ - Sheryl Sandberg Why did you decide to become an entrepreneur? I found myself inspired and fascinated by other entrepreneurial journeys, particularly since joining  an early-stage pharmaceutical company post-training. I was motivated to do something meaningful and purposeful; to have a wider impact and create positive change, and I’ve always had an appetite for risk. I did an MBA at UCD Michael Smurfit Graduate Business School and, upon graduating in 2015, a colleague and I began planning Shorla Pharma. We now have a pipeline of oncology products for global markets that deliver a major contribution to patient care and, ultimately, enhance patient outcomes.  Describe your typical day. There is no such thing as a ‘typical day’ for me anymore, and that is one of the aspects that I enjoy the most. My work is extremely varied. If I’m in the office, I can be working on anything from business development to product development to financial modelling. I’m in Dublin at least one day a week for conferences and meetings, and I travel frequently, particularly to the US to engage and interact with key opinion leaders, clinicians and the US Health Authority given that the US is a major market for Shorla Pharma.   What do you find most challenging? The business is progressing rapidly and it’s increasingly difficult to find time to reflect. Due to the fast pace, decisions need to be made quickly and change must be embraced regularly. I often take guidance from my intuition now, and that’s a big change given my analytical background. As a business owner, what traits do you value most? When selecting a consultant, employee or service provider to work with, I look for enthusiastic individuals who can demonstrate a desire to succeed – preferably with a proven track record. Organisational fit is essential; all the smarts in the world won’t make up for a personality that doesn’t fit the existing dynamic. Most importantly, I look for common sense – people who are pragmatic and possess a ‘can-do’ attitude. What is your best piece of business advice? Don’t overlook the basic fundamentals that a company needs to function. Create agile business systems, cover your legal and taxation bases, and pay close attention to the numbers. Above all, don’t forget to enjoy the journey and remember, there are rarely traffic jams on that extra mile.

When in a professional crisis, it’s difficult to see the wood through the trees. Resolving this inflection point as a business leader can take a different set of skills not yet in your arsenal, explains Brian Fowler. An inflection point is a period when an organisation must respond to disruptive change in the business environment effectively or face deterioration but, in practice, it’s a rare but decisive moment that marks the start of significant change – often in crisis. These moments not only affect organisations and industries, but they also impact on careers, too. At an inflection point, we are in a situation where the expectations placed upon us have so fundamentally altered because of the changes in the profession or working environment that if we don’t adapt, ourselves or the business will fail. When managing senior appointments, I am in contact with executives facing career challenges every day. The different types of situation are so vast that I couldn’t outline them easily, but pending redundancy after being a part of an organisation’s long-term senior leadership team or an executive transitioning from the safe zone of their current position to a different organisational role are not uncommon. If it’s a job move, many recruiters will introduce you to great opportunities.  However, it’s important to remember that a recruitment consultant’s primary task is source a candidate for a particular job and requirement for their client. If you are at a career inflection point, not only do you need a job, but you need proper career advice.  Who can help? There is a saying “That for every will, there is a relative!” and, in business, for every problem, there is an advisor, both competent and incompetent. It’s human nature to start the discussion with people within your network, whom you feel could be a good advisor. Your family and friends know you, but do they understand your business strengths and achievements, and how you have coped and tackled challenges?  Soundboarding with your peers seems intuitive but is often detrimental. Similarly, there are brilliant people in academia, but they may not have been at the coal face of business. It would be best to talk to executives who have a successful business track record, and whose only objective is to support and advise you.  Finding the answers When a professional hits a career inflection point, feeling inadequate is not uncommon. As a business leader, you may find that the skills and training that have brought you to this point in your career may be insufficient to bring you into the next development phase. The approach you will want to take may be a continuation of how you have resolved usual day-to-day business issues in the past, but you must remember that you are at an inflection point, and possibly heading into unchartered territory. Professional support and guidance will pay dividends.  Working with an executive coach can be an eye-opening experience. Great coaches are masters at asking questions that help them understand exactly what you are grappling with, but more importantly, they will help you view your situation through a new lens. Coaches don’t have the answers, but their questions can guide towards the answer that will best suit you.  People experiencing a dramatic change, in work or life, tend to keep asking themselves the same questions over and over. These questions are within their comfort zone, but the inflection point problem needs a different approach. The executive needs to start asking a different set of questions to come up with a plan to resolve the situation. An executive coach is the person who can teach you what questions to ask. Interacting with a coach should not only help you develop tactics to overcome today’s issues but help you gain skills to overcome future challenges. You will need to come up with better answers when facing professional challenges, and those answers will come more easily if better questions inspire you.  Brian Fowler is the Founder and Managing Director of financial recruitment specialists, Accountancy Solutions.

David Duffy highlights the latest VAT cases and discusses recent VAT developments. Two-tier VAT registration In eBrief 114/19, Revenue announced the introduction of a “two-tier” VAT registration process which took effect from 15 June 2019. The purpose of this change is to help speed up VAT registration applications for most businesses while also protecting against fraudulent traders obtaining VAT numbers that would allow them to buy-in goods or services from abroad VAT-free. Under the new system, applicants must specify whether they are applying for a ‘domestic-only’ or ‘intra-EU’ VAT registration number. Businesses that trade in goods or services with counterparties in other EU member states should apply for intra-EU registration. Other businesses should apply for domestic-only status. It is our understanding that domestic-only and intra-EU numbers will follow the same format. However, only intra-EU numbers will be valid on the EU’s VAT Information Exchange System (VIES) website. The VIES website is intended to allow suppliers to validate their customers’ VAT numbers for the purpose of intra-EU trade. Domestic-only VAT registration numbers will not be valid on the VIES website. For new applicants to obtain an ‘intra-EU’ VAT registration, additional information will be required, including details of due diligence undertaken to establish whether their suppliers are genuine traders and the arrangements for the cross-border transport of goods (if applicable). Less information will be required for domestic-only applicants, but these applicants may at a later time apply for intra-EU status, at which time they will be required to provide additional information on their intra-EU activities. All VAT registrations in effect prior to the introduction of the two-tier system will be automatically treated as having intra-EU status and there is no requirement to contact Revenue in this regard. Further changes are expected to be introduced in September 2019 to accelerate the processing times of VAT registration applications. EU VAT updates Recovery of VAT incorrectly charged In the case of PORR Építési Kft (C-691/17), the Court of Justice of the European Union (CJEU) confirmed that the Hungarian tax authorities were entitled to disallow a claim by the taxpayer, PORR, in respect of VAT incorrectly charged to PORR by the supplier of motorway construction services. This was on the basis that PORR should instead have self-accounted for VAT under the reverse charge procedure. The CJEU confirmed that in such circumstances, the customer must pursue the supplier for a reimbursement of the VAT incorrectly charged in the first instance. It is only if reimbursement from the supplier is impossible or excessively difficult (e.g. if the supplier is insolvent) that the customer can address their application to the relevant tax authority. However, the CJEU confirmed that the tax authority is not required to ascertain whether the relevant supplier can adjust the VAT before rejecting a claim by the customer for a deduction of VAT incorrectly charged. This case highlights the importance of adopting the correct VAT accounting mechanism in order to claim recovery of the VAT arising on the supply. VAT bad debt relief In A-PACK CZ case (C-127/18), the CJEU held that a tax authority cannot deny a supplier’s claim for a VAT adjustment on bad debts, simply as a result of the debtor ceasing to be VAT registered. The VAT legislation in the Czech Republic appears to have included a condition that a VAT bad debt adjustment could not be made in these circumstances. In addition to confirming that this condition was incompatible with EU VAT law, the CJEU went on to say that the fact that the customer is no longer VAT registered because of insolvency proceedings is, in fact, supportive of the position that it is a bad debt and that the supplier should, therefore, be entitled to an adjustment for the VAT previously remitted on those supplies. There is no equivalent condition in Irish VAT law, but confirming the principle of an entitlement to claim VAT bad debt relief when it is clear that the debt will almost certainly not be collected is helpful. VAT exemption for granting of credit Vega International Car Transport and Logistic (C-235/18) was an Austrian company which had a number of subsidiaries throughout the EU. Vega provided fuel cards to drivers employed by its subsidiaries to allow them to purchase fuel for the purpose of providing transport services. Vega paid for the fuel purchased with the fuel card and at a later date, on a monthly basis, passed on the cost of the fuel to its subsidiaries plus a surcharge. Accordingly, Vega allowed its subsidiaries to obtain the use of the fuel but only pay for that fuel at a later date, in return for an additional charge.  Vega sought to argue that this should be considered a VAT-exempt service to its Polish subsidiary of the provision of credit. The CJEU agreed with this analysis as it concluded that Vega had not bought and resold the fuel, but had instead provided it subsidiaries’ employees with an instrument to allow them to purchase fuel. The judgment reconfirmed a principle established in other cases that the VAT exemption for the granting of credit is not limited to loans or similar products granted by banks and financial institutions, but can in principle apply to other circumstances where an additional charge is levied for deferred payment. VAT recovery on investment activities The University of Cambridge case (Case C 316/18) asked whether there is any entitlement to recover VAT connected with activities that are outside the scope of VAT, if those activities could help generate funds for other VATable activities.  The University in this case provides VAT-exempt educational services as well as VATable services, such as commercial research, and therefore has a partial VAT recovery position on its general overhead costs. However, the University also received donations and endowments, which it invested through a fund. It was accepted that this investment activity was non-economic activity, i.e. outside the scope of VAT. The CJEU was asked whether the University could recover VAT on the management costs of the fund at its general overhead recovery rate.  The CJEU concluded that, based on the facts of the case, there was not the necessary direct and immediate link between the fund management costs and VATable output activities, and therefore the costs did not form part of the University’s overheads. Consequently, as the fund management costs instead related to an activity that was outside the scope of VAT, there was no entitlement to recover VAT on the fund management costs. David Duffy FCA, Chartered Tax Advisor, is a VAT Partner at KPMG.

