Tax

The UK’s research and development scheme offers generous tax savings to companies, but is it sustainable and are there risks? As those working within the accountancy industry in the United Kingdom (UK) will largely be aware, the UK’s research and development (R&D) relief scheme offers considerable tax savings to qualifying companies. The scheme for small- and medium-sized enterprises (SMEs) is particularly generous, offering relief totalling 230% of qualifying R&D expenditure and cash rebates for loss-making companies. The purpose of the relief is to support companies working on innovative science and technology projects in an effort to increase economic growth by promoting innovation. There is a risk, however, that the relief could be perceived as an opportunity for companies to obtain funds in instances where the claim may not be entirely legitimate or as a lucrative opportunity for advisors to promote a tax reduction strategy. Current climate HMRC statistics indicate that both the number of R&D claims being made and the total financial support claimed through R&D tax credits have increased drastically since the introduction of the relief in 2000, with a particular surge since 2014. Although the UK government appears to equate increasing R&D claims to increasing R&D investment and innovation, this link may be somewhat tenuous. Due to the retrospective nature of R&D claims, claimant companies will not necessarily undertake increased R&D activities as a result of making a claim. In some cases, a claim will be made for activities that the company would have undertaken irrespective of the availability of relief. Furthermore, awareness of the scheme has increased significantly in recent years. This is due in part to the fact that the relief is widely promoted by R&D claim advisors, including a number of boutique firms that specialise in assisting with R&D claims in return for a portion of the tax savings generated. Potential risks Although the enquiry limit is typically two years or less from the end of the accounting period, discovery powers enable HMRC to make an assessment if they determine that a relief has been given which is, or has become, excessive. A discovery assessment can be made where the loss of tax was brought about carelessly or deliberately by, or on behalf of, the company and where the HMRC officer could not reasonably have been expected, on the basis of the information available, to be aware of the facts giving rise to the loss of tax. The general time limit for discovery assessments is four years, increasing to six years for cases involving carelessness and 20 years for those involving deliberate action. HMRC has been known to seek penalties regarding incorrect R&D claims on the basis that the company was careless in failing to obtain professional advice considering the size of the company and the claim. For companies within the scope of the Senior Accounting Officer (SAO) regulations, the appointed SAO in particular should ensure that he or she is satisfied that R&D claims are accurate as the SAO may be held personally accountable for the failure of the company to submit accurate tax returns. Potential issues with R&D claims A range of potential issues can arise when it comes to R&D claims, including: Documenting insufficient technical detail to support the claim (for example, presenting the claim in a glossy report that fails to provide the information necessary to evidence its validity); Failing to identify appropriate claim boundaries (for example, claiming for an innovative project in its entirety without isolating the elements that meet the relevant criteria, or claiming for projects that span many years using the same supporting narrative, therefore failing to evidence how the project continues to meet the criteria over time); Overstating the claim (for example, claiming expenditure for directors’ time where directors have not been directly and actively involved in resolving technical uncertainties); Claiming non-qualifying expenditure (for example, consumable costs where the resulting product has been sold to customers. Such costs would have qualified prior to 2015); and With software development claims, assuming that a technological environment is indicative of technological uncertainties. It is crucial to ensure that a project is assessed against the qualifying criteria and that the supporting narrative is robust and can withstand the scrutiny of HMRC’s software specialists. The future of R&D relief HMRC has been relatively supportive of companies claiming R&D relief to date and enquiries into R&D claims are reasonably infrequent. Consultation undertaken in 2015 sought to improve access to the relief for small businesses and an ‘Advance Assurance’ scheme was introduced for first-time claimants as a means of simplifying the process. With the UK undergoing a period of significant uncertainty, not least due to Brexit, it is difficult to speculate on future government policy. The benefits of R&D tax incentives and/or support for the scheme could be enhanced in order to encourage companies to operate in the UK, stimulate innovation and increase the UK’s competitiveness. Alternatively, the spiralling costs of R&D relief could render the scheme a target for cost-cutting measures. If so, the UK could follow in the footsteps of the Republic of Ireland where R&D claim investigation activity has increased and claims are now subject to heightened scrutiny (for example, external experts assisting in the evaluation of claims). Revenue Commissioner investigations have reportedly exposed high levels of abuse of the scheme with over €57 million recouped from R&D claimant companies in the five years to 2017. The risk of penalties for non-compliance and the potential for increased scrutiny of claims emphasise the importance of ensuring a high level of diligence in the preparation of claims. It is advisable that companies, their directors and advisors ensure that an R&D claim is legitimate, accurate and can be fully supported and justified to HMRC in the event of enquiry. Cathy Kelly is a Senior Manager at BDO Northern Ireland.

