In the UK and internationally, audit was the subject of much debate in recent times and the attention will continue over the coming year. 2018 was quite a year in the world of audit. A sector often, and unfairly, characterised as ‘grey’ and perhaps unexciting, such stereotypes certainly do not apply to the year we have just had – and it is set to continue in 2019 and beyond. Much media attention has been given to high-profile corporate scandals and failures in the UK and internationally in recent years – BHS, Carillion, Patisserie Valerie in the UK, international cases such as those involving the Gupta family businesses in South Africa and the Commonwealth Bank of Australia to name but a few. Audit regulatory investigations and findings have followed with serious implications in many cases for those involved. Studies, reviews and consultations involving the audit sector were commonplace throughout 2018. Those of particular relevance, and demanding the attention of this and other Institutes and their members, include: the UK Competition and Markets Authority (CMA) October 2018 invitation to comment on the UK statutory audit market and its December update paper; the Independent Review of the Financial Reporting Council (FRC) in the UK by Sir John Kingman (the Kingman Review) published in August and report issued in December; and the ongoing Monitoring Group (MG) consultation on reforms to the global audit standard-setting bodies. Add to that the upcoming Brydon Review of the scope and purpose of the audit, announced by the UK Department for Business, Energy and Industrial Strategy in late December and the FRC’s post-implementation review of the 2016 ethical and auditing standards. Overarching questions being addressed by these various studies, reviews and consultations include: What is the value of audit? What is the scope and purpose of a statutory audit? How do we align it better to societal needs and expectations? How do we best expand choice in the audit market? Who should police auditors and corporate reporting more generally? And what powers should the enforcers have? To which standards should auditors be subject, and who should set those standards? Are the current standards fit for purpose, both now and into the future? These overarching questions give rise to more detailed questions, such as: which, if any, non-audit services should audit firms be permitted to provide, and to whom? Is there a role for other bodies, such as the regulator, in the appointment of auditors or in the governance of the process? Should standard-setting for auditors of public interest entities be separated from standard-setting for the audits of other entities? Should all accountants, irrespective of the sectors in which they work, be subject to the same general ethical principles? One only has to consider the two CMA consultations to appreciate the level of detail and complexity involved – the October consultation contained 27 different questions on 19 potential measures while the December consultation also contained 27 questions, this time focused on a small number of specific proposals. In Ireland, you can add into the mix the uncertainty that has arisen about the recognition of UK-based auditors in Ireland in the event of a no-deal Brexit and the IAASA consultation on its publication and grading policies relating to quality assurance reviews of public interest entity audits and audit firms. Reporting by IAASA is currently envisaged to commence in early 2020 with respect to 2019 audits. So, at the time of writing, where are we with all this activity? Competition and Markets Authority study of the UK statutory audit market The original October 2018 CMA invitation to comment contained a wide range of potential measures aimed at increasing competition, enhancing incentives to better align audit services to shareholder interests, improving market choice and opportunities for switching auditors and bolstering the resilience of the UK audit market, particularly against the failure of one of the Big Four audit firms. Following that consultation, the CMA published an update paper on 18 December containing a proposed package of measures, including a number of core proposals: Regulatory scrutiny of auditor appointment and management with a view to securing audit committees’ accountability and independence; Mandatory joint audit with a view to breaking down barriers to non-Big Four firms; An operational split between the audit and advisory businesses of audit firms, aiming to address conflicts between the provision of audit and non-audit services while mitigating against some of the key negative consequences of alternatively introducing full ‘audit-only’ firms; and Peer review of audits prior to the opinion being signed. Presented as preferred alternatives to other measures originally proposed in October, the update paper suggests that the CMA may still take future steps in relation to those other measures, should sufficient progress not be made through the current package of measures. The CMA is currently consulting on these revised proposals with final recommendations scheduled for April 2019. Potential measures in the October consultation not carried forward by the CMA at this point include the break-up of the Big Four firms and the creation of a national audit office-style auditor for private sector audits.  Kingman Review of the UK Financial Reporting Council The Kingman Review, also published on 18 December, calls for the replacement of the FRC with a new independent regulator, with the suggested title of ‘Audit, Reporting and Governance Authority’. It recommends that this regulator should have clear statutory powers and objectives, and should be accountable to the UK parliament. In total, there are 83 different recommendations addressing the structure and purpose of the regulator, the effectiveness of its core functions, the role and powers of the regulator with respect to corporate failures, oversight and accountability, staffing and resources, and other matters. Notable recommendations include: The new regulator taking responsibility for the approval and registration of audit firms which audit UK public interest entities from the recognised supervisory bodies (including Chartered Accountants Ireland); Enforcement action against accountants in relation to apparent wrongdoing in public interest entities should be undertaken on a statutory rather than voluntary basis; That the regulator is given the powers necessary to investigate the actions of all directors, not just those who are members of accountancy bodies; The introduction of a duty of alert for auditors to report viability or other serious concerns to the regulator; That the UK Department for Business, Energy and Industrial Strategy (BEIS) give serious consideration to a strengthened framework around internal controls; and That BEIS should put in place a statutory levy and that the current voluntary funding approach should cease. In welcoming the publication of the Kingman Review, Business Secretary Greg Clarke noted that Sir John Kingman has delivered the “root and branch review of the FRC” as requested and said “the government will take forward the recommendations set out in the Review to replace the FRC with a new independent statutory regulator with stronger powers”. The Chairman of the FRC, Sir Win Bischoff, also welcomed the recommendations, saying that they have “addressed the gaps in our powers... [and] have the potential to bring about significant improvements in the work we do in protecting the interests of investors and the wider public”. Independent review of the quality of UK audit standards (Brydon Review)/FRC post-implementation review On the same day as the publication of the Kingman Review and CMA update paper, BEIS announced the appointment of Donald Brydon to chair another review in the UK. The Brydon Review, which is intended to build on the work of the Kingman and CMA reviews, will consider how the audit and auditing standards may be evolved to better address the expectations gap between what the audit can and should deliver compared to the public expectations from audit. The terms of reference are expected shortly. Separately, the FRC issued a consultation in November as part of its post-implementation review of the current UK auditing framework. These standards were revised primarily to support the implementation of the EU Audit Regulation and Directive and to reflect changes made by the IAASB to the suite of international standards on auditor reporting. The FRC notes that having applied to two cycles of audits, it is seeking to learn the lessons from its enforcement work and, at the same time, gather feedback on whether the changes made to the standards have had the desired impact on auditor independence and audit quality. The Monitoring Group consultation on the future of international auditing standard-setting The Monitoring Group (MG) is a group of regulatory and international organisations committed to advancing the public interest in areas related to international audit standard-setting and audit quality – members include the International Organisation of Securities Commissions (IOSCO), the World Bank, the European Commission and the Financial Stability Board. The MG issued its initial consultation entitled Strengthening the Governance and Oversight of the International Audit-Related Standard-Setting Boards in the Public Interest in November 2017. A May 2018 feedback statement highlighted concerns raised by respondents under the primary objectives of serving the public interest; independence from the profession; and timeliness of standard-setting. We await the MG white paper setting out its more detailed proposals, which are expected to include the core principles of a ‘public interest framework’ and proposals relating to a sustainable funding model that is consistent with, and indeed enhances, the desired levels of independence of the standard-setting processes. International audit-related standard-setting is currently undertaken by independent boards (the IAASB and the IESBA) within the International Federation of Accountants (IFAC) in New York. IFAC’s standard-setting activities are funded primarily by IFAC member bodies, including our Institute, and international audit networks (which also provide significant people resources to the standard-setting boards). The underlying position of the MG and the regulatory community in general is that in order to ensure that standard-setting is undertaken in the public interest, and to enhance public confidence in audit, the governance processes involved need to become more independent of the audit profession and multi-stakeholder in nature. To achieve this, the MG envisages a separation of the standard-setting processes away from IFAC. The MG aims to implement the new standard-setting arrangements by the second half of 2020 or the beginning of 2021. Implications of a ‘no-deal’ Brexit on the registrations in Ireland of UK-based audit firms The UK parliament recently voted by an overwhelming majority to reject the withdrawal deal negotiated between the UK Government and the European Union (EU), leading some commentators to state that a no-deal Brexit is more likely than ever. The Institute has been actively engaging with IAASA on the position of UK-based audit firms as regards registration to undertake Irish company audits post-withdrawal in the event of a deal not being agreed and information on that engagement has been published on our website. Space constraints do not allow for a summary here of the many clarifications sought or various scenarios presented, but suffice to say that in the event of a no-deal Brexit, the indications are that our registered audit firms (and those of the other recognised accountancy bodies) based in Northern Ireland and the rest of the UK will not be recognised under Irish law post the withdrawal date to undertake statutory audits of companies in Ireland, unless they are recognised as a ‘third country auditor’ by IAASA. Such recognition can only be granted post-withdrawal and, except with regard to a small number of UK firms auditing non-EU entities with Irish listings, will require a reciprocal arrangement to be put in place by Ireland and the UK, which is likely to take some time. This is not likely to be an issue in the event that a withdrawal deal between the UK and EU is agreed and there is a transition period. It should be noted that the UK Government issued a technical notice in October, which stated that the UK will unilaterally provide a transitional period as regards audit until the end of December 2020. During this transition period, EU auditor registrations will continue to be recognised in the UK. As such, audit opinions issued by Irish-based audit firms on the financial statements of entities in Northern Ireland and the rest of the UK will continue to be valid under UK law. It is an evolving situation and the Institute continues to engage with the relevant authorities. Audit firms likely to be affected should make reference to a regulatory bulletin issued in recent days by the Professional Standards department. The Institute’s ‘Value and Future of Audit’ event Many of the topics mentioned above were debated during an excellent event on the value and future of audit hosted in October 2018 by the Institute’s Deputy President, Conall O’Halloran, and organised by Aidan Lambe, Director Professional Standards. Conall and Aidan assembled a top quality panel of contributors, drawn from the profession, business and the media. Given the significance and topical nature of the issue, the event naturally drew a very large and engaged audience, resulting in a lively debate. Some interesting perspectives from contributors to the debate included: The much-discussed ‘expectations gap’ between what the audit can deliver and what the public expects from the audit does not necessarily apply across all stakeholder types. Speakers argued that consumers of audit services, practitioners, regulators, audit committees, boards and analysts all understand the limitations of a statutory audit; That being said, there was general agreement that audit may need to better address the needs and expectations of society in order to survive and thrive into the future. To do so, the scope and purpose of the audit may need to change, though debates in this regard need to begin from informed positions; That the application of ever-increasing regulatory requirements intended to enhance the quality of audit may actually have the contrary effect of diminishing the importance of professional judgement in the process; That the audit profession, operating, as it is perceived by many stakeholders, from a privileged position in society given the legal requirements pertaining to the purchase of audit services, is validly challenged by politicians and the media in the event of corporate scandals and failures, and the onus is on the profession to meet those challenges; and The need for the profession to better communicate the value proposition of the audit, and indeed the output, in a manner that doesn’t disenfranchise stakeholders. The irony was noted of the audit opinion relating to listed entities and certain other public interest entities having in recent years moved clearly away from boilerplate language to provide very interesting and useful information, while the focus on the opinion at the annual general meeting has simultaneously diminished. As the Deputy President acknowledged in closing the event, the debates created some great content which the Institute will consider when formulating its own contributions to consultations going forward and we will return to some of the topics discussed in future issues of this magazine. Concluding remarks It is fair to say that the underlying theme of the various studies, reviews and consultations, the level of regulation of the audit sector globally, and the extent of media and political interest and scrutiny the sector continues to receive all clearly highlight the continuing importance of audit today. Audit faces significant challenges to bridge the expectations gap and to evolve to embrace technological developments and artificial intelligence, but the significance of its oversight role has not diminished. The profession needs to present a strong voice to ensure new measures achieve the goals of providing more assurance to stakeholders and higher quality audit. Collectively, we need to commit our talents to develop solutions to ensure the continued relevance and importance of audit to the market into the future. These studies, reviews and consultations are inextricably linked and responses from this Institute, and the profession in general, have voiced the need for proposed measures to be coordinated and coherent, and to encompass developments and changes in corporate reporting. Other key messages include serious concerns about the implications of UK-only approaches, given the international nature of audit and the need for solutions that work globally. There is a general recognition that public trust in the audit needs to be restored. While we may not agree with all the proposals on the table, we welcome the debates and will continue to actively contribute to the debates both locally and internationally. Never a dull moment, it seems! Mark Kenny is Director, Representation & Technical Policy, at Chartered Accountants Ireland.