The new rules provide an opportunity  to review your client’s overall inheritance tax position, the terms of their will, and relevant estate planning opportunities. By Fiona Hall The Residence Nil Rate Band (RNRB) was introduced on 6 April 2017, so many of us are just starting to appreciate the intricacies of the complex legislation. This article will summarise the key points regarding the RNRB, including when it does and does not apply, what property can qualify, factors affecting the amount of the allowance, and some planning points. References to spouses are to include civil partners. The RNRB is an additional inheritance tax-free allowance where a home passes on death on or after 6 April 2017 to direct descendants. The legislation is found in the Inheritance Tax Act 1984 Section 8D-8M, with HMRC’s helpful guidance contained in its Inheritance Tax Manual. The RNRB applies whether the home passes on death via the will, under the intestacy rules or by survivorship. It generally does not apply to a lifetime gift of the home (subject to the downsizing rules, highlighted later) unless the gift with reservation rules apply. Then, for the purposes of the RNRB, the home is treated as passing on death and the allowance can apply. The legislation refers to a “qualifying residential interest”, which is an interest in a dwelling house that was the person’s residence at a time when the person’s estate included that property. A person may own multiple properties on death. In this scenario, the personal representatives may nominate which is to be taken into account for the RNRB and it can be a property let out at the time of death, so long as it has been the deceased’s home at some stage during ownership (i.e. not a buy-to-let). There is no minimum period of occupation or ownership of the property and no garden/grounds limitation applies. It can be a home outside the UK so long as it is within the charge to inheritance tax. The RNRB is being phased-in over four years starting at £100,000 in the 2017/18 tax year and increasing by £25,000 each year until 2020/21 when it will be £175,000. The RNRB is not aimed at the very wealthy and it is tapered where the net value of an estate exceeds £2 million. The “net value” is the market value of the assets less liabilities at death, but before any reliefs or exemptions are deducted. It does not include the value of any gifts made in the seven years prior to death. Where taper does apply, the RNRB is reduced by £1 for every £2 above the threshold. For clients whose estates are above the taper threshold, lifetime gifts may be considered. Married couples should consider alternative options if leaving their entire estate to the survivor on first death will lead to tapering. The allowance due on a particular estate is the lower of the RNRB and the property value (after deduction of any secured liabilities and any reliefs, such as agricultural property relief). As with the nil rate band, the legislation provides that should one spouse not utilise their RNRB, on making the appropriate claim, the surviving spouse’s RNRB is increased by the unused amount (using rates on the second death). A transfer of unused RNRB is available regardless of: When the first death took place, including deaths before 6 April 2017; How much the first estate was worth (however, this may result in tapering where the first estate exceeds the taper threshold); and Whether or not the first estate included a residence. A point of practical importance when calculating the inheritance tax liability is that the RNRB applies in priority to the nil rate band. This is relevant in determining whether there is a claim for a transferable nil rate band and/or transferable RNRB by the surviving spouse. To qualify for the RNRB, the home must be “closely inherited” (i.e. generally that the property passes to direct descendants such as a child/grandchild of the deceased, including step-children and foster children). However, the legislation also extends to spouses of direct descendants, including their widows/widowers, provided remarriage is not a factor. The RNRB does not apply if the home passes to others, including parents, siblings, nephews and so on. Should the home pass into a trust for direct descendants, eligibility to the RNRB will depend on the trust terms. Trusts under which a direct descendant has a qualifying interest in possession will qualify, as will a bereaved minor or 18–25 trust. However, a discretionary trust will not. The home does not have to be a specific legacy in the will; it can pass through the residue. However, where residue passes to qualifying and non-qualifying beneficiaries, HMRC treats each as inheriting a proportion of the home and this may lead to a restriction to the available allowance. A deed of variation could be considered in such circumstances. If the maximum RNRB is not being utilised, you should consider whether the downsizing provisions apply. These complex provisions are designed to replace the RNRB lost due to a disposal of the original home. To qualify for a “downsizing addition”, the deceased must have disposed of a home on or after 8 July 2015 and either moved to a less valuable property or ceased to own a home, and some of the estate must be closely inherited. In conclusion, these relatively new rules provide an opportunity to review a client’s overall inheritance tax position, the terms of their will, and any relevant estate planning opportunities.   Fiona Hall is Principal, Private Client Tax Team, at BDO Northern Ireland.