Many businesses are using MTD as an opportunity to revamp outdated compliance processes and seek out opportunities to automate time-consuming processes. Making Tax Digital (MTD) was introduced on 1 April 2019 in the United Kingdom (UK) with a six-month deferral in place for a small cohort of taxpayers. The aim of MTD is to transform and modernise how tax is reported and managed, and the first stage of MTD is to bring VAT into the digital domain. For VAT periods commencing on or after 1 April 2019, all VAT-registered businesses with a turnover in excess of the VAT registration threshold (taxable supplies of £85,000 per annum) will be required to maintain digital records for VAT and submit their VAT returns digitally. There will be some limited exceptions, which are in line with the current exceptions for businesses that are unable to submit returns electronically (due to lack of internet access, insolvency or religious beliefs, for example). Once a business is covered by MTD, it will remain within the regime even if its turnover later goes below the threshold, while businesses for which MTD is not mandatory can opt into the regime if they so wish. The UK is one of many jurisdictions taking measures to modernise the tax reporting process. MTD is unique in its design and, unlike measures taken in mainland Europe, doesn’t require the provision of additional data to the tax authorities. However, the need to maintain quality data to support the tax reporting process is critical for businesses to build the robust electronic audit trail that is now required. MTD requirements There are three principal requirements in relation to MTD for VAT. Each requirement is outlined below. Digital records  (effective from 1 April 2019) Details of the business transactions that directly lead to the creation of the summarised VAT return figures due for periodic submission to HMRC must be maintained in digital form within ‘functional compatible software’. The time of supply, value of supply and the amount of input VAT to be claimed must be recorded digitally in respect of all individual purchase transactions. For sales, it is necessary to record the time of sale, value of sale and the applicable VAT rate. This requirement may be straightforward for larger businesses, which already record granular data in enterprise resource planning (ERP) systems. While standard accounts payable or accounts receivable transactions will contain the required data, however, exceptional items recorded by journal entry or manual workarounds are presenting challenges to businesses in meeting their MTD obligations. It should be noted that where improvements can be made to the raw data and system tax logic supporting VAT compliance, this will help streamline the tax compliance process and help businesses meet MTD’s other requirements – in particular, the need to build “digital links”. Digital links  (soft landing up to 1 April 2020) It will be necessary to demonstrate that “digital links” are used throughout the end-to-end VAT return preparation process to transmit data between systems used to produce data relevant to the VAT return. Re-keying data and the use of ‘cut and paste’ are specifically prohibited. Information flows between systems must therefore be automated. It should be noted that links between various Excel documents are permitted. However, businesses will be challenged by the manual adjustments and various journal entries that typically form part of the VAT reporting process. While this requirement has the force of law from 1 April 2019, HMRC has confirmed that a “soft landing” period will apply, whereby penalties will not be imposed for non-compliance prior to 1 April 2020 (or 1 October 2020 where the deferral applies). However, the soft landing applies only in respect of the digital links requirement. Digital submission of VAT returns (effective from 1 April 2019) For VAT periods commencing on or after 1 April 2019, VAT return information can only be submitted to HMRC via an application programme interface (API). It will no longer be permitted to manually complete the nine-box UK VAT return via HMRC’s portal. HMRC has issued a list of compatible software packages that will support this requirement. For some of the larger businesses that already keep digital records and have automated VAT compliance processes which comply with the first two requirements mentioned above, MTD may simply require investment in bridging software to allow the business’s software package(s) to ‘talk’ to HMRC’s systems and achieve compliance with the third requirement. For others, more action may be needed depending on how the business arrives at its VAT return figures at present and the extent to which records are currently maintained digitally. Deferral A six-month deferral is available for certain categories of taxpayer including public bodies, members of VAT groups and foreign non-established businesses with a UK VAT registration. It should be noted that a specific direction from HMRC is required in order for the deferral to apply. We understand that HMRC has written to the taxpayers they believe to be in this category. Where the deferral applies, the requirements in respect of digital records and the digital submission will apply from 1 October 2019, while the requirement to maintain ‘digital links’ will not apply until October 2020. Businesses that believe they should be entitled to the deferral, but have