As the evolution of the Institute’s syllabus continues, the FAE syllabus will soon undergo a range of significant enhancements.   The December 2018 issue of Accountancy Ireland outlined the marking developments at FAE level. In this issue, we will continue that discussion with an overview of the evolutionary plans for the FAE and assessments in particular. In rolling out the new ACA syllabus at all levels (including two new FAE electives) in 2018/9, we are mindful that the syllabus will need continuous enhancement and development. The periodical review of syllabus content is no longer appropriate. The only constant for accountants today is the constancy of change and indeed, the increasing pace of change. Future skills and syllabus trends The key areas requiring further enhancement at FAE level encompass the skillsets of accountants and the impact of technology on the work of accountants. In framing our thinking, we are mindful that the profession globally is facing a tsunami of change. Our thinking is being informed by: Current work being undertaken by the Global Accounting Alliance Directors of Education, which seeks to redefine the future skills and areas of competence for accountants; Enhancements to IFAC Education Standards, which reflect ICT developments and the need for enhanced skills in areas such as professional scepticism and soft skills; The changing nature of trainee and firm work profiles and how this is likely to continue to evolve over the coming years. We continue to consult with firms on anticipated changes and will reflect this in the syllabus. Our three practice-focused electives (audit, tax and advisory) seek to better align with how practice is evolving, while exam cases seek to ensure that we better reflect the operational realities of today’s trainees; Rapid change in a wide range of technologies, which require syllabus updates to cover such items as data analytics, artificial intelligence and emerging technologies (including blockchain and cryptocurrencies). We expect these topics to feature in the evolving FAE Core case exam, for example; The challenge of sustainability (including the opportunities presented by millennial development goals and integrated reporting) and how these and related topics are creating opportunities for firms and members; and Risk topics also require enhancement to reflect best practice in areas such as internal audit. Naturally, we cannot simply add additional topics to the syllabus without seeking opportunities to de-emphasise some technical topics that have already been assessed at CAP2 level and will continue to be assessed in elective modules. Assessment trends Internationally, professional bodies are moving away from paper-based assessment in favour of digital platforms. Such a change will allow us to take advantage of significant technological enhancements while maintaining the examination’s integrity. The work of today’s student is completed virtually exclusively on computers and digital assessment therefore better reflects the skills and day-to-day experience of trainees. Technology also offers the potential for increased flexibility and innovative assessment methodologies. In framing our thinking in this area, we consulted with leading technological providers, other professional bodies and regulators to learn from their experiences and challenges. Conclusion We are entering a very exciting time for the Institute’s education and examinations operations. The new topics and processes available will allow us to ensure that the future Chartered Accountant is fully equipped to take advantage of the significant change underway. We will approach this opportunity and change with a view to minimising risk as far as possible. We anticipate a future update to reflect our evolving thinking. Ronan O'Loughlin is Director of Education at Chartered Accountants Ireland. Ian Browne is Head of Assessment & Syllabus at Chartered Accountants Ireland.

2019 will be a critical year in shaping the tax landscape for multinational corporations. 2018 was a busy year on the international tax front, with developments across the globe having an impact on Ireland, directly and indirectly. So, what can we expect in 2019 in terms of tax developments which could impact Ireland, directly or indirectly? Interest deductibility changes The Department of Finance has just completed a consultation phase around the EU ATAD (Directive) in respect of both hybrid instruments and interest deductibility rules. The interest deductibility rules are probably of most interest. Broadly, under a binding EU Directive, we are obliged to amend our interest deductibility rules so that allowable net interest will be restricted to 30% of earnings before interest, tax, depreciation and amortisation (EBITDA). As Ireland currently has very limited rules restricting the deductibility of interest, this is a significant change. It initially appeared that Ireland would have until 2024 before the new interest restrictions would be implemented. However, it now looks likely that the new rules could be in place by the end of this year. Companies may need to adjust existing tax cash flow models to factor in potential disallowable interest in the future. Grandfathering of existing loans will be limited, with loans taken out post-June 2016 within the ambit of the new provisions. The consultation phase is focusing on a number of issues, including carve-outs for certain activities and sectors, as well as how any de minimis limit (expected to be circa €3 million) will be legislated (for example, how group situations will be impacted). At the moment, there is uncertainty as to how the new rules will be implemented. How will a fully geared company with only rental income be impacted? Will there be a carve-out for infrastructure projects? There is some flexibility as to how countries implement the Directive; the hope is that Ireland chooses a sensible course. We will likely see the outcome of the consultation phase, and the resultant legislation, later this year. Transfer pricing There is a separate public consultation phase due to commence shortly in relation to transfer pricing (TP). This will cover various matters such as how Ireland will implement the updated OECD guidelines and whether TP should be extended to non-trading transactions. Irish TP legislation currently refers to 2010 OECD guidelines. One of the key changes in the 2017 guidelines is around value creation and the consideration that needs to be given to where value is created in allocating taxable profits. A greater focus on value creation activities could impact companies that carry out significant research and development (R&D) activities outside Ireland, amongst other things. How Ireland implements the new OECD guidelines could impact significantly on a company’s effective tax rate. One potential outcome of the new guidelines is that countries may compete for taxing rights over the same pool of profits. In the authors’ view, we are likely to face an environment of increased cross-border tax disputes, likely to last for several years. Later this year, in Finance Bill 2019, we will see the output of the consultation phase and the Department’s view on how best to implement the updated OECD guidelines. Regardless of the outcome of the consultation phase, there will be an increasing onus on companies to have appropriate and robust transfer pricing documentation in place to support their intra-group pricing policies. A unique feature of Ireland’s current TP regime is that TP does not extend to “non-trading” transactions, which would cover companies that, for example, might provide a limited number of (interest-free) intra-group loans. The expectation is that Ireland will move to change this, with TP in the future covering both trading and non-trading transactions. While it is expected that there will be an appropriate time-frame to unwind existing structures, or suitable grandfathering provisions, the changes may have a significant impact on Irish and international groups with interest-free loan structures in place. Digital tax The position in respect of digital tax is a moveable feast. At the time of writing, the potential for a consensus at European Union (EU) level looks low, which in some respects is a positive for Ireland, which stood to lose tax revenues from an EU-wide digital tax. However, we are already seeing individual countries, such as the UK, introduce unilateral digital tax equivalent measures. Such measures can reduce the attractiveness of our 12.5% tax regime. 2019 may see further developments at EU level on the digital tax front, or more likely an increase in the number of countries looking to implement their own digital tax regimes. The OCED has recently rowed heavily into this debate, which is likely to give significantly more impetus to proposed future changes. Unanimity over tax matters There has been talk at EU level of removing the current requirement for unanimity at EU level for the passing of tax changes. If, instead of unanimity, a qualified majority only was required to introduce tax changes, it would increase the likelihood of other EU changes being introduced. For example, the threat of a common consolidated corporate tax base (CCCTB) regime would increase, which would also erode the benefits of our low corporate tax rate. A change to the current unanimity rules would itself require unanimity, which at the moment seems most unlikely. However, it provides a good sense as to the direction in which the EU wishes to travel. In summary, we can expect significant further activity in 2019 on the international tax front that will be critical in shaping the landscape both for multinational corporations operating in Ireland and for indigenous Irish groups with overseas operations. Peter Vale is a Tax Partner at Grant Thornton Ireland. Paschal Comerford is a Tax Director at Grant Thornton Ireland.

By Cróna Clohisey The first pay cheques of the New Year will see the average Irish worker about €3 better off per week. However, these new gains could be wiped out with the increase in the rate of tourism VAT with consumers facing heftier bills in restaurants, hotels and hairdressers. The 9% rate introduced in 2011 was reinstated to its original rate of 13.5% from 1 January 2019. Ireland’s return to the rate of 13.5% means it is one of the highest rates of tourism VAT in the EU. Sixteen out of 19 eurozone countries have a rate of 10% or less while Northern Ireland has just undergone a consultation on whether it should reduce its rate from 20%. Brexit and associated Sterling fluctuations have also been mentioned as a reason for keeping the VAT rate at 9% in Ireland. Yet, visitors from the UK remain strong. The initial VAT rate drop was a temporary measure and at the time, businesses were warned that they must pass the savings on to customers. Now, tourism is booming and our value for money rating has improved. Tourism accounts for an estimated one in 10 jobs and has created employment opportunities all over the country. Despite good growth in Dublin and other cities, there are reports that rural areas are struggling despite seven years of the reduced VAT rate. A targeted support system to promote Ireland’s Hidden Heartlands and the Wild Atlantic Way, as well as funding to develop our greenways, was announced in Budget 2019.  Using a reduced VAT rate on an entire sector of the economy to encourage growth now seems to have been a blunt tool. Perhaps the targeted support approach is the right way forward. Time will tell.