Jonathan Ginnelly outlines the main stamp duty considerations for those acquiring commercial property in the Republic of Ireland. The stamp duty rate on non-residential property in the Republic of Ireland was increased to 6% in Finance Act 2017. Since this rate increase, stamp duty has become a real and significant cost when it comes to property acquisitions and, in some cases, it can be a deal-breaker. While stamp duty is a cost for the purchaser, the increased rate will inevitably have an impact on the purchase price paid to the vendor so as to manage the overall cost of the acquisition. Specific provision was also introduced to ensure that the increased rate also applies to certain property holding entities, such as companies, which might have been used to transfer property indirectly to avail of lower stamp duty rates. In addition to introducing the higher rate of stamp duty on non-residential property, Finance Act 2017 introduced a new provision to allow for a partial repayment (up to two thirds) of the stamp duty paid for land that is to be developed for residential purposes. This article will look at where the 6% rate can apply to property holding entities and provide a brief overview of the refund scheme for relevant residential developments. Property holding entities Where property is held through a company (including foreign companies), a partnership or an Irish Real Estate Fund (IREF), the higher rate of stamp duty (6%) can apply on the transfer of shares, interests or units of such entities. The higher rate should only apply in the following circumstances: Where the property was acquired by the entity with the sole or main objective of realising a gain on disposal; Where the property was, or is, being developed with the sole or main objective of realising a gain on disposal when developed; or Where the property was held as trading stock. Where one of the above conditions is met, the higher rate will apply on the transfer of shares, interests or units – but only where such a transfer results in a change of control, either directly or indirectly, over the immovable property. In addition, any contract or arrangement resulting in a change of ownership and control which might not ordinarily be ‘stampable’ will also be subject to the higher rate. Where minority interests are being transferred, such that control does not change, the higher rate should not apply. However, attempts to transfer several minority interests to a person or persons acting in concert will not escape the provisions. The provision should not apply to shares in companies that hold property where the property was not acquired for the purpose of realising a gain on disposal, for development purposes, or held as trading stock. For example, companies owning and operating a hotel or nursing home, or property rental companies (where the property was acquired for the purpose of generating rental income) should not be caught by the provision. Stamp duty refund scheme To encourage the development of residential property, a refund scheme was introduced in tandem with the increased rate to effectively reduce the 6% rate by two-thirds where the land acquired is to be developed for residential use. When a greenfield site or a site with existing non-residential property is purchased for development, this would not be considered “residential” property at the date of acquisition and, as such, is subject to the 6% rate. However, post-acquisition, a refund of up to two-thirds of the stamp duty paid may be available where the property is to be developed into residential units. Such developments can be carried out in either a single phase or in multiple phases. The refund (subject to a number of conditions) is available once construction operations on the residential development have been commenced pursuant to a commencement order issued by a relevant building authority. A phased development will have a number of commencement notices attaching to the various phases of construction. The key points to remember are: The first phase of construction operations must commence within 30 months of the date of execution of the instrument of transfer; The refund for a phased development can be claimed on a phased basis, or on completion of the entire residential development; On a multi-phase development, separate commencement notices will be required for each phase; There is a two-year time frame for completion. This two-year period runs separately for each phase; and If the residential development is not carried out in a phased manner, the full two-thirds refund can be claimed following commencement of construction operations – but the entire development must be completed within two years of the commencement notice. A refund claim for each phase can be made after the issuance of the relevant commencement notice and once construction operations have commenced. The refund will be for the proportionate amount of stamp duty relating to that phase. In a multi-phase development, there could be a number of phases commencing and finishing at various stages throughout the overall development. It is important to bear in mind that the 30-month time period in which the developer must commence construction runs from the date of execution of the instrument of transfer. If the development is carried out in phases, the legislation states that the construction operations in respect of the first phase must be commenced within 30 months of the date of the instrument of transfer. The last commencement notice and respective construction operations must commence before 31 December 2021 in order to fall within the scope of the relief. As such, the latest possible date for completion of qualifying construction works is 31 December 2023. Given the very specific timeframes involved, any development needs to be carefully managed to ensure all relevant dates are complied with. If any condition or timeframe is breached, a claw back of the refund can arise, leaving the taxpayer open to additional costs such as interest. Practical issues in claiming the refund Since the introduction of the refund scheme, certain practical difficulties have arisen in the refund application process. The stamp duty return may be filed by the solicitor dealing with the property conveyance, for example. However, when it comes to the refund scheme, taxpayers may opt to use the services of their tax advisor. In such cases, the advisor must liaise with Revenue to have the stamp duty records for that particular case transferred to the advisor’s ROS certificate. This can take some time to arrange, resulting in delays in the issuance of refunds. Where there are critical cash flow issues with a development and the taxpayer is relying on the stamp duty refund for financing purposes, early engagement with the tax advisors and Revenue is advisable. In conclusion, given the growth in property prices over the last number of years, the increased stamp duty cost now constitutes a significant part of the financing of acquisitions and developments. Accordingly, care should be taken to ensure that acquisitions and related development operations are structured so as to avail of the residential refund scheme where appropriate.   Jonathan Ginnelly is Tax Director at Grant Thornton Ireland.

The digital VAT quarterly deadline bites for the first time. On 7 August, the first quarterly return deadline for businesses mandated to meet the requirements of Making Tax Digital (MTD) for VAT will arrive for those businesses with a VAT return period that ended on 30 June 2019. Businesses must use MTD for submitting VAT returns if they are VAT-registered and have taxable turnover exceeding the VAT registration threshold (currently £85,000). The first return period beginning on or after 1 April 2019 must meet the requirements of MTD. Some more complex businesses have been given an extension until 1 October 2019. Not only does the business have to use functional compatible software to submit VAT returns, but the business must also now keep and preserve certain digital records. A year-long ‘soft landing’ period will apply during which HMRC will accept the use of ‘cut and paste’ as a digital link, but only if a digital link hasn’t been established between software programs. Now that the first returns are with HMRC, what will its response be? We’ve heard that HMRC will apply a light touch approach if a business “does their best to comply” with the core requirements; only in those instances will no filing or record-keeping penalties be issued. What will this light touch approach look like and for how long will it last? These questions are yet to be addressed. We would like to hear how your first MTD submission went. Contact leontia.doran@charteredaccountants.ie to tell us. Leontia Doran is UK Taxation Specialist at Chartered Accountants Ireland.

While Alternative Performance Measures have enjoyed a rising profile, it would be folly to think that IFRS financial reporting has diminished in value. By Jamie Leavy Today’s world is fast-paced and what was the norm yesterday, in certain cases, can seem to be redundant today. We are living through a technology revolution, which has changed the corporate world unrecognisably from that of five years ago. One of the major changes is the exponential growth in the availability of real-time data that is providing existing and potential investors, lenders and other creditors (users) of companies with more valuable sources of information than ever before. This has coincided with the proliferation of Alternative Performance Measures (APMs), which provide users with information on a company’s performance and financial position. In 2016, the European Securities and Markets Authority (ESMA) released a paper on APMs that defined an APM as “a financial measure of historical or future financial performance, position or cash flows of an entity which is not a financial measure defined or specified in the applicable financial reporting framework”. APMs are commonly disclosed outside of, or as a supplement to, a company’s annual financial statements. These developments have led to a number of commentators suggesting that IFRS-based financial reporting is now of little importance and is seen as out-dated to users. It is suggested that users’ interest now focuses predominantly on APMs and non-financial information within annual reports and other announcements to provide them with an understanding of a company’s performance and financial position in order to make future investment decisions. However, before the preparers and users of financial statements place their IFRS Standards book in the nearest recycling bin, I would suggest caution in both solely relying on