Although entrepreneurs’ relief wasn’t abolished or capped in the 2018 budget, it is subject to additional conditions.   Entrepreneurs’ Relief (ER) is the fundamental capital gains tax (CGT) relief in the United Kingdom (UK). It replaced business asset taper relief in April 2008 and provides the opportunity to obtain a 10% CGT rate on gains from qualifying business disposals if certain conditions are met. The relief has gradually been extended to cover £10 million of lifetime gains. Prior to the autumn 2018 budget, there was concern that ER could be significantly capped or even abolished. The good news is that there were no changes to the overall value of ER, but the bad news is that there are now additional conditions which must be satisfied for ER to apply. Change effective from 6 April 2019 This change involves an increase from one year to two years in the qualifying period over which the necessary qualifying conditions must be met. Individuals who acquired a qualifying holding of shares between 6 April 2017 and 5 April 2018 will therefore be subject to the minimum holding period of one year provided the sale takes place on or before 5 April 2019. From 6 April 2019, however, those shares may then cease to meet the minimum holding period until the new two-year period is reached. This will require careful consideration regarding the timing of a sale. It is important to remember that entering into an unconditional contract represents the disposal date for CGT and not the completion date. Hence, could there be agreements entered into on 5 April 2019 with completion thereafter? Alternatively, there may be situations where the sales process is delayed until the two-year period is met and the use of option agreements may also be considered. Change effective from 29 October 2019 Changes have been made to the definition of a “personal company”. Two additional tests have also been introduced to ensure that the shareholder has a genuine economic interest in the shares being disposed. Previously, a personal company was one in which the individual held at least 5% of the ordinary share capital of the company and at least 5% of the voting rights. From 29 October 2018, the individual is also required to be: Beneficially entitled to at least 5% of the profits available for distribution to the equity holders of the company; and Beneficially entitled, on a winding up of the company, to at least 5% of the assets of the company available for distribution to equity holders. The proposed ER legislation broadly imports the definition of equity holders and assets available for distribution from the existing group relief provisions in chapter six of part five of Corporation Tax Act (CTA) 2010. This is a complex area and consideration will be required on a case-by-case basis. Where a company has issued convertible loan notes, debt securities with “equity-like” features or where the interest on the debt exceeds a commercial rate of return, for example, this will cause significant issues and a potential dilution of an individual shareholder in the “equity holders” pool, potentially bringing them below the 5% threshold. In determining assets available for distribution, the definition within Section 166 of CTA 2010 provides that assets available are the assets amount minus the liabilities amount. The problem with this definition is that internally generated goodwill or intellectual property is unlikely to be included in the assets amount. Companies with no net assets are assumed to have a sum of £100 to distribute. It is also likely to cause problems for shareholders with entitlement to growth or freezer shares and may also cause problems where there are “alphabet” shares in the company, depending upon the rights attaching to them in the articles. These changes do not impact enterprise management inventive (EMI) shares. Further change from 21 December 2018 Given the complexity of the new rules introduced on budget day, a late proposed amendment to the legislation has been made inserting an alternative test to the two new 5% economic tests. This new test requires that, on the date of disposal, the selling shareholder would have been entitled to 5% of the proceeds in the event of a hypothetical sale of all of the company’s ordinary share capital on that day. This test is good news, especially for companies with alphabet shares, and it is likely that when individuals look to consider if ER is available, they will first consider if this test is met in priority to the other alternative economic tests. Conclusion Following these changes, the assessment of whether ER is available will be significantly more complex. It will be important to consider the interaction of these changes from budget day, 21 December 2018 and 6 April 2019 and establish what possible planning can ensure the future availability of ER. The above represents a short overview of the proposed new rules and may be subject to further changes as the Finance Bill proceeds through Parliament. Specific advice should be sought in advance of any proposed transaction. Kate Hamilton is a Senior Tax Manager at BDO Northern Ireland.

David Duffy highlights the latest VAT cases and discusses recent VAT developments. IRISH VAT UPDATES Revenue guidance updates eBrief 218/18, issued on 27 December 2018, contained links to a number of new and updated sections of Revenue’s VAT Tax and Duty Manual. This includes: Confirmation of a change in Revenue practice, which will result in the VAT rate for sales of certain food supplement products increasing from 0% to 23% with effect from 1 March 2019; Confirmation of a change in Revenue practice, which will result in the application of 0% VAT to sales of rollators with effect from 1 March 2019. A rollator is a device, equipped with wheels, used by persons with a disability or infirm people for support while walking; Refreshed or updated guidance on the VAT rules applicable in certain sectors including opticians, staff canteens, pharmacists and personal contract plans (PCPs); and New guidance on changes to the VAT treatment of vouchers (see below for more detail). Vouchers New VAT regulations (Statutory Instrument No. 582 of 2018) were published in December 2018, which update the Irish VAT law applicable to transactions involving vouchers. The regulations apply to vouchers issued from 1 January 2019 onwards. This update is in line with the harmonisation of the VAT rules for transactions involving vouchers across all EU member states. The new legislation defines the meaning of a voucher for VAT purposes and distinguishes between two types of vouchers for VAT purposes: single purpose vouchers and multi-purpose vouchers. A single-purpose voucher (SPV) is one where the place of supply (i.e. the jurisdiction where VAT is due) of the goods or services to which the voucher relates, and the amount of VAT due on those goods or services, are known at the time of the issue of the voucher. VAT will be due by the seller of the SPV in the VAT return for the period during which the SPV is sold based on the VAT rate of the good or service against which the voucher can be redeemed. A multi-purpose voucher (MPV) is a voucher other than a single-purpose voucher. This would include a voucher that can be redeemed against goods and services in more than one jurisdiction or at different VAT rates. For example, a voucher for a supermarket would typically be an MPV as the voucher can redeemed against products at a number of different VAT rates. VAT will be due on an MPV at the time of redemption of the voucher and the VAT rate will be determined by the goods or services against which the voucher is redeemed. Businesses that sell vouchers will need to review their business to determine whether they are selling an SPV or MPV, and apply the VAT treatment accordingly. VAT refund scheme for charities In Budget 2018, the Minister for Finance announced a refund scheme for charities in respect of VAT incurred by them from 1 January 2018 onwards. Qualifying charities are now entitled to submit an annual claim for VAT incurred during 2018. The deadline for making such claims in respect of 2018 is 30 June 2019. eBrief 219/18 contains guidelines for the procedures for making such claims. In order to qualify for the scheme, a charity must hold a charitable tax exemption from Revenue and be registered with the Charities Regulatory Authority at the date of the claim and the date the expenditure was incurred. Charities will be entitled to apply for a refund of a proportion of their VAT based on the level of non-public funding they receive out of total funding. Revenue’s guidance sets out the method for calculating a refund claim and the process for submitting the claim to Revenue. There is an overall cap of €5 million for this scheme across the charity sector in respect of claims made in 2019, which will be allocated on a pro-rata basis for qualifying claims. EU VAT CASE LAW UPDATES Termination payments  In MEO (C-295/17), the Court of Justice of the European Union (CJEU) ruled that payments a telecom company was contractually entitled to receive as a result of the early termination of a customer’s contract were subject to VAT. The CJEU rejected the argument that they were non-VATable compensation. In the facts of the case, the telecom company offered contracts under which customers paid lower prices in return for agreeing to a minimum contract period. The contract provided that where the customer defaulted and his/her contract was terminated, the customer owed a lump sum termination amount equal to the net monthly instalments for the number of remaining months in the contract period. According to the CJEU, this termination payment was not a compensation for damages and therefore, was subject to VAT. While the judgment is not available in English, the CJEU’s decision appears to be based on the termination amount being specified in the contract and the fact that the telecom company ended up in the same position as if the contract ran for the full duration. It is still possible that payments which amount to compensation can be outside the scope of VAT, but this judgment highlights that the exact fact pattern and contractual arrangements are important in determining the VAT treatment. Conditional payments  The Baumgarten case (C-548/17) considers when VAT becomes due in a scenario where there are multiple payments that are conditional on future events. The default rule is that VAT becomes due on a supply of goods or services when they are supplied. However, there are exceptions which allow for VAT to be due at a later date where successive payments are made in respect of those goods or services. In this case, the CJEU ruled that the supply of a service by a football agent to football clubs, which was paid for in later instalments that were conditional upon future events, became subject to VAT when the payments were made rather than when the service was initially performed. Baumgarten was a professional agent, which placed professional footballers with German football clubs. When Baumgarten successfully placed a player with a football club, it became entitled to commission from that club provided the player subsequently signed an employment contract and held a licence issued by the German Football League. This commission was paid to Baumgarten in instalments every six months after the player joined the club, for as long as the player remained under a contract with that club and held a German Football League licence. While the service of placing the footballer took place on day one, it was paid for over the duration of the player’s contract and the exact amount due was conditional. The taxpayer argued that VAT should be payable on each payment as and when it became due. The German Tax Authorities, however, argued that VAT was due upfront on the full amount that would be due over the term of the contract. The CJEU decided that, as the full amount of the payments to be made is conditional, the VAT on those payments became due on the expiry of the periods to which the payments made relate. David Duffy is a VAT Partner at KPMG.

EY’s Helen Byrne, Sherena Deveney and Brendan McSparran outline the relevant compliance dates for February and March. REPUBLIC OF IRELAND RELEVANT DATES FOR COMPANIES 14 February 2019 Dividend withholding tax return filing and payment date for distributions made in January 2019. 21 February 2019 Due date for payment of preliminary tax for companies with a financial year ended 31 March 2019. If this is paid using Revenue Online Service (ROS), this date is extended to 23 February 2019. Due date for payment of initial instalments of preliminary tax for companies (not “small” companies) with a financial year ended 31 August 2019. If this is paid using ROS, this date is extended to 23 February 2019. 23 February 2019 Last date for filing corporation tax return Form CT1 for companies with a financial year ending on 31 May 2018 if filed using ROS. Due date for any balancing payment in respect of the same accounting period. Loans advanced to participators in a close company in the year ended 31 May 2018 may need to be repaid by 23 February 2019 to avoid the assessment (on the company) of income tax thereon. A concessional three-month filing extension for iXBRL financial statements (not Form CT1) may apply. For 28 February 2018 year-ends, this should extend the iXBRLW to 23 February 2019. 28 February 2019 Last date for filing third-party payments return Form 46G for companies with a financial year ending on 31 May 2018. Latest date for payment of dividends for the period ended 31 August 2017 to avoid Sections 440 and 441 TCA97 surcharges on investment, rental or professional services income arising in that period (close companies only). Country by Country Reports (CbCRs)/Equivalent CbCRs for the fiscal year ended 28 February 2018 (where necessary) must be filed with Revenue no later than 28 February 2019. 14 March 2019 Dividend withholding tax return filing and payment date for distributions made in February 2019. 21 March 2019 Due date for payment of preliminary tax for companies with a financial year ended 30 April 2019. If this is paid using ROS, this date is extended to 23 March 2019. Due date for payment of initial instalments of preliminary tax for companies (not “small” companies) with a financial year ended 30 September 2019. If this is paid using ROS, this date is extended to 23 March 2019. 23 March 2019 Last date for filing corporation tax return Form CT1 for companies with a financial year ending on 30 June 2018 if filed using ROS. Due date for any balancing payment in respect of the same accounting period. Loans advanced to participators in a close company in the year ended 30 June 2018 may need to be repaid by 23 March 2019 to avoid the assessment (on the company) of income tax thereon. A concessional three-month filing extension for iXBRL financial statements (not Form CT1) may apply. For 31 March 2018 year-ends, this should extend the iXBRL deadline to 23 March 2019. 31 March 2019 Last date for filing third-party payments return Form 46G for companies with a financial year ending on 30 June 2018. Latest date for payment of dividends for the period ended 30 September 2017 to avoid Sections 440 and 441 TCA97 surcharges on investment, rental or professional services income arising in that period (close companies only). CbCRs/Equivalent CbCRs for the fiscal year ended 31 March 2018 (where necessary) must be filed with Revenue no later than 31 March 2019. PERSONAL TAXES  31 March 2019 Deadline for claiming separate assessment and nominating assessable spouse for 2019.  GENERAL 23 February 2019 P35 deadline for employers for 2018 (assuming returns and tax payments are made through ROS). Due date for Special Assignee Relief Programme employer returns for 2018. 31 March 2019 Return of information in relation to share options or rights granted in the year ended 31 December 2018. A similar deadline applies in connection with reporting obligations for forfeitable and convertible shares given to employees and directors. NORTHERN IRELAND RELEVANT DATES FOR COMPANIES The key dates for corporation tax purposes will, in most instances, depend on a company’s accounting period end date. The dates below are for a company with a 12 month accounting period ended 31 December 2018. 14 January 2019 Due date for third quarterly instalment payment for “large” companies.  A “large” company is defined as having total taxable profits in excess of the upper limit (being £1.5 million divided by the number of 51% group companies plus one and adjusted accordingly for length of period). PERSONAL TAXES 31 January 2019 Deadline for submission of tax return (individuals, partnerships and trusts) for 2017/18 by internet filing, with a £100 penalty for failure.  All tax due for 2017/18 to be paid by this date.  First payment on account towards the taxpayers 2018/19 liability is due.  Deadline for amending the 2016/2017 tax return. Note that amending the tax return, will extend the enquiry period by 12 months from the end of the quarter period of submission. Quarters run April, July, October and January. Any 2016/17 tax returns submitted after this date will be subject to a penalty amounting to the higher of £300 or 5% of the tax due for the year. This can be increased to as much as £3,000 or 100% of the tax due if HMRC consider that an individual is deliberately not filing the tax return.  Any tax for 2016/17 not paid by this date will be subject to a 5% penalty (in addition to an interest charge).  The trustees of all relevant trusts and complex estates that have incurred a liability for any relevant tax in the tax year 2017/2018 must register beneficial ownership information about the trust on TRS, by no later than 31 January 2019, if they have not already done so.    Relevant taxes are: Capital gains tax; Income tax; Inheritance tax; Land and buildings transaction tax (in Scotland); Stamp duty land tax; and Stamp duty reserve tax or stamp duty. The lead trustee may have to pay a penalty if they do not register the trust before the registration deadline. If they do not register or update the information, and cannot show HMRC that they took reasonable steps to do so, the penalties are: £100 for registering up to three months after the deadline; £200 for registering between three to six months after the deadline; and £300 or 5% of the total tax liability in the relevant year (whichever is higher) for registering more than six months after the deadline. Penalties will not be issued automatically and will be reviewed on a case-by-case basis.   Note that if the trustees incurred income tax or capital gains tax liabilities in 2016/2017 they should already have registered. If you have sold or disposed of a UK residential property after 5 April 2015 and are a: Non-resident individual; Personal representative of a non-resident who has died; Non-resident who’s in a partnership; Non-resident landlord; Non-resident trustee; Non-resident company or fund; and UK resident meeting split year conditions and the disposal is made in the overseas part of the tax year. You have 30 days from the date of conveyance to report your disposal on the non-resident Capital Gains Tax return, and pay any tax due.  If you do not submit and pay HMRC by the deadline you may have to pay a penalty and interest both on the late filing of the return and late payment of any tax due. Penalties for missed deadlines: £100 if up to six months late; A further penalty of £300 or 5% of any tax due, whichever is greater, if more than six months; and A further penalty of £300 or 5% of any tax due, whichever is greater, more than 12 months. If any non-resident capital gains tax remains unpaid after 31 January after the end of the tax year of the disposal, a late payment penalty of 5% of the tax outstanding will be charged. There are exceptions to the pay now rule if you already have an existing relationship with HMRC – for example, through Self Assessment. If you do, you can either: Pay when you submit your non-resident Capital Gains Tax return; or Defer payment until your normal due payment date through Self Assessment (i.e.31 January following the tax year of disposal). 2 March 2019 Any tax due in respect of 2017/18 and not paid by this date will be subject to a 5% penalty (in addition to an interest charge).