APMs for decision-making and diminishing the importance IFRS financial reporting provides to users. IFRS reporting Given the vast increase in information available to users, it would be somewhat naïve to expect IFRS financial reporting to have sustained its importance on a relative basis. It is logical that users will make use of APMs when predicting how a share price might move. These measures act as an important tool in deciding whether to hold, sell or buy shares in a company. However, these predictions depend heavily on one condition – the current share price being correct. This can only be the case if the underlying IFRS-based financial information is calculated consistently with other companies and is materially correct. Therefore, IFRS-based reporting, especially within the audited financial statements, remains a crucial element in the user’s decision-making process. The benefits of IFRS Comparability: financial reporting under IFRS provides a high level of transparency by enhancing the global comparability of companies’ financial statements. Users can easily compare a company’s performance and financial position to that of domestic and overseas competitors as well as to the prior year’s figures. It also provides economic efficiency by helping users identify opportunities and risks globally. It facilitates the comparison of potential investment opportunities in numerous companies globally, safe in the knowledge that the figures of each company are based on identical, sound and clearly defined accounting principles. IFRS creates a common accounting language. This level of transparency and comparability is not achieved by APMs, as they are not uniformly applied and are often uniquely adjusted at the individual company level. Not only is there a difficulty for users in comparing performance measures of different companies, it is similarly problematic to compare the current and prior year APMs. This is as a result of the various adjustments that are included or excluded in the calculation year-on-year. Accountability: the use of IFRS in financial reporting strengthens accountability by reducing the information gap between users and management. IAS 1 requires that all significant management judgement and estimates used in calculating IFRS amounts be explained within the notes to the financial statements. This ensures that users have information that provides them with an understanding of any adjustments or subjectivity involved. On the other hand, the major risk of APMs, and the reason for such regulatory interest, is the lack of accountability. In many cases, APMs lack order and structure and there is widespread concern about the potential misuse of these measures by management.   Yes, when used appropriately these measures can provide users with valuable information. However, APMs can potentially be utilised by management to adjust important figures – such as profit and revenue, for example – to show a more positive figure than the IFRS-based equivalent, or be used to ignore ‘inconvenient’ expenses by excluding them from the calculation. This has led to instances where, for example, companies have disclosed adjusted earnings figures as a positive highlight in announcements while the IFRS-based equivalent figure is actually a loss and is disclosed outside the highlights section. Further cases have been noted where a company discloses an APM in, for example, an unaudited preliminary announcement, but this measure is subsequently not repeated anywhere in the financial statements. In both examples, users need to exercise caution in interpreting these measures. They should closely analyse the adjustments being made and the associated reasoning. APMs – not all bad The intention is not to downplay the positive role that APMs, when used appropriately, can play. APMs are an important element in the communication between a company and its users. They can enhance financial analysis by segregating the effects of items that do not support an understanding of historical or future trends, cash flows or earnings. To ensure that APMs are credible, however, they should supplement the IFRS information in financial statements rather than compete with them. This requires a level of discipline regarding measurement and presentation. Working in harmony While I disagree that IFRS reporting is no longer of prime importance to users, there is room for continued improvement. Nowadays, users want all available information to better explain and understand performance; this is one reason why APMs have risen in popularity. The IASB has acknowledged that improvement is required and it is currently working on a Primary Financial Statements project. The aim is to provide better formatting and structure in IFRS financial statements, with the primary focus on the income statement. It has been suggested that this project will lead to additional subtotals, similar to current common APMs such as operating profit and EBIT, with more specific classifications of items being introduced. This should create more discipline around APMs by providing more reconcilable line items in the financial statements. The IASB has also suggested that it may require preparers to explain and reconcile APMs in the notes of the financial statements, which will provide users with a better understanding of the measures and lead to the measures being subject to audit. This project has the potential to improve IFRS-based reporting further and provide a defined and trusted link between financial reporting and APMs. It is unknown when, if any, changes from this project are to be implemented. However, in 2016, ESMA released Guidelines on Alternative Performance Measures. These guidelines are not intended to eliminate the use of APMs but instead, to ensure that APMs clarify rather than obscure the financial performance and position of a company. The prevailing principle of the guidelines is that APMs reported outside the financial statements must be consistent with the information disclosed within. The guidelines provide the opportunity for a company to present APMs while safeguarding against the manipulation of results by requiring that APMs be presented in a clear and transparent manner. The guidelines include 48 paragraphs of detail regarding the presentation of APMs, but the main aspects are as follows: APMs should be meaningfully labelled and defined; The purpose of the APMs should be clearly set out; Comparative data should be provided for all APMs; APMs should not be displayed with more prominence, emphasis or authority than measures directly stemming from the IFRS-based financial statements; Clear reconciliations should be given; and Unless there is a good reason for change, the presentation of APMs should be consistent over time. IAASA has received a number of undertakings in relation to the above aspects since the guidelines were published. Furthermore, IAASA has published a number of thematic reviews in relation to the use of APMs, namely: Alternative Performance Measures – Thematic Survey (September 2017); Alternative Performance Measures – A Survey of their Use Together with Key Recommendations: An Update (January 2015); and  Alternative Performance Measures – A Survey of their Use Together with Key Recommendations (November 2012). Conclusion The substantial increase in information available to users has meant that IFRS financial reporting is no longer the only reporting type available. The use and prominence of APMs has increased over the last five years; however, IFRS financial reporting is still as important as ever in the user’s decision-making process. The aim of every company should be to provide as much relevant and reliable information to users as possible. To achieve this, APMs will play an important role – but only when used appropriately. To ensure appropriate use, both APMs and IFRS-based reporting should work together to provide an overall view of the financial performance and position of the company. The ESMA’s guidelines will be critical in realising this goal – if companies follow the guidelines, the combined information within the financial statements should be defined, clear and reconciled in order for users to grasp and gain value from every page. Users will then benefit from the comparability and transparency that IFRS offers, supplemented by additional valuable information in the form of APMs.   Jamie Leavy ACA is a Project Manager in IAASA’s Financial Reporting Supervision Unit.

Paula Nyland considers how Chartered Accountants involved in the third sector can improve transparency and prosperity to the benefit of charities and society at large. The third sector on the island of Ireland impacts directly or indirectly on the work of every Chartered Accountant, whether as a director/trustee, audit practitioner, employee or volunteer. In the Republic of Ireland alone, the sector includes 9,500 non-profits that are incorporated as companies, more than 4,000 primary or secondary schools, and 800 friendly societies, co-operatives, trade unions, professional associations, political parties or charter bodies. Another 15,000 or so are unincorporated associations, clubs and societies. Chartered Accountants are critical to supporting and directing this sector, and it’s important that they are aware of some of the impacts of changing regulatory conditions on their practice.  