A new research project has uncovered the extent to which professional accountants are exposed to unethical activity.   The question of ethical or moral awareness of professionals is an important one, given that such awareness opens the door to ethical decision-making. Decisions made by accountants and other professionals are frequently made on a morally blind basis as the decision-maker is not aware that the choice harbours an inherent moral judgement. High standards of integrity are expected of professionals, who are also presumed to apply their specialised knowledge for the public good and to follow a code of ethics. The significance of moral awareness is among the matters that prompted our research into the ethical world of professional accountants in Ireland. In this article, we will discuss the significance and challenges around ethical awareness. We will then describe our research and findings on the subject and conclude with some proposals for optimising ethical awareness, which can subsequently lead to more ethical decisions and actions. What is moral awareness? A morally or ethically aware individual recognises the moral nature of an ethically ambiguous situation, that his/her potential decision or action may conflict with one or more ethical standards or values. An interpretative process by the person to incoming information determines whether they have factored in and recognised the moral values dimension to the dilemma they must address. This is important because moral awareness represents a first step, which ultimately leads to moral action. What leads to ethical awareness? There are various causes of awareness. One is context, the organisational culture in which the individual finds him or herself, with its moral values and reward systems. Another is individual differences. For example, research has found that accountants’ ethical orientation – idealism with a focus on principles, duties, obligations and personal integrity versus relativism, which eschews any absolute moral principles – influences ethical sensitivity in favour of the former. The other factor that promotes ethical awareness is the moral intensity of a given situation. This encompasses the magnitude of consequences from an ethical violation, social consensus on right and wrong, the temporal immediacy of consequences, the probability and proximity of beneficial or especially damaging effects on the public or the victim, and the concentration of effect. Why is moral awareness so difficult to establish? The nature of everyday routine in contemporary business organisations can foster insensitivity to the ethical aspect of decisions. The bureaucratic principle by which modern corporations are organised espouses impersonality in decision-making. It can lead to automaton-like behaviour, devoid of ethical considerations. We have routines of behaviour or scripts to follow in given situations, founded on unquestioned assumptions (for example, a script of how to prepare financial statements so we hardly think about it while doing it). Information inconsistent with the plot of the script may be filtered out (i.e. ethical considerations in the interests of efficiency). Overview of the ethics research Our research was part of a broad project examining ethical awareness, challenges and concerns of professional accountants with a view to creating guiding recommendations in support of ethical practice. Having conducted secondary research as background to steer the primary research, an online survey was completed by 2,137 members of Chartered Accountants Ireland and CPA Ireland in proportion to their membership numbers. This was followed by one-to-one interviews and focus groups to try to understand the thinking behind the survey responses. Online survey In the survey, respondents were asked to evaluate the extent to which they consider the need for ethical conduct in business decisions. Their responses were: 54% stated a “very large extent”; 34% stated a “large extent”; and 12% stated “some or small extent or not at all”. Respondents were asked how frequently, if at all, they observed or encountered particular categories of unethical behaviour (unethical HR practice, undue pressure or influence, dishonesty, bullying and harassment, misrepresentation and/or manipulation of information) in their career. 90% of respondents have “observed or encountered” a range of unethical conduct during their professional career, although this does not mean that they have partaken in such wrongdoing. Rather, it can illustrate circumstances where an individual has clear awareness of what constitutes unethical conduct. Accountants in business generally observe or encounter more unethical conduct than their colleagues in practice. Specifically, accountants in business are twice as likely as accountants in practice to have observed or encountered bullying and harassment. Conversely, 42% of accountants in practice have never observed or encountered bullying/harassment compared with only 23% in business. A partial explanation for this finding may be the fact that almost one third (32%) of respondents within the ‘accountants in practice’ cohort are sole practitioners, 46% of whom have never encountered or observed this behaviour. Further analysis of the online survey shows that at 23%, accountants in business are more likely than accountants in practices with more than 20 partners (11%) to have observed or encountered inappropriate responses to conflicts of interest. An explanation for this difference may be that accountants in practice have a regulatory obligation to formally address conflicts of interests before undertaking audit work with new clients and in reviewing long-standing relationships with existing clients. Accountants in business are more likely to have observed or encountered dishonesty (saying things that are not true). Also, 27% of accountants in practice have never observed or encountered dishonesty, compared with 21% of accountants in business. Again, the explanation may be the greater regulatory oversight over accountants in practice. Accountants in practices with more than 20 partners are one third more likely than accountants in practice generally to have observed or encountered manipulation of information. Such differences may be explained by the fact that accountants in practice, as auditors, are more exposed to clear examples of manipulation – for example, the overstatement of accruals. Furthermore, 32% of accountants in business and 27% of accountants in practice report that they have never encountered or experienced manipulation of information. This phenomenon of never having encountered this type of unethical conduct could be a factor of length of career, given that 51% of respondents’ with five years or less experience report having never experienced or encountered manipulation of information. The survey shows that 32% of accountants in business and 26% of accountants in practice report that they encountered or experienced misrepresentation of information either often or occasionally. Conversely, accountants in business at 29%, and those in practice at 32%, report that they have never encountered this type of misconduct. Again, this could be a factor of length of career as 50% of respondents with five years or less experience report having never experienced or encountered misrepresentation of information. Likewise, accountants in business (43%) are twice as likely as accountants in practice (22%) to have observed or encountered unethical human resources (HR) practice. Of the accountants in practice, 47% have never observed or encountered unethical HR practice, compared with only 23% of accountants in business. Accountants in business are likelier to have observed or encountered unethical HR practice (such as lack of transparency in selection and promotions), since their career and promotional paths may be less formalised or structured when compared with their colleagues in practice.  Interviews and focus groups Focus group participants suggested that there is greater awareness of ethical issues in the accounting profession, perhaps as a reaction to reported high-profile wrongdoing by professional bodies and regulators in the media. However, this is as yet insufficient to guarantee ethical behaviour. One interviewee in practice emphasised that ethics is fundamental, inherently doing the right thing – not just in response to professional regulations. Behaviour should be based on the correct values. This view was echoed in focus groups where there was a belief that behaviour should be based on principles rather than compliance. The concept of culture came up again and again, that ethics needs to be part-and-parcel of the everyday life of an organisation. This is consistent with culture as an antecedent of awareness in the ethics literature. The focus groups stressed that there should be an awareness of the accountant’s obligation to society, especially in larger firms which are involved with public interest entities and many stakeholders. There was general agreement that ethics should be an intrinsic part of organisational culture in both business and practice. In particular, partners in practice have a huge responsibility to do the right thing and lead by example. One interviewee made the point that being a qualified accountant is a very privileged position, as it is difficult to achieve and the examinations are not easy. So, why would you want to jeopardise that with misbehaviour? In similar vein, personal pride and safeguarding one’s own reputation was emphasised in the recently qualified accountants’ focus group. The difference between regulatory compliance and ethics, meaning ‘doing the right thing’, was discussed in focus groups. A particular issue in this regard is tax planning, where participants voiced their unease about highly sophisticated tax avoidance schemes. Accountants in business are more isolated with respect to their professional obligations and ethics than those in practice, where professional duties as an accountant are foremost in their jobs. This is even more apparent in smaller organisations, as larger organisations usually have guidelines or code of ethics. Overall, when questioned in person about the notion of acting in the public interest as part of being a professional, the study participants found it a nebulous concept. When it comes to decision-making, “you act for your client”. The recently qualified accountants we interviewed were of the view that more recently qualified accountants may be more ‘switched on’ about ethics compared to those who have been in the profession longer. They took the view that more experienced professional accountants are more influenced by loyalty and familiarity to the client and this may take precedence in decision-making. They believe that recently qualified accountants are more conscious of accountability for their actions and the consequences of wrongdoing. Enhancing ethical awareness Among the study’s participants, there was a high level of awareness about ethical issues and challenges in business and practice alike. Moreover, conducting this research in itself engaged professional accountants with the essential and relevant subject matter of professional and business ethics. Interview and focus group participants expressed an appetite for more such activity. This suggests that ethics education and training based on real-life issues and dilemmas and in-depth discussions should form a key part of both initial formation and continuing professional development (CPD) of professional accountants to create and advance ethical awareness, embracing principles. Where this is not practical, online discussion groups should be considered. The professional bodies are well-placed to play a significant role in making available such practical supports, training and CPD to their members. Cognisance of moral intensity factors such as magnitude of consequences for society of wrongdoing should form part of the discussion. A more principled ethical orientation of individuals who are relativists can itself be cultivated through such discussions. The challenge for us all is to create more ethically aware organisations. There is an opportunity for professional accountants in business and in practice to take a leadership role in fostering a positive ethical culture in their organisations. Such an approach could produce a virtuous process between culture, awareness and ethical action. Full details of the recent ethics research, which was carried out with the support of Chartered Accountants Ireland Education Trust, is available online from Chartered Accountants Ireland Ethics Resource Centre. To view the report, visit CharteredAccountants.ie/ethics. Dr Eleanor O'Higgins is Adjunct Associate Professor at UCD Smurfit Graduate Business School. Matt Kavanagh is a human resources consultant and part-time lecturer at the Centre for Corporate Governance in UCD.