Greater financial transparency and accountability Since 2014, when it was established under the Charities Act, 2009, the Charities Regulator in the Republic of Ireland has been working to bring greater public transparency and regulatory accountability to the work of the charity sector – about one-third of all non-profits. The Regulator now plans to introduce new regulations that will clarify the reporting requirements for charities in the form of an Irish version of Charities SORP. Charities SORP is a module of FRS 102, which provides guidance on financial accounting and reporting for charitable entities. It is currently mandatory for UK charities, but only recommended for charities in Ireland. Based on our analysis of all of the financial statements filed by Irish non-profits since 2015, Benefacts has discovered that just 12% of Ireland’s incorporated charities currently file financial statements using Charities SORP on a voluntary basis. This will change when the forthcoming regulations are introduced. All larger incorporated charities (more than €250,000 in income or expenditure) will be required to meet these higher standards of disclosure, and will no longer be permitted to file abridged accounts. Currently, the level of abridgement in charities’ accounts here is running at 37%, and this is something the Charities Regulator has repeatedly spoken out on – most recently after the launch of Benefacts’ Sector Analysis Report in April 2019. For the audit profession, there is a clear need to become familiar with these reporting standards, because the question is no longer whether Charities SORP will become a requirement for larger charities in the Republic of Ireland, but when. Guidelines on fundraising and internal control Even in advance of the new regulations on financial reporting, the Charities Regulator has been active in setting standards for the charity sector, with guidelines for fundraising from the public issued in November 2017 and a governance code issued at the end of 2018. These measures, coupled with the Internal Financial Controls Guidelines for Charities, have created a strong foundation for control within the regulated charity sector, in particular for the people serving on the boards of charities and non-profits. VAT repayment scheme  Elsewhere in Government, there have been measures to respond to campaigns from within the sector. Following years of lobbying to change the VAT regime for charities, Government introduced a new scheme that has made €5 million available for recovery annually by charities against VAT paid from non-statutory or non-public funds for costs after 1 January 2018. The deadline for 2018 claims was 30 June 2019. DPER Circular 13 of 2014 Without having the full force of regulations, the standards for financial disclosures promulgated by the Department of Public Expenditure and Reform (DPER) nonetheless deserve to be more widely understood by the accountancy profession. Circular 13 of 2014 is the most important statement of the disclosure standards that are expected of all entities receiving State aid, and it is the responsibility of every government funder to ensure that these are being followed. They set out the requirements for reporting every source of government funding, the type of funding provided (loan, current or capital grant, service fee), the purposes of the funding and the year in which funding is being accounted for. Abridged accounts do not meet the standards of DPER 13/2014, nor do accounts prepared using the new standard for micro-enterprises, FRS 105. FRS 105 (micro entities) When the Companies (Accounting) Act 2017 was commenced on 9 June 2017, it introduced the concept of the Micro Companies Regime, which is provided for in Section 280 of the Companies Act 2014. This allows smaller companies (with two of the following conditions: turnover of €700,000 or less, balance sheet total of €350,000 or less, and no more than 10 employees) to prepare financial statements under FRS 105 instead of FRS 102. FRS 105 provides for minimum disclosures: no directors’ report, no requirement to disclose directors’ remuneration, no disclosure of salary costs or employee numbers. In 2017, 5% of non-profit companies reported to the CRO using this standard, including some that receive funding from the public or from the State.  Charities in the UK are not permitted to report using FRS 105, but as yet there is no such regulation in the Republic of Ireland. The burdens of disclosure Many Irish non-profit organisations receive funding from more than one source – some from many sources, as will be clear from even a cursory glance at the listings of well-known names on www.benefacts.ie. As well as multiple funding sources, most major charities are regulated many times over, if you count the oversight responsibilities of the CRO/ODCE, the Charities Regulator, the Housing Regulator, Revenue, HIQA et al. The high administration and compliance burden represents a real cost – including, of course, the cost of audit fees. At a minimum, of course, company directors must confirm that the company can continue as a going concern; Charities SORP requires that trustees disclose their policy for the maintenance of financial reserves and it is expected that these will reflect a prudent approach to maintaining funds to see them through periods of unexpected difficulty. These are sensible, indeed fundamental, principles and the annual financial reporting cycle is intended to give confidence to all stakeholders that the directors/trustees fully understand their responsibilities and are fulfilling the duties of care, diligence and skill enjoined on them. The €20 million or so currently spent by non-profit companies on audit fees (as yet the public has no access to the accounts of unincorporated charities) should be money well spent. The better the quality of the financial statements, the more these can play a role in initiatives being explored by a number of Government agencies to explore cost-saving “tell-us-once” solutions, supported by Benefacts. Who is accountable? Using current data from filings to the CRO and the Charities Regulator, Benefacts reported in Q1 2019 that 81,500 people are currently serving in the governance of Irish non-profit companies and charities. 49,000 of these serve as the directors of 9,500 non-profit companies, and the rest are the trustees of unincorporated charities. All are subject to regulation, and they include many members of Chartered Accountants Ireland.  By any standard, this is a large sector with more than 163,000 employees and an aggregate turnover in 2017 of €12 billion, €5.9 billion of which came from the State (8.4% of all current public expenditure in that year). Most of this funding was concentrated in only 1% of all the bodies in the sector. Voluntary bodies enjoy some of the highest levels of trust in our society, but it has become clearer in recent years that this trust does not spring from an inexhaustible reservoir. It must be continuously invested in and replenished by the work of every non-profit, most especially in the form of ample and transparent public disclosure – about their values, their work, its impacts, and the sources of their funding. Above all, the board carries responsibility for setting a tone of transparency and accountability, and directors/trustees need to be aware of their personal responsibilities in this regard. As professionals, we are often looked to by our friends and family, by our clients, or by our fellow directors/trustees for advice or leadership. We all know that in any kind of business, the consequence of a loss of public confidence can be dire; in non-profits, it can be fatal.   Paula Nyland FCA is Head of Finance & Operations at Benefacts and Co-Chair of the Non-Profit and Charities Members Group at Chartered Accountants Ireland.

Paul Smith breaks down the three most significant changes in the latest edition of Revenue’s R&D tax credit scheme guidelines. In a recent Oireachtas debate, Deputy Mary Butler asked the Minister for Business, Enterprise and Innovation: “What is being done to ensure we reach the EU average spend? Will Ireland meet the 2020 target to spend 2.5% of GNP on research and development annually?” To which the Minister replied: “It is unlikely that many European countries will reach the target of 2.5%. Where Ireland stands and how well we are doing, we can only go on the European and global statistics we get. Under the heading, Excellent Science, a report from Science Foundation Ireland (SFI) noted that Ireland is tenth in the global scientific ranking. A few examples of our global rankings in different areas are: second in animal and dairy, immunology, and nanotechnology; third in material science; fourth in agricultural science; fifth in chemistry; and sixth in basic medical research… I have been all over the world and our 18 research centres are recognised as being par excellence throughout Europe and the world. We are doing exceptionally well.” A key part of Ireland’s national development strategy is to develop “a strong economy supported by Enterprise, Innovation and Skills”. The research and development (R&D) tax credit scheme forms part of the overall corporation tax offering aimed at fulfilling this strategy. The primary policy objective behind the tax credit is to increase business in Ireland, as R&D is considered an important factor for increased innovation and productivity. Reflecting these considerations, the Government’s Innovation 2020 Strategy aims to achieve the EU 2020 target of increasing overall (i.e. public and private) R&D expenditure in Ireland to 2.5% of GNP by 2020. The R&D tax credit scheme is administered by the Office of the Revenue Commissioners, which issued its latest guidelines on 6 March 2019. It is almost four years since the previous guidelines were published (April 2015) and in the interim, a number of significant events relating to the wider research, development and innovation (RD&I) landscape have happened: The Knowledge Development Box was introduced in 2015; The updated OECD Frascati Manual was issued in 2015; The Department of Finance reviewed the R&D tax credit scheme in 2016; An R&D Discussion Group was formed in 2017; and The Department of Business Enterprise and Innovation’s Disruptive Technologies Innovation Fund was introduced in 2018. It was expected that the latest guidelines would provide additional clarity on issues set out in previous ones, insight from the increased number of audits, and recommendations for continued best practice. There are 14 changes in all, most of which are relatively minor, and are therefore not discussed in this article. I will instead evaluate the more significant changes and briefly comment on the upcoming Department of Finance review of the R&D tax credit scheme. Change 1: Suggested file layout for supporting documentation An important consideration is that in defending a claim, the burden of proof is on the claimant to evidence their entitlement to tax credits. It should therefore come as little surprise that the principal focus of many audits is on supporting documentation. Although the legislation is silent on the nature of the documentation required to support an R&D tax credit claim, Revenue conducts audits using its own guidelines and provides a copy to the experts appointed to assist Revenue. The guidelines give indications of records that should be maintained to satisfy the science and accounting tests. The latest guidelines have, for the first time, introduced a “suggested” file layout for supporting documentation. This should be of benefit to existing claimants who have inadequate record-keeping and who are considering upgrading their systems and processes to be audit-ready. It may also be of benefit to potential claimants who are assessing what must be done to prepare a robust claim and, in time, defend it – the adage being that “your first step to claiming is also your first step to audit”. Revenue also benefits by potentially standardising the audit process