Becoming a parent involves significant personal and professional change, but a little planning can go a long way.   Becoming a parent and taking time out of the workplace involves a significant, complex professional and personal transition, and often comes during a crucial time in your career trajectory. Take a moment to think about it. The psychological reorganisation required for healthy adaptation to parenthood is enormous – we have to learn to adapt to the physical, psychological, emotional and relationship changes that occur. It is one of the most challenging transitions that can occur in our lives. From a career perspective, employees in Ireland are lucky to have access to generous maternity leave with many women opting to take upwards of nine months’ leave. Increasingly, partners are also able to avail of a number of months’ leave. This is fantastic for adapting, and bonding with your new baby, but it involves the added transition of stepping away from work and back into it after a period of extended leave. If you have a baby on the way, the chances are that right now you are spending the vast majority of your week going to your place of work and hopefully doing a job you enjoy. This is about to change, suddenly and quite significantly. So much will happen in your life while you are away that the transition back to work will be a big one, despite what it might feel like now. Let us look at what you can do to make life easier on yourself and thrive through the changes ahead. Before leave Once baby is on the way, it can be so easy to be pulled into the craziness of preparing your home for a baby and gathering the baby ‘essentials’. It can often be a bit of a rush to get everything finished up in work, but it is well worth taking the time to put a plan in place for looking after yourself, helping your employer to help you, and managing your career in the run-up to your maternity or paternity leave. Make a plan with your manager Many employers can be reticent about getting in touch while you are on family leave. This is often well-intended but can leave you feeling a bit lost. The best way to counter this is to sit down with your manager before you go on leave and agree a communication plan. This can be as basic as agreeing that you will text them when baby comes, that you want to be notified of any major changes in your absence, and planning to meet for a coffee a few months before your return – whatever feels right and works for you both. Get in touch with human resources On a similar note, if you want to be kept in the loop about company goings-on, internal vacancies and so forth, get in touch with human resources (HR). Although some companies are fantastic at this, others can tend to forget about you altogether! So, make a point of contacting them (or raising the same points with your manager if your company has no dedicated HR function) and asking them to stay in touch.  Work and performance summary I highly recommend pulling together a brief summary of what you have been working on and your achievements in the run-up to your leave. You absolutely will forget! This can be very useful in getting your head back into the game when you return and act as a little confidence boost when looking back at your achievements. Invest in your well-being Make a commitment to prioritise your own well-being, as well as that of your family. Be kind to yourself and remember that there will be many changes ahead; and if things don’t go to plan, tomorrow is a new day. Ask your company to invest in your attendance at a workshop for planning your return to work or for some personalised one-to-one coaching. This is extremely beneficial in helping you get into a positive head-space and assisting with planning when the time comes. And of course, if you are back on top form quickly on your return, this will benefit your employer so it is a ‘win-win’ scenario. Planning your return Link in with work before you return  Keeping in touch with key contacts in work can be very beneficial while you are on leave. In the weeks before you return, arrange a coffee or call with your boss, work friends or network to get the lay of the land and reassure yourself that the landscape has not changed as drastically as you might imagine. Consider what supports would be helpful for you as you return and discuss these with your manager. Know your worth As you start to plan your return, take time to reflect on your worth. List the skills and experience you have gained through your career and also, during your time away from work. If you have trouble doing this, or feel you are losing your confidence, enlist someone who can help you. If you are taking an extended career break, it is important that you maintain professional development through volunteering, reading, attending relevant events and keeping up with industry developments. Make a plan with your partner to manage the household The chances are that you will be doing most of the household ‘stuff’ while on leave. While this makes sense when one partner is at home, this isn’t sustainable when both partners are working. Don’t expect your partner to just know this; it is hard to know what needs to be done when you are not the person doing it. Take time to sit down in advance and agree how you are going to manage the various tasks and downsize or outsource what needs to be done. Plan to get up and out in the morning This depends on your work and childcare circumstances (for example, if you all need to leave together in the morning, if your baby needs breakfast before you leave etc.) Take time to plan everything that needs to happen to get you out of the house, and find a system that works best for you. Most parents I have worked with find it beneficial to get as much done the night before as possible. As you settle back in Things will invariably change for you in the months and years ahead. Your priorities may change, perhaps temporarily and perhaps for the long-term. The sleepless nights don’t go away just because you are back at work and little ones often get sick at the worst possible time. Parenting through the early years can be tough, but they are fleeting in the grand scheme of things. Keep open lines of communication at work and note these wise words from Alan Sroufe: “The best thing parents can do is guard against their own stress levels”. TOP TIPS FOR MANAGING THE TRANSITION TO PARENTHOOD The prospect of parenthood beings with it many competing demands which, when taken as a whole, can be overwhelming. To avoid the common but counterproductive practice of retreating into panic mode, follow Claire’s four simple steps below... Plan, plan, plan Before leave, think about what will make you feel confident and supported as you return to work. Think about what will help you when you have a new-born baby at home and what will make your life as easy as possible. Communication is key If you don’t tell people at work and at home what is going on for you and what support you need, they will not be able to help you. It is so important to do this, even if this means pushing yourself outside your comfort zone. Prioritise your well-being Ensuring that you are healthy and well, both physically and mentally, is what will ultimately help you weather any tough times and manage the changes ahead. Know your worth Take stock of your skills, experience and achievements before your leave and as you plan your return. And yes, anticipating the ever-changing needs of your new mini-stakeholder is a skill! Claire Flannery is a business psychologist and executive coach at Strength Within, and mum to two small boys.

Coaching can help boost performance, but you must establish a culture that embraces coaching to see the benefits.   One of the most important attributes of a successful leader is their ability and willingness to develop others. Because of this, business leaders are now recognising the value and importance of coaching. If you look at job listings, you regularly see ‘the ability to coach and develop others’ on the list of skills needed in managers and leaders. Businesses are now going one step further and investing in ‘coaching cultures’. Coaching cultures are about delivering results and developmental opportunities to help people grow. You have a coaching culture when leadership is clear that coaching is at the heart of how the organisation is run. What is coaching? Unlike giving advice or direction to staff, coaching is an ongoing developmental process. Its purpose is to help your coachee to continue to learn and develop after the coaching session is completed. Coach and coachee agree on a development plan and work towards its execution together. The development plan is always created in the context of the organisation’s strategy. This distinguishes coaching from more personal approaches, like life coaching. The coach’s role is to ask questions, not give direction, and to assist the coachee in making their own decisions to keep them accountable. The coach is not the expert; the coach is a guide. Done well, coaching can have a big impact on performance and productivity. Creating a coaching culture Lead from the top It’s important to make a coaching project visible to all staff to show that coaching is at the centre of the organisation; that it is a permanent fixture and not a once-off project. Get an organisation leader to be a coach and a coachee, sending a clear message that coaching is at the heart of the organisation. Without a champion at a senior level, it is unlikely that a coaching culture will become embedded. Establish a coaching programme for senior management Encourage senior managers to see the benefit of coaching for themselves. They will bring their experience and enthusiasm for coaching to their own staff. Establish a company-wide coaching training programme. Customise the programme as managers become coaches themselves within the company. Once established, you can customise the programme for the context of your company and culture. Align coaching culture with the organisational performance  Coaching is not an end in and of itself. Coaching is always in the service of team and organisational performance. Coaching should be undertaken with the organisational and business strategy in focus and so, it is important that coaching and organisational goals are always aligned. It is also important that the boundaries between coach and coachee are explicitly negotiated and an agreement about confidentiality and reporting structures is drawn up. Hold yourself accountable at an organisational level Follow-through in a coaching culture is as important at an organisational level as it is on an individual level. Leaders at the top should look for feedback from coaches and coachees, and listen to what people say about the coaching process. If the coaching programme isn’t working, then review, revise and renew. Finally, you don’t need to work in a large organisation to enjoy a coaching culture. Some of the best examples of coaching cultures I have seen have come from small companies and individual practitioners. For example, a group of self-employed and solo entrepreneurs can gather monthly to coach each other. Reach out into your network to look for other professionals who want to engage in a coaching programme. Coaching keeps each person accountable and aligned with business goals as you plan the next stages of business growth. Dr Annette Clancy researches emotion in organisations. She is assistant professor at UCD school of art history and cultural policy.

Pauline Madden ACA works in a fact-paced environment, but always finds time to fundraise for a cause close to her heart. What do you most enjoy about your role? I am the Financial Controller at Valeo Foods and as my role is a very varied one, no two days are the same. I also work with a great bunch of people. What particular aspect of training has stood you in good stead? I trained at PwC and the audit skills I gained there have been invaluable. This, coupled with the experience I gained from working in several industries in finance roles, has given me a very focused commercial outlook. I have also had some excellent mentors throughout my career, who have helped me develop both personally and professionally. Who is your role model, and why? I don’t really have any one role model, but I do admire anyone who leads by example, believes in themselves and overcomes the obstacles that life throws at them. What gives you the greatest sense of satisfaction? Completing the goals I set for myself. One of your goals recently had a charitable motive. Tell us about that. My proudest moments include completing a trek to Mount Everest base camp, a 32-county challenge run in Ireland and the New York Marathon three times. All of this was done to help raise funds for children with a congenital heart defect (CHD). How did you get involved with CHD and ‘Team ANNAtude’? It’s all to do with Annabelle and Abbigael, who are twin daughters of a college friend, Anita O’Donnell, and her partner Mark. The girls were born six weeks premature with Abbigael showing no ill effects and coming home at eight days old. Annabel, however, was born with a CHD called ‘tricuspid atresia’, where the tricuspid valve in the right side of the heart has not formed. This is a potentially fatal heart defect and can only be treated by multiple open-heart surgeries. Annabel spent her first 10 months in the neonatal intensive care unit at New York Presbyterian Hospital and left after having four open heart surgeries. She suffered multiple heart failures, cardiac arrest, addiction to pain medications, intensive care unit delirium, gastrointestinal issues and various developmental delays. Thankfully, Annabel is now a happy five-year-old, going to school with her sister and enjoying life. Almost everyone knows someone born with a CHD, and I’m very proud to be able to raise awareness and funds for such a great cause.

Welcome to the February edition of Accountancy Ireland. This is the first edition in 2019, a year which could be momentous in terms of framing a new relationship between Ireland, the UK and the EU. Fittingly, this edition will bring a particular focus on the issue of leadership, a key factor if the changing relationship between these islands is to be managed successfully.  Brexit draws near At the time of writing, the UK and EU appear to be reaching the endgame in terms of withdrawal. There is little evidence that the Brexit Withdrawal Agreement, which would avoid a hard Brexit, will be agreed. We can only hope that all will be clear before 29 March. What is certain is that our members, as business leaders and financial advisers, will be at the forefront of dealing with new trading obligations. Preparations As an Institute, we must ensure that our members, their firms and their clients are ready to meet the challenge of Brexit. Be assured that as the specifics unfold, we will offer support, detailed information and resources to help members deal with the new arrangements, whatever they may be. Please note that the Institute, in partnership with ICAEW, has developed a free customs guide, Taking the Lead: Chartered Accountants and Brexit, which is available on our website. The UK Government has also released a partnership pack, which covers information on how to prepare for changes at the UK border in the event of a no-deal Brexit. We are also engaging with the relevant regulatory bodies, the FRC and IAASA, to ensure continued cross-border recognition of members’ qualifications and auditing rights across the island of Ireland after Brexit. Call for delay on VAT Deal or no deal, after the UK leaves the EU, Irish traders will have to pay VAT upfront on imports from the UK. This, in addition to new customs duties, could mean a stark cash flow burden for business.    Given that over €30 billion of goods are exchanged between the two jurisdictions every year, this major change will cause significant upheaval to every business involved in imports. The Consultative Committee of Accountancy Bodies Ireland (CCAB-I) is calling for the introduction of rules to allow Irish traders extra time to pay the VAT due on goods arriving from the UK. The postponed method of accounting for import VAT would mean that Irish importers would not have to pay VAT until several weeks later. Your professional development For many, New Year’s resolutions may have already come and gone, but for Chartered Accountants, personal and professional development remains a constant. Members should be aware that our Professional Development brochures (for both the Republic of Ireland and Northern Ireland) are available to download at our website. This year’s new courses and specialist qualifications are ready to book. We have endeavoured to bring together a varied programme of high-quality content designed to help our members fully develop their career. Barry Dempsey Chief Executive  

Populism seems to have taken hold across the world, but can it sustain itself outside of the spread of social media? There has been apparent chaos in so many democratic institutions recently – from the US government shutdown to a dysfunctional Parliament in Westminster to the violent protests of the Gilets Jaunes in France against fuel tax hikes. You could be forgiven for thinking that somewhere along the way, the traditional political parties which usually comprise the backbone of elected governments had stopped listening to their citizens. Instead of the conventional ideologies of left- and right-wing politics, populism seems to have taken hold instead. The core idea of populism is that there is a ruling elite which, in some way, is separated from the concerns of, for want of a better expression, “ordinary people”. It is neither necessarily “left-wing” nor “right wing”, but rather “my wing and not your wing”. It seems to me that this is a barren philosophy with little in it ultimately for anyone other than its most strident adherents. Perhaps of more interest is not the rise of populism, but the circumstances in which it is coming to the fore.  Over the centuries, ruling elites of all types have often been suspicious of any spread of knowledge or better communications among those whom they rule. Scholars distrusted the printing press, clergy showed hostility towards church services being conducted in the vernacular. Government of all types have long cherished the belief that the popular message should be disregarded. But in this era of mass communication, the popular message refuses to be disregarded. Among the consequences is the emergence of populist leadership – Trump in America, Bolsanaro in Brazil, Duerte in the Philippines and so on. In Europe, we have seen the rise of the German AfD, UKIP, Orban in Hungary, the flurry of support for Marine Le Pen in France and the extent to which Italy’s Five Star movement now holds sway. It does not seem to matter that their political messages have little by way of long-term viability.  What remains to be seen is whether the messages of populist thinking, often spread through the convenience of social media, will have the same enduring impact as political thinking developed from the grind of committee meetings, election campaigns and town hall rallies. These require serious effort over an extended period of time by the promoters of the political ideologies and commitment and stamina from those who support them. For example, the US civil rights movement was not born out of a social media hashtag campaign. It has endured since the 1950s and is still of relevance and has much still to achieve. In 70 years’ time, will we be saying the same thing about the Gilets Jaunes? Even if social media can help win over hearts and minds, it may not be sufficiently powerful to retain them. UKIP has already faded out of mainstream politics because it has nothing more to say. The French National Front has rebranded itself as the National Rally. Populism in its current incarnation only survives as long as it can keep communicating effectively.  Yet, there is little sign of any re-evaluation of the liberal, conservative, environmental or socialist values which have long informed the policies of traditional politics as a way to address populism. Unless political parties of every hue reassess the policies they use to attract support and win power, we will all be stuck within a cycle of short-term fixes and protectionism – border fences, trade wars and backstops – until all the populist ideas eventually run out of steam. That reassessment should start by political leaders tuning in to the messages from their own elected representatives, and tuning out the messages from the quangos, the special advisers and the spin doctors. Dr Brian Keegan is Director of Public Policy and Taxation at Chartered Accountants Ireland.

The only way to have a successful business is to have a successful product, and investment in change is crucial.  The economy, stupid” was a famous campaign mantra that helped elect Bill Clinton as the US President in 1992. In the business world, this could be stated as, “The product, stupid”. A viable product or service is what dictates the success of a business, not the sophisticated financial management, the ‘who’s who’ board of directors, the prestigious PR, nor even having classy auditors and lawyers. As an aside, but related, HQ flagpoles, unrecognisable sculptures in the lobby, advertisements boasting of industry awards, titled parking spaces for management, sponsoring of unrelated prestige events (such as the chairperson’s hobby like opera, horse racing, or arty stuff) are all signs of trouble to come through lack of direction. It was reported that the directors of Enron, the failed US conglomerate, spent a board meeting discussing the interior colours of a new corporate jet. No product development in any of this. The mantra for business success has never changed, though often unrecognised. Anecdotal evidence from experienced people suggests that a business, even a run-of-the-mill business, should consciously devote specific expenditure equivalent to perhaps 5% of annual sales keeping close to customers and researching the marketplace. This in order to determine quickly and on a continual basis how the product or service can be improved, enhanced or replaced. In other words, spending focused money to stay in business. The business world moves fast; often very fast. There is hardly a product or service that has a life – without significant change – of more than five years. Obsolescence, technological improvement, environmental concerns, regulatory or legislative demands, changes in consumer or industry habits or a new competing or replacement development – all of these elements are moving at a bewildering pace. Unexpected developments or competition can show up almost overnight in some sectors. Fast, international transport and communication means competition from across the world. Much of the change is driven by the application of technology. For example, emails supplanting physical mail, high street retail undermined by e-commerce, cameras made obsolete by smartphones, e-books, internet banking; the list is long. Each change further ripples out to underlying suppliers. For example, printing, previously a very major industry, is a hidden casualty of change. Printed directories, cheque books, paper currency, postage stamps, catalogues, magazines, newspapers, airline tickets, diaries etc. are almost obsolete. Conversely, on the other side, retail e-commerce has generated increased demand for packaging. However, this, too, is an industry pressured to change by environmental concerns on waste and use of plastic. Change can be categorised as evolution or revolution. Evolution is where the underlying product or service is largely constant as to purpose but changes presentation, usage or direction. For example milk is milk, but the end product on the supermarket shelf constantly changes in variety, packaging, food regulatory standards, and so on. Similarly, a truck as simple transport for goods is nevertheless evolving through tracking technology, emission controls, regulatory changes, fuel efficiencies and now electric or hybrid trucks on the horizon. Constant investment in change is always the keynote. Revolution is where an existing product or service is supplanted or seriously threatened by a new development or way of doing business. Even a simple process such as hiring a taxi or delivering restaurant food has been revolutionised, while services such as Airbnb poses a threat to aspects of the hotel industry as well as distorting residential lettings in cities.  ‘Disruption’ has entered the lexicon of business, almost invariably associated with technology. Disruption may be defined as an intrusion, usually unexpected, that impacts on a sector’s way of doing business; or indeed becomes the entire displacement of a product or service. The due diligence when buying or selling a business now keeps a wary eye on vulnerability through disruption. The leading reason for business failure is an inability to anticipate and address change. Foremost in this is the product or service. The renowned accountant, Laurence Crowley, greatly experienced in business failures and reconstructions, told me that signs of imminent failure – through not addressing change – are always there but not recognised in time.  Directors should watch out for flagpoles and sponsored opera as evidence of losing direction. More importantly, as a simple test, ask yourself when was the last time the executive management made a detailed presentation to the directors as to anticipating and planning the future of the business products or services? In today’s world, financial figures alone don’t tell you the story. Des Peelo is author of The Valuation of Businesses and Shares, 2nd edition, published by Chartered Accountants Ireland.

Establishing the ODCE as a stand-alone agency has taken some time, but its independence is required and welcome.  On 23 May 2017, the trial in the case of the DPP v Sean FitzPatrick, one of the most complex and largest investigations in the history of the Irish State, ended when Judge John Aylmer directed the acquittal of the defendant on all charges. In that case, Judge Aylmer advised that his decision to direct the jury to acquit the defendant arose out of concerns with the investigative process undertaken by the Office of the Director of Corporate Enforcement (ODCE). As a consequence, the Director of Corporate Enforcement made a number of changes to the office to address the issues highlighted by Judge Aylmer. These included adding a team of forensic accountants, a digital forensics specialist and a digital forensics laboratory to the ODCE. In addition, ODCE staff are now provided with specialised training in the Garda Training College to assist them with, among other things, statement taking and preparing files for the Director of Public Prosecution and members of An Garda Siochána are assigned to the ODCE to lead all criminal prosecutions. Notwithstanding the introduction of these positive changes, and in light of the Government’s commitment to further strengthen Ireland’s regulatory framework for the conduct of business and to combat white collar crime, further deliberation was given by the Government as to whether the ODCE could be provided with greater State support to assist it in carrying out its statutory functions.  Establishing the Corporate Enforcement Authority Against this backdrop, in November 2017, the Government published a package of measures to enhance Ireland’s corporate, economic and regulatory framework. One of these measures was to establish the ODCE as an independent agency better equipped to investigate and prosecute increasingly complex breaches of company law. On 4 December 2018, Heather Humphreys T.D., the Minister for Business, Enterprise and Innovation, announced that Cabinet had approved the establishment of this agency and further announced that the agency would be called the Corporate Enforcement Authority. On that day, Minister Humphries, in affirming the commitment of Government to supporting Ireland’s enterprise base and preserving its competitiveness, confirmed that she had allocated an additional €1 million to the ODCE in her 2019 budget to support the establishment of the ODCE as a stand-alone agency. Legislation is needed to effect this change and Government proposes to achieve this through enactment of the Companies (Corporate Enforcement Authority) Bill 2018.  The General Scheme of this Bill has been published. It proposes to give the Corporate Enforcement Authority the same functions and powers that the Director of Corporate Enforcement has but, in addition, to add flexibility so that it can structure itself to meet the demands of its extensive remit and appoint its own staff so as to preserve its independence. The Scheme also proposes to give the Corporate Enforcement Authority new investigative tools, most notably new search and entry powers to enhance the Authority’s ability to gather evidence that is held electronically. The existing regime The ODCE was established on foot of a recommendation from the 1998 Report of the Working Group on Company Law Compliance and Enforcement. At that time, the principal matter of non-compliance that was required to be addressed was a culture of failures by companies and their officers to meet their obligations in respect of the filing of annual returns. The fact that 90% of companies are now compliant with filing their annual returns on time is clear evidence that the ODCE has succeeded in addressing the defaults. While the Director is expressed to be independent in the performance or their functions, they are politically accountable which is evidenced by the fact that they are a civil servant, they can be removed by the Minister for Jobs, Enterprise and Innovation at any time (albeit for stated reasons) and required to submit annual reports to the Minister. The welcome changes We now live in a time when, not only is there a greater awareness of the need to prosecute serious company law breaches but the nature of those breaches is becoming more complex. Therefore, our corporate watchdog needs to be equipped to deal with the challenges in encouraging greater compliance with company law and to thoroughly investigate suspected breaches of that law.  The Government’s commitment to the establishment of the Corporate Enforcement Authority and to ensuring that it will operate in line with international best practice must, therefore, be welcomed.   Claire Lord is a Corporate Partner and Head of Governance and Compliance at Mason Hayes & Curran.

While technology has its benefits, it is important to remember that we sometimes need to take our time to do our best. I feel about 102 years old writing this article, as I fear I will be seen to bemoan the advances of technology and run the risk of coming across as a technophobe. Luckily for me, neither is true. Having qualified at a time when a laptop was a COMPAQ computer that you needed to be a weightlifter to bring on audit with you, I fully welcome the benefits that technology has brought us. However, I do acknowledge that, with all the advancements we have witnessed in the past 20 years, and with every screed of benefit it brings us as professional accountants, it also brings risks which we must acknowledge in our profession and, particularly, our education and training. There are many facets of benefits and threats, and people much more qualified than me have done SWOT analyses of the influence technology has on our profession. However, for me, the biggest risk technology brings us is the pace at which we  are forced to lead our professional lives.  Yes, it is a double-edged sword. This pace ensures we can shorten the life-cycle of our deliverable, be it a report, a trial balance or a lecture. I have to ask, though: when does this demand for speed become a threat to the very cornerstone of our profession? A threat to our ethics As a profession, we know that ethics is the foundation for everything we do and we must as, professional accountants, comply with the following fundamental principles:  (a) Integrity; (b) Objectivity; (c) Professional competence and due care; (d) Confidentiality; and (e) Professional behaviour. Are the above principles delivered as a practice/process or a value set or a mixture of both? Does it matter? How does technology influence or impact this? To me, three of them definitely are value sets – integrity, objectivity and professional behaviour. And it is these values that can be put under pressure in the fast-paced, digital world in which we work. We must be mindful that these values are maintained and upheld in all aspects of our work, especially when we are challenged to deliver output or answers instantaneously.  Time to slow down As an employer in practice, I can see the pressures that are put on all levels of our organisation, from trainee through to partner. This is often by virtue of a question or request in an email that simply “must” be answered immediately. We have all become so used to living in a fast-paced world where instantaneous information (Google), photos, videos (Instagram) and commentary (Twitter) are the norm, especially for a younger generation where they have never witnessed anything different. I urge other Chartered Accountants to teach our students and younger accountants to know when they must take time to consider, think, confer with others (face-to-face) and reflect. We need to be able to show them that speed is not the fundamental requirement but the consideration of their ethical obligations is, which may mean they should slow down. They need to understand that consultation with peers can be crucial to success.   Sinead Donovan is a Partner in Financial Accounting and Advisory Services at Grant Thornton.

With recent equity weakness, investors have to ask themselves if supporting long equities is still a safe bet. Marathon Man is one of my favourite movies. It fits into the genre of 1970s paranoia movies such as The Conversation, Chinatown and Three Days of the Condor. Those movies represented a cultural reaction to America’s unsettling status at home (Watergate) and abroad (Vietnam). The film’s central scene pits Laurence Olivier (as an elderly ex-Nazi war criminal) against Dustin Hoffman, (playing a student whose CIA brother has been hunting Olivier). Olivier kidnaps Hoffman and straps him into a chair to torture him with a dentist’s drill. Olivier asks “is it safe” for him to retrieve money from his illicit bank account. Poor Hoffman doesn’t know what Olivier is talking about.  Today, in early 2019, equity investors are confronted by the same question: is it safe? Over the course of 2018, US equities dropped by 7%. Irish equities dropped by a startling 22%, which was met by indifference from the Irish media and political classes. This dramatic fall in Irish equity values has passed by with little public commentary.  These are the same classes who populated the room on the night of 29 (to 30) September 2008 when the Irish government decided to guarantee the liabilities of Irish banks. That decision was based on the proposition that our banks were merely suffering a funding crisis rather than a solvency crisis (resulting from the market value of banks’ loans falling far below their book value). A cursory glance at the share price chart of the main Irish banks back then would have revealed that they had already lost three quarters of their peak value prior to Lehman Brothers becoming insolvent. Conclusion: markets often know more than supposed experts.  Is it safe? All we can do is examine the possible reasons for recent market weakness and consider the balance of market forces likely to prevail in 2019. There are several factors that may explain recent equity weakness: High equity valuations – on several long-term measures, such as the cyclically adjusted price earnings ratio, equities look richly valued. However, two caveats must be noted. First, while valuation levels offer a good indicator of prospective returns over three years and longer, they are poor indicators of likely returns over shorter periods. Second, equities look reasonably valued based on some valuation metrics, such as prospective price earnings. Tighter monetary conditions – across the globe, central banks are tightening monetary policy whether through withdrawal of quantitative easing or outright interest rate increases. The danger is that central banks will overdo it and tip the global economy into recession. Recent comments from Fed chairman, Jerome Powell, suggest the Fed is alive to this risk. Recession danger – we are already very long into the current global recovery cycle. Several reliable American indicators (the unemployment rate and the yield curve) suggest the next US recession may happen by 2020/2021. But it may come even sooner. Just two months ago, JPMorgan reported a 60% chance of a recession within two years, and stated in early January that “US equity, bond and commodity markets appear to be pricing in on average close to 60% chance of a US recession over the coming year.”  Brexit – as the clock ticks down to 29 March, the prospect of a hard, no-deal Brexit is growing. That scenario could tip an already weak European economy into recession. This factor may be weighing especially (and probably mistakenly) on Irish equities. Is it safe? No, it’s not. But I remain optimistic about the prospects for equities in 2019 for two reasons. One, this is not at all what a stock market top looks like: investors are frightened rather than euphoric. Two, the US economy continues to perform strongly. I sense the next US recession is still some years away. That’s why I’m still long equities.     Cormac Lucey is an economic commentator and lecturer at Chartered Accountants Ireland.

The biggest issue facing employers at the moment is the new “real-time” reporting regime, known as PAYE Modernisation, for PAYE that went live on 1 January 2019. From this date, you must make a submission to Revenue on or before making a payment to an employee. After the end of each calendar month, Revenue will issue a statement based on submissions received, which sets out the tax due for the period. The statement is deemed a statutory return by the 14th day after month end. Where errors are made, there is scope to amend the statement in advance of the 14th day of the following month. Payroll taxes are then remitted to Revenue by the 23rd day of the following month. The P35 filing will also no longer be required – the reporting process must be correct for each pay period, otherwise penalties may apply. If not already done so, employers should immediately review their payroll procedures to ensure that accurate information is provided on a timely basis. It is important to have all stakeholders involved so they understand the need for improved processes. How does this effect benefits-in-kind and notional payments? Revenue has advised that benefits-in-kind (BIK) and other notional payments should be reported by: a) The day the BIK or notional payment is made; or b) The earlier of the next pay day or 31 December in the year. A “best estimate” of the taxable value should be included in the next payroll submission after the benefit/notional payment is provided. When the actual value becomes known, an adjustment is to be processed in the following payroll submission. Revenue expect these items to be reviewed regularly – at least quarterly – with adjustments processed in the next payroll submission. Does this also apply to taxable expenses? Revenue has advised that a payroll submission is required on or before any taxable cash payment is made to employees. Many employers reimburse employees for items that, while allowable under the company expense policy, are taxable. To date, these items are generally picked up through retrospective reviews throughout the year and before the P35 is filed. This type of catch up exercise will no longer be possible. Employers should review internal processes to ensure taxable expenses can be identified in advance of reimbursing employees. Further complexities may arise where expenses are reimbursed by the Accounts Payable department or off-payroll-cycle as additional payroll submissions may be required. What about company credit cards? Revenue has confirmed that the use of company credit cards are considered notional payments with the benefit being provided at the date the credit card is used (and not when the credit card bill is settled). Such items should be included in a payroll submission and reported to Revenue by: a) The day the benefit is provided; or b) The earlier of the next pay day or 31 December in the year. This may create practical difficulties for employers in determining what items are reportable each period as you may not have oversight of the taxable expenses incurred until a later date when the employee submits expense details. What will happen if my organisation isn’t compliant? The current penalty regime provides for a €4,000 fixed penalty for each breach of the PAYE regulation. There is also provision for a €3,000 fixed penalty imposed on the company secretary for each breach. These penalties can be imposed on a per-item basis, so if you are even a mid-size level employer, these penalties can mount up. While Revenue have stated that the penalty and self-correction regimes are under review, it is hoped that penalties would only be enforced for significant breaches and only in situations displaying evidence of deliberate behaviour.  However, as things stand, they could be applied to any correction of, or omission from, a payroll submission. Colin Forbes is a Tax Partner of Global Employer Services in Deloitte.

Performance reviews are often thought of as an ordeal rather than opportunity. Dr Gerard McMahon outlines the actions to take before, during and after the review to ensure its success. For many people, the performance review process is a pain in the posterior. It is up there with a visit to the dentist in the popularity stakes. However, the wide-scale application of formal performance management or appraisal systems serves to underline an employee’s central role in the pursuit of a wide range of organisational objectives. Though performance management is ultimately an ongoing, every-day process, it normally comes to a head at the periodic review meeting. If approached with due consideration, it can prove to be an uplifting and invaluable experience for all.  Before the meeting Before you step into the meeting, reflect on its purpose. Most want to increase the employee’s motivation levels, to any extent, in the desired direction. Make sure that’s clear for yourself and your employee. It’s worth considering planning a provisional interview structure and strategy to ensure all relevant matters will be dealt with in an appropriate manner.  Set a mutually convenient time – a lot of it – and encourage the employee to prepare for the meeting. It is now common for employees to submit a self-assessment form to their manager prior to the meeting. This practice has considerable merit, as it encourages the employee to reflect on all of the important aspects of their performance and development.  The decision as to what venue to use for such a sensitive meeting is also worth considering. Though the norm is to convene it in the manager’s office, it may be preferable to locate in the employee’s office (if they have one) or to avail of a neutral venue. It helps to ensure that there will be no interruptions, wherever you go. Having agreed the time and venue, the room’s setting or layout should also be prepared. The manner in which a room is laid out conveys certain messages. For example, the manager can choose to avoid placing themselves behind a desk due to its (physical and psychological) ‘barrier’ connotations. You should also avoid sitting at a confrontational angle.  Next, it is important to review the employee’s job description and consider what their job entails in practice. You should also be familiar with the review forms from previous meetings, including the objectives agreed. It will be useful to have concrete examples to support the feedback that you intend to give. When forming an assessment of the employee’s performance, other views may be relevant.  It can also help to check what training/development has or can be provided to the employee.  Finally, the manager should be aware of the objectives of the organisation, department or division objectives for the next period and the potential role of the job-holder. During the meeting Once the meeting commences, it’s important to establish rapport. This entails nothing more complex than breaking the ice with simple questions and quips. After the initial niceties, the review’s objective and proposed agenda can be outlined. The practice of inviting an agenda input gives the employee joint ownership of the process. Of course, the better prepared the manager is, the less likely it is that issues that had not been anticipated will be introduced.  It is advisable to clear the (discreet) note-taking with the employee and to invite them to take notes if they wish.  Start the review by giving appropriate, positive feedback. This is the most important part of the review meeting, so don’t rush it. It is also good to encourage the employee to talk about what positives they think they bring to the role. It is a good idea to get the employee to self-review as much as possible. A good manager should spend up to 85% of the review meeting actively listening, so take your time and don’t be afraid to use silence if and when appropriate. Clarifying and reflecting are also useful techniques for getting the employee to open up and elaborate. It is advisable to avoid arguments and judgement before you’ve heard all of the evidence.  In a similar vein, an effective manager will focus on facts relating to job performance, not personality. This entails reviewing past performance and SMART (i.e. specific, measurable, agreed, realistic and time-bound) objectives, before setting new ones for the coming period.  As with any important meeting, summarise the key points at the end. However, it may prove enlightening to ask the interviewee to summarise first and then to focus on any important omissions. If it hasn’t been done during the meeting, complete the self-assessment form – or make appropriate arrangements with the interviewee for form completion Before closing, the manager should look for feedback on him or herself. Performance management reviews should be a two-way street, and if one is big enough to give feedback, one should be big enough to take it. Conclude the meeting on a positive note. After the meeting The manager and employee should be satisfied that the completed self-assessment review form is a fair and accurate reflection of the meeting. The draft form should be forwarded to the employee for approval, signature or comment on any appropriate revisions. Afterwards, both parties should endeavour to do what they agreed in the meeting and on the form, and make sure to schedule follow-up reviews or agreed actions. Finally, ensure that the employee and other authorised parties secure copies of the signed form or that the designated online computerised facility is appropriately utilised. Dr Gerard McMahon is the Managing Director at Productive Personnel Ltd. Performance review checklist Before Reflect on the meeting’s purpose: to motivate. Agree a mutually convenient time and place. Ask the interviewee to submit the self-assessment form in advance.  Plan a provisional interview structure and strategy.  Check the meeting venue to ensure an appropriate setting and layout.  Ensure that there will be no interruptions. Review the job holder’s job description and consider what the job entails in practice.  Study forms from previous meetings, including the objectives agreed, and look for concrete examples to support your feedback. Others’ views may be relevant.  Check what training or development has and can be provided.  Revisit the department’s objectives and the potential role of the job-holder. During Establish rapport. Confirm the interview’s objective and agree the agenda. Enable note-taking.  Give appropriate, positive feedback and encourage the reviewee to talk about their strengths. Actively listen as you allow the interviewee to self-review and self-prescribe. Take your time and don’t be afraid to use silence when appropriate.  Clarify and reflect to explore key issues. Don’t engage in arguments. Focus on facts relating to job performance, review past performance and SMART (i.e. specific, measurable, agreed, realistic and time-bound) objectives. Set SMART objectives for the coming period.  Ask the interviewee to summarise the meeting and then focus on any important omissions.  Look for feedback on yourself.  After Forward the draft form to the employee for approval and signature. Follow through on what was agreed in the meeting and on the self-assessment review form.  Fill in the diary in regard to follow-up reviews and agreed actions.  Ensure that the interviewee and other authorised parties get copies of the form. 

This year’s budget was much like the budgets in years past. Reading this article, the Budget probably seems a long time ago. However, the proposed changes are still a work in progress, with further changes included in the Finance Bill, prior to enactment in late December. Last year, the President signed the Bill on Christmas Day. Most of what was included in the Budget was well flagged in advance. Like in previous years, the main beneficiaries from a tax perspective were low to middle income earners. What is interesting is what was not said in the Budget speech about personal tax. There was no mention of our high marginal tax rates and no indication that these would be lowered in the future. Given the current political environment, it is difficult to see much movement in the near future on this front, with entrepreneurs also a victim of this atmosphere, with no increase in the €1 million cap on gains subject to the lower 10% capital gains tax (CGT) rate. Exit tax As expected, the 9% VAT rate for the hospitality sector was increased to 13.5%. The lower rate was seen to have served its purpose and a proposal to confine the increase in the rate to large cities was ruled out. On the corporate tax side, the biggest surprise was the introduction, at midnight on Budget Day, of tighter exit tax provisions. The exit tax seeks to prevent Irish companies from migrating tax residence and removing certain assets permanently from the Irish tax net. Prior to the amendment, it was relatively easy to escape the existing exit tax provisions. Going forward, Irish companies that migrate tax residence will suffer a 12.5% tax charge on unrealised gains at the date of migration, payable in six instalments in certain cases. The 12.5% rate increases to the standard 33% CGT rate if the migration is part of an arrangement whereby there is also a disposal of assets by the company.  The new exit provisions will principally impact companies with valuable intellectual property (IP) in Ireland. Going forward, it will not be possible to remove this IP from the Irish tax net without incurring a tax cost. The exit tax comes at a time when many groups are looking at moving IP currently housed offshore to onshore locations such as Ireland.  While the introduction of a revised exit tax regime was mandatory under an EU Directive, its introduction could have been delayed until 2020, so its implementation on Budget Day was surprising.  Controlled Foreign Company regime The Budget also saw the expected introduction of our Controlled Foreign Company (CFC) regime. Broadly, this affects Irish companies with subsidiaries in low-tax jurisdictions where the profits of the low-tax country are essentially driven by activities undertaken in the Irish company. The expectation is that the CFC rules, effective 1 January 2019, will not generate significant tax revenues but will require consideration by some groups. KEEP scheme There was a positive change to the KEEP scheme with an increase to 100% of salary on share value that can qualify for CGT treatment. KEEP is a tax-efficient share option scheme, granting CGT treatment rather than more penal income tax treatment, subject to certain conditions. Unfortunately, the scheme is still difficult to access and uptake has been slow. Many of the hoped for changes did not come to pass and this is likely to mean that no significant additional take-up in the scheme will be seen. EIIS The Budget, and subsequent Finance Bill, also saw fundamental changes made to the EIIS (old BES) relief, which incentivises investors with a tax deduction for qualifying investments. With EU rules making it difficult in many cases to establish whether a particular investment is eligible for relief, the existing EIIS regime has proved difficult to access for many investors. Combined with a resourcing issue in Revenue, this has caused significant delays in the certification process. The Finance Bill has completely rewritten the EIIS rules. The rules are now clearer and less complex, and introduce a new relief for investments in start-up ventures. While some issues remain within the new regime, there is hope that the improvements made will encourage more take-up of the scheme in 2019 and beyond.  Housing In a positive move, full interest relief for landlords in respect of interest charges on residential properties has been fast-forwarded to 1 January 2019.  In a further move to improve supply in the rental market, short-term lettings (less than 28 days) will no longer qualify as tax-exempt rental income under the “rent-a-room” scheme. The objective here is to discourage short-term lettings in favour of longer-term tenancies. Overall, the Budget produced nothing earth-shattering from a tax perspective. However, there were some missed opportunities to do more for Irish entrepreneurs and small businesses in general.  Peter Vale is Tax Partner at Grant Thornton.

The UK Government is carrying out inspections and imposing fines on companies found to be non-compliant with the national minimum wage. Geraldine Browne highlights the common mistakes that organisations sometimes make. Her Majesty’s Revenue and Customs (HMRC) achieved record enforcement results this year, identifying £15.6 million of underpayments. The number of workers identified as underpaid was more than double that in 2016/17 and the highest number since the national minimum wage (NMW) came into force. There is no doubt that the Government’s commitment to this clampdown is working; we are seeing an increase in NMW reviews. There has also been a significant rise in whistleblowing over the NMW. HMRC received a record 5,053 reports of suspected underpayments in 2017, which had doubled from the year before. We expect that this will continue to increase with new payslip rules, which are due to come into force in April 2019. The main change will mean that any worker paid on an hourly basis will be due a payslip showing the number of hours worked. The aim is to help workers establish if they have been paid the correct amount under the NMW.  When we look beyond the headline figures, we see that most businesses take NMW compliance very seriously. In fact, of the 239 employers named and shamed, 85 were found to be underpaying just one employee, indicating that mistakes are being made, not malicious intent. Public naming and shaming has a huge impact on the reputation of a business. Employers tend to focus on ensuring that they are paying the correct rates to the correct categories of employee. They understand the rates but do not always understand the principles of what constitutes time for pay. It is a complex area and worth reviewing some of the common pitfalls. What is work time? There are periods of travelling time when the minimum wage must be paid to a salaried worker. When they are travelling in connection with their work, any rest periods taken during the time they are working counts as time worked, as does waiting for a train, waiting to collect goods, meeting someone in connection with work and travelling to a training venue. Employers need to address how they record and pay for this time. Contrast this to the recent Court of Appeal case on “sleep-ins”. The Court of Appeal decided that sleep-in workers were not entitled to national minimum wage for time spent asleep during a sleep-in shift. This case, Royal Mencap Society v Tomlinson-Blake again focused on time worked with the employee arguing that time asleep was time worked. The outcome left the care sector in limbo as we await to hear if the Supreme Court will hear this appeal. In the meantime, this sector continues to pay employees for sleep-ins until a decision is reached. Many employers have systems whereby their workers clock in and out and this data is passed to a payroll department to process hourly paid workers. This area will be reviewed in detail by a NMW inspector. If they do come across a case where an employee has not been paid for time worked, this will form part of non-compliance with the NMW. This can easily happen. For example, the employee has clocked in at 8.10am, but has been paid from 8.15am. It is worth having your own internal review of this data to ensure compliance. One slip-up can be costly. Deductions It is not just what employers pay that requires review, but also what deductions they make from pay. There are deductions that will not reduce the employee’s pay for minimum wage purposes. These include deduction for income tax, national insurance and accidental overpayment of wages. Deductions can cause unintentional error. The employer may deduct something from the employee’s salary, which may take their pay below the NMW. For example, an employer may deduct the cost of the uniforms from staff salaries, bringing the employee below the NMW. Employers may wish, instead, to provide uniforms free of charge or, alternatively, spread the deductions over several pay periods. Review your pay practices In summary, the Government continues to put measures in place to protect employees from NMW exploitation. This is how it should be, even when it raises additional challenges for business. To safeguard against non-compliance, employers should conduct a thorough review of their pay practices in all areas of NMW. Substantial fines accompany NMW offences and the damage to the employer’s reputation can be significant. It can impact on business sales and on businesses’ ability to attract key talent in the future. You may think you are complying, but one error can lead to the naming and shaming. It’s worth moving this topic further up your organisation’s agenda and investing the time in a thorough review.   Geraldine Browne is Tax Director at BDO Northern Ireland.