and its inherent costs. At a recent audit this author attended, the Revenue inspector commented: “If we knew then what we know now, there may have been less need for the audit”. With Revenue’s increased adoption of e-auditing, a standardised R&D file structure could reduce the time and cost of on-site audits for both Revenue and claimants. Although the suggested file layout has advantages, it could be costly and administratively difficult for claimants to adopt. Furthermore, although the words “suggested” and “non-obligatory” are used, we can but assume that in time it could become a de facto requirement. This raises the question as to whether claimants would be disadvantaged in not using it or in having an incomplete file. In addition, claimants frequently receive an Aspect Query (Revenue’s R&D questionnaire, comprising 23–25 questions) into their claim in advance of a full audit. In answering the Aspect Query, a report setting out one’s entitlement to claim is typically furnished. That report is often laid out in the same format as the Aspect Query and although additional questions may be raised, the reports are not generally rejected by Revenue. Therefore, if reports in the Aspect Query format are broadly acceptable to Revenue, a suggestion is for Revenue to consider amending its Aspect Query rather than asking claimants to amend their processes. The R&D tax credit was introduced to defray the cost for claimants in the carrying on of R&D activities. There is no tax credit for the costs of record-keeping or file management. Change 2: Eligibility to claim for sub-contracted R&D activity The guidelines have reversed Revenue’s position that “outsourced activity must constitute qualifying R&D activity in its own right”. In the past, outsourced activities needed to be the R&D of the company carrying on the activities. With this change, they now must be the R&D of the claimant. This is constructive as it considers entitlement to tax credits from the claimant’s standpoint and reflects the reality of sub-contracting where the claimant lacks specific expertise and requires outside assistance to support its in-house R&D activity. The positive impact of this change will be the confidence it gives claimants to include sub-contracted activities that may previously have been omitted from claims, as the claimant could not determine whether the outsourced activities constituted R&D when performed by the contracted party. Change 3: Materials used in R&D activities, which may be subsequently sold R&D tax credit/relief schemes in other jurisdictions (such as Canada, Australia and the UK) have a legislative requirement to deduct from claims saleable products resulting from R&D activities. In Ireland, there is no such legislation, but the 2015 guidelines introduced this requirement without worked examples. The latest guidelines have updated the wording to read “where it is reasonable to consider that there will be a saleable product” and have provided three examples. Revenue is effectively placing the onus on the claimant to assess, based on a “reasonable to foresee” test, whether the materials were utilised “wholly and exclusively in the carrying on by the company of R&D activities”. This assessment seems to be at odds with the legislation, wherein other than a requirement to make a deduction for expenditure met by grant assistance, there is no reference to eligible expenditure having to be reduced for income from the sale of materials or saleable product derived from R&D. In the author’s opinion, whether materials have a post-R&D resale value should not detract from the fundamental and legislative reason for which their cost was incurred – namely, to carry on R&D activities. Guidelines do not make the law, and are but an aid to its interpretation. Department of Finance Review The Department of Finance has a duty of care over public expenditure and this year, in co-operation with the Office of the Revenue Commissioners, it will conduct its triennial review of whether R&D tax expenditure remains fit for purpose. The R&D tax scheme benefits not only claimants, but wider society also through development, employment, education and so on. However, the R&D headline cost figures do not reflect the full cost of the scheme to the Exchequer. It will be a full review (unlike 2016, which was economic only) and will cover four pillars – relevance, cost, impact and efficiency – to determine if the scheme remains valid. It will be conducted along two strands: A cost-benefit analysis (statistical in nature); and A tax policy unit analysis, involving a public consultation. It is encouraging that since the last review:  There has been no change in the R&D legislation; The OECD-compliant Knowledge Development Box scheme has come into operation; Ireland is ranked tenth in the 2018 Global Innovation Index; Ireland is ranked ninth in the 2018 European Innovation Scorecard; and Ireland is ranked fourth in the OECD Tax Database in terms of R&D tax incentives (tax and grants). Conclusion The expectations of the latest guidelines have largely been met, and hopefully the R&D Discussion Group will function as a collaborative forum to influence future updates.Yes, there is increased focus on supporting documentation, but broadly, the status quo remains. For now, you could say of the RD&I landscape in Ireland and the R&D tax credit guidelines respectively: “You rock. You rule!” The big three The three significant changes to Revenue’s R&D tax credit guidelines of which claimants should be aware are as follows: Change 1:  Suggested file layout for supporting documentation. The layout will benefit existing claimants who have inadequate record-keeping and who are considering upgrading their systems and processes to be audit-ready. A standardised R&D file structure could also reduce the time and costs of on-site audits for both Revenue and claimants. Change 2:  Eligibility to claim for sub-contracted R&D activity. The guidelines have reversed Revenue’s previous position that “outsourced activity must constitute qualifying R&D activity in its own right”. This is constructive as it considers entitlement to tax credits from the claimant’s standpoint and reflects the reality of sub-contracting, in that the claimant lacks specific expertise and requires outside assistance to support its in-house R&D activity. Change 3:  Requirement to deduct the cost of materials used in R&D and having resale value. The guidelines update the wording and provide three examples regarding saleable materials used in R&D activities. Revenue is effectively placing the onus on the claimant to assess, based on a “reasonable to foresee” test, whether the materials were utilised “wholly and exclusively in the carrying on by the company of R&D activities”. Paul Smith is Senior Tax Manager, Global Investment & Innovation Incentives (Gi3), at Deloitte.

Recent multi-million euro fines for breaches of GDPR have reconfirmed the need for a watertight data management strategy. By Angela Craigan Just over a year ago, one of the main concerns for businesses and organisations operating in the European Union was the impending implementation of the General Data Protection Regulation (GDPR). Its introduction in May last year brought major changes to the way personal data could be handled. The run-up to its implementation saw an influx of email requests from organisations requesting permission to hold data. GDPR increased the obligations on those holding data to protect it and gave individuals more control over how their information is collected, used and stored. Businesses must ensure that all reasonable steps are taken to secure data, train staff and disclose breaches. They must be clear about how they use personal data. Individuals can demand to see what data is held on them and can also request that this data is deleted at any time. Now one year down the line, with our GDPR policies embedded into our businesses, the recent news that British Airways has been fined £183 million by the Information Commissioner’s Office (ICO), closely followed by a notice of intent for almost £100 million for the hotel group, Marriott, reminds us all of the importance of making sure we are not falling foul of the regulations. While the fines are huge, neither are the maximum amount that could have been levied by the ICO, which can fine up to 4% of annual global turnover or €20 million (£18 million) – whichever is greater. Security arrangements With British Airways, the breach was caused when hackers diverted users to a fraudulent website and harvested information such as login, payment card, name, address and travel booking information. With Marriott, personal data including credit card details, passport numbers and dates of birth had been stolen in a hack of guest records. There was no issue in relation to reporting the breach; both were reported within the mandatory 72 hours of discovery. With British Airways, the problem was the fact that hackers were able to gain access to the information. The ICO reported that the data breach occurred because British Airways had “poor security arrangements” in place to protect customer information. This again highlights the importance of protecting the data we hold on individuals; it needs to be protected through its lifecycle. This will require working closely with IT departments or external IT suppliers to make sure the systems are water-tight. We also need to be very careful about the disposal of data and IT equipment that has held data. Achieving compliance The simplest way to ensure compliance is to have a data management strategy. This should set out what information you need, how long you need it for and where it is stored. It is understood that with Marriott, the breach had already occurred in a hotel group it purchased prior to the sale, although it was only discovered last year. When considering the acquisition of another company, it is essential to make sure sufficient due diligence is carried out to ensure the company being acquired is GDPR-compliant. Although these recent cases involve large global companies, the legislation applies to all businesses and organisations regardless of size. The data-rich information age that we all now inhabit has been the trigger for GDPR. As members of Chartered Accountants Ireland, the role we play in the organisations in which we work has always been built on a foundation of ethical behaviour and trust in all matters – including that of data protection. As a result, the foundation of our profession continues to be relevant in the midst of an ever-evolving business landscape. Angela Craigan FCA is a Partner with Harbinson Mulholland, the accountancy and business advisory firm.

Directors faced with a court application to restrict them  as a director must be able to demonstrate clearly that they acted responsibly at all times to avoid restriction.  By Claire Lord A liquidator of a company that is unable to pay its debts is required to apply to court for a declaration that any director of that company, either at the time of commencement of its winding up or during the period of 12 months before that date, cannot be appointed or act as a director of a company or be concerned in or take part in the formation or promotion of a company, for a period of five years. This requirement does not apply where the Director of Corporate Enforcement relieves the liquidator of the obligation, or the company in question meets certain share capital requirements. In addition, the court is not required to make a declaration of restriction where it is satisfied that the director in question acted honestly and responsibly in relation to the conduct of the affairs of the company, whether before or after it became unable to pay its debts. The concept of “acting responsibly” was recently considered by the Irish High Court in connection with an application made by the liquidator of IQ Content Limited for a declaration of restriction against two of its directors. One of these directors was Morgan McKeagney, the founder and former managing director of IQ Content Limited.  The case IQ Content Limited was an IT consulting and web design firm that had enjoyed considerable success until 2014, when an unfortunate coincidence of events caused it to suffer an unprecedented collapse in revenues. As a consequence, in July 2014, a decision was made to wind up the company. At that time, Morgan McKeagney remained as a director of the company but was no longer involved in its day-to-day operations. Representing himself, and assisted by a successful application for an order of discovery of documents held by the company, Morgan McKeagney presented evidence of “a story of intrigue” to the court. The evidence presented by Mr McKeagney demonstrated that his colleagues had acted in a coordinated and calculated manner to drive the company into liquidation while at the same time, establishing a new company into which they planned to move all of the company’s assets. Mr McKeagney was also able to show the court that throughout this period of crisis, he had been deliberately removed from decisions that were made and otherwise isolated within the company. The judgment The application for Morgan McKeagney to be declared by the court as being restricted from acting as a director was declined. The presiding judge instead declared that Mr McKeagney had acted responsibly and with integrity throughout the process. The judgment notes that the court was highly impressed with Mr McKeagney’s actions in his role as a director of IQ Content Limited and in opposing the restriction application. In this regard, it is stated in the judgment that Mr McKeagney had presented his case in a clear and articulate manner and had presented clear evidence that he had acted in the best interests of the company at all times. This case demonstrates that the court will decline to make an order for restriction in circumstances where a director has acted responsibly in relation to the conduct of the affairs of a company in liquidation. However, a director in this situation needs to be able to clearly demonstrate to the court that this was the case. Morgan McKeagney went to impressive lengths to contest the application being made to restrict him as a director, and he was successful in demonstrating that he had truly acted responsibly in relation to the conduct of the affairs of IQ Content Limited. These lengths are indicative of the burden of proof placed on directors that find themselves in a similar position to successfully argue a positive outcome.   Claire Lord is a Corporate Partner and Head of Governance and Compliance at Mason Hayes & Curran.

Des Peelo explains why a trust or an overseas holding company is rarely a good idea. The ownership of wealth and related capital taxes go together, and there are lessons to be learned in trying to distance one from the other. Nothing stands still over time, except the Great Pyramid and similar edifices. This simple fact can escape legal and financial advisors when it comes to wealth and capital taxes. First, let us consider the history of capital taxes briefly. The 1970s brought a slew of capital taxes, much of it modelled on UK precedents. The government of the day introduced capital gains tax, capital acquisitions tax replaced estate duties, and there was a short-lived wealth tax. A wide range of tax measures involving the relationships between companies and the individuals who owned them also came along in successive Finance Acts, while 1988 saw the introduction of self-assessment on income and capital taxes. There was relatively little personal wealth in Ireland at that time, and it was the mid-1980s before the capital taxes realised much revenue, with the result that planned tax avoidance (and illegal tax evasion) became an unstated industry in itself. Schemes were thought up by legal and tax advisors until a Finance Act caught up with them. Even so, on occasion, the combatting legislation itself created another loophole, and so on. The use of trusts (usually through what is known as a discretionary trust) and overseas holding companies became fairly widespread, the repercussions of which were not always wisely thought through – a resonance that is still valid today. The ownership of businesses, properties and investments were held in companies and trusts in places like Jersey and the Isle of Man. Others were based further afield in Bermuda, Cyprus and the Cayman Islands. It was not unusual to have pyramids of ownership across several jurisdictions. Revenue probes, the Ansbacher Enquiry, tribunals, several tax amnesties and the Panama Papers subsequently revealed the widespread use of overseas structures. Fast forward from those earlier years and the anxiety to avoid capital taxes, or to keep control after the demise of the founder or owner of a business, overwhelmed common sense as to what was likely to happen in the long run. Subsequent legislative and practice changes, in Ireland and overseas, were not always known or understood. The rigidities in the original tax schemes, over time, frequently created obstacles to addressing subsequent tax challenges and change. As to the designated beneficiaries of the underlying wealth, the elapse of time created its own dysfunctions. Sibling rivalry and inter-generational fighting continue to be common outcomes; not to mention the complications of divorce and remarriage, poor behaviour within a family and possible inadequate management performance as to the underlying business or assets. Trustees also pass on in time, being usually older than the intended beneficiaries, and replacement trustees may have different attitudes. Indeed, some were not replaced in a timely or legally permitted manner. As stated at the outset of this article, nothing stands still and what started as a tax-planning decision is now a tangled legal, financial and tax imbroglio. There are instances of ‘orphan assets’, which arise from the failure to address legislative or practice changes over time. This failure can lead to paralysis or an inability to access the underlying assets. A particular problem with trusts – as identified in several UK court cases – was the continuity of trustees, meaning that overseas trustee companies went out of business without any succession or replacement structures in place. Similarly, individuals acting as directors of holding companies in foreign jurisdictions became incapacitated or died. What is not always readily understood is that if something goes wrong, such as an unexpected event or a dispute of some kind, the Irish courts are unlikely to have any jurisdiction. Trust and/or company law can be opaque or vague in foreign jurisdictions. For example, it may be the case that the shareholders in an overseas holding company have not been filed in the local equivalent of the Irish Companies Registration Office, or indeed disclosed or accessed in any other way. This failure may lead to uncertainty as to actual ownership, and the articles or constitution are likely to diverge from what is set out in Irish company law. In any event, the point is that the use of trusts and overseas companies will often fall foul – and usually do – in the long run. This reality keeps accountants and lawyers busy all over again in trying to sort it out; usually with significant legal and tax bills to follow. In summary, a trust or an overseas holding company is rarely a good idea. Des Peelo FCA is the author of The Valuation of Businesses and Shares, which is published by Chartered Accountants Ireland and now in its second edition.

Welcome to a special 50th anniversary edition of Accountancy Ireland. As this is my first comment piece in the magazine since our AGM, I’d like to say what a tremendous honour it is to follow in the footsteps of a long list of remarkable Presidents. I would also like to congratulate my predecessor, Feargal McCormack, for a tremendously successful year. The audit challenge As a member who has spent his career working in audit, it will come as no surprise that I am keen to address the challenge that currently faces the audit profession. I have been looking to our nearest neighbour in the UK and reflecting on the fractured relationship with the regulator, the Financial Reporting Council, and with politicians. Many of the reforms recommended by Sir John Kingman’s recent independent review have now been accepted. However, the wider review by the Competition and Markets Authority and also the independent review into ‘The Quality and Effectiveness of Audit’ being conducted by Lord Brydon will be fundamental to our future, and the future of business more broadly. We must remember that what may be required to work in the UK is not necessarily or automatically right for Ireland. We must work hard to ensure good communication between the profession, politicians and regulators to ensure that the very particular strengths we have in Ireland are protected and nurtured. Routes to our profession My second area of focus will be around access to the profession. I see this as having three different strands. Firstly at graduate level, secondly by facilitating more graduates to train in industry and public sector, and thirdly by opening up a route to non-graduate entry. Over many years, the Institute’s dependence on the audit functions of the big accounting firms has become more and more accentuated. I believe there is real opportunity both to widen our graduate pool, but also to work with Ireland’s largest corporates – and, indeed, our influential senior members – to revitalise and enhance the ‘training in business’ route to the qualification. The other thing we need to get right is our school-leaver route. It is inevitable that college fees for university education will be reintroduced at some stage, making third-level education inaccessible to many. Through Accounting Technicians Ireland, we already have a ready-made route for school-leavers to Chartered Accountancy, which presents a fantastic opportunity. Strategy My third area of focus will be strategy. We are now working with our Strategy Board to make sure that by the end of the year, we have progressed a new strategy up to 2025. In doing this, we will engage with the full spread of our membership. We have so many business leaders who are Chartered Accountants and who play a very significant role in Irish business life – creating value, creating opportunities for careers, and sustaining families. With your help, we will deliver a strategy that secures our reputation and delivers important services to members. I am very confident that together, we can deliver on our themes and strategy for all of our membership. Conall O’Halloran President

Trainees are the lifeblood of the profession and rather than expect conformance, accountancy firms must  continually evolve to meet their needs. By Sinead Donovan In today’s environment, the role and route to becoming an accountant has changed compared to when I initially started my training contract. I don’t mean in respect to the professional exams or length of training contracts, but more the expectation of the future accountant in their day-to-day work environment and, likewise, in the expectation we have from them. In fact, the question I am asking is: what is the primary role of an accountant? Wikipedia defines an accountant as “a practitioner of accounting or accountancy, which is the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and others make decisions about allocating resources”. The rounded accountant Technically, as accountants, we need to be able to provide the above services – but this is no longer our sole role. Today, we need to be experts in project management, forensic accounting, cybersecurity, fintech, negotiation settlements – the list  goes on. To service these needs, it is becoming increasingly critical that we train very rounded and evolved accountants, and that we arm ourselves in our teams with skillsets to build a sustainable relationship with the client, have the foresight to envisage what they need, and be able to address their needs. An evolving industry We are all aware that the professional service environment is changing at rapid speed. To meet these changes, there is a high expectation from the future generation of accountants. This future generation of accountants will be key to the evolution of the professional services industry. We want and need our accountants to have vast experience and other interests, and we want to see how this can be used and applied in our changing environment. This requirement is well served by trainee accountants who come through the non-traditional accounting route and often have a primary degree in something completely different – science, arts, engineering or marketing. Their unique skill will add to the learning experience they will encounter and give a different perspective on the work being performed for clients. Trainees’ concerns Trainees want to learn, but they also want to be supported throughout their career to ultimately achieve the goals and targets they set for themselves. They are not afraid to address issues or concerns they may have. Sometimes we may bemoan this as a millennial or Gen X requirement. However, it should be welcomed and embraced. These students are headstrong, determined and not afraid to voice their opinion. They want a fully rounded experience and the opportunity to get involved in other aspects of the business. We as training firms need to be positioned to address their needs – and there is no doubt that we are being interviewed by the students. A number of things are important to them, not least company polices in respect of CSR, career progression, the different service offerings we provide as professional services firms and how we keep up-to-date with change and technology. They are also keenly driven by the work-life conundrum, which can be difficult to navigate as a trainee accountant. Our responsibility And indeed, accountancy firms must simultaneously pivot their own expectations of trainees. We need to: Help them set stretch goals and put supports in place to enable the achievement of these goals; Keep pace with changes in technology and develop our service offerings to support our clients and our trainees; Communicate and share our strategies and objectives with them – they need to understand what their investment can reap; and Be open to being challenged and questioned. Most importantly, we need to do all this while remembering that ethics is the cornerstone of our profession – a fact that, thankfully, hasn’t changed. Sinead Donovan FCA is a Partner in Financial Accounting and Advisory Services at Grant Thornton.

The FAE Core curriculum is undergoing significant changes in order to maintain the Irish  ACA’s global reputation for excellence. By Ronan O'Loughlin   Members and students will be aware of the significant technological changes impacting on the work and careers of Chartered Accountants. It isn’t just the technological changes that are significant, but the increasing pace of change. Against this backdrop, the Institute’s Education Training and Lifelong Learning Board (Education Board) and Exam Committees have been adapting and enhancing the ACA curriculum to meet these challenges. This article outlines the changes to the FAE Core examination, which will be rolled out from autumn 2019. From a practical perspective, this can be viewed as a first step and will be further enhanced in the years ahead. The journey At a global level, the profession is paying significant attention to the impact of technology on the education needs of students and qualified accountants. Technology is impacting what we learn, how we learn and how we are assessed. The skillsets of Chartered Accountants must be further developed to cope with these changes. The Institute launched a new syllabus in 2018, which featured new FAE electives. These are: the Public Sector elective, which is aimed at students working or advising in this sector; the Financial Services elective, which is targeted at students training in the Financial Services sector; and the Advisory elective. With the other existing Audit and Tax electives, students now have a choice of five electives. This innovative structure recognises the changing nature of the work of the profession and in the case of those working in practice, the increasing importance of Advisory in particular. The 2018/9 structure is summarised in Table 1. Students completing FAE must complete FAE Core and one elective. This structure is unique amongst our reciprocity partners and supports a level of pre-qualification specialisation. All electives can be completed at the time of qualification and additional electives can be completed post-qualification to support career changes. The Education Board and the relevant examination committees are also mindful of the work currently underway with our reciprocity partners in the Global Accounting Alliance, which will frame the skillsets and requirements that will be necessary for Chartered Accountants in the future. This work will conclude in 2019 and will inform the new reciprocity agreements, which will be rolled out in the years ahead. In the meantime, the FAE Core syllabus will be further developed in anticipation of likely reciprocity developments and emerging technological developments. This will be rolled out in 2019/20. Changes to the FAE Core syllabus The Core syllabus is being restructured, with a reduction in modules from five to four (see Table 2). This new structure reflects a desire to create ‘space’ for the new material and to better reflect the changes in our key training firms and organisations. These changes include an increased focus on advisory work and the re-framing of audit practice. There are a number of reasons for these changes: Financial Reporting in terms of syllabus requirements remains as before; it is a key skill for all Chartered Accountants. The slight change in weighting reflects its importance. Assessment will take place within the Core exam and, separately, in an interim Advanced Application of Financial Reporting Principles (AAFRP) assessment; Strategic Management and Leadership contains the areas of strategy (analysis, choice and implementation), as before, with the addition of the Strategic Finance Management Accounting (SFMA) topics previously examined under a separate heading. In terms of the SFMA topics, the focus will be on dealing with the key strategic aspects of these topics; Data Analytics, Artificial Intelligence and Emerging Technologies represent new material, which reflects the current and emerging technological developments that will impact businesses and clients of Chartered Accountants. The topic covers data analytics, with particular reference to determining the data set and its integrity and the interpretation of the outcome of the data analysis. Artificial intelligence will be explored, given its significant impact on business processes. The Emerging Technologies focus specifically on blockchain and cryptocurrency developments, which are creating significant new opportunities for the processing of financial information. The aim is to ensure that newly qualified Chartered Accountants are equipped to understand these developments and their impact on their clients and employers; and Risk Management and Sustainability focuses on the area of audit process, risk management and internal control rather than the traditional external audit focus. Extended coverage of audit and assurance will occur in the Audit Elective. Other new topics include professional scepticism, sustainability and integrated reporting. This rebalancing reflects the evolving nature of audit and the emergence of topics that are altering the role of today’s Chartered Accountant. Feedback received We shared these developments recently with our students and other stakeholders, and the feedback was fully supportive. Students recognise that these developments will future-proof their careers and enhance their career prospects. One recently admitted member said: “I wish I was completing the FAE in 2020”. These changes are just the first step in the planned evolution of our syllabus to reflect the ongoing rapid changes in technology. The education programme in 2019/20 will be supported by a suite of new learning materials. Other changes In addition to the FAE Core changes, a new e-assessment platform will be launched on a pilot basis at CAP1 level. The initial pilot will be conducted in 2019/20 and will be limited to the CAP1 interim assessments and Law. If successful, it will be expanded to all of CAP1 and all interim assessments from CAP1, CAP2 and FAE in 2020/21 and to all CAP1, CAP2 and FAE assessments in 2021/22.  The new platform allows students to complete their exam in an appropriate environment (including their home) with an online live moderation of their exam by an invigilator supported by artificial intelligence. This replaces the current online double entry examination and will include a new CAP1 Law paper and the Management Accounting interim assessment on the same platform. The new platform will not only facilitate increased security and efficiencies, but enhanced student and customer service – and it is fully GDPR compliant. It will also lay the foundation for future enhancements to the Institute’s examination offering. Conclusion The enhanced syllabus and planned developments in FAE Core and e-assessments are significant developments that seek to retain the Irish ACA’s standing in the global business landscape. This output reflects significant work and investment on the part of Chartered Accountants Ireland and forms part of a plan of continuous enhancement. Ronan O’Loughlin FCA is Director of Education and Training at Chartered Accountants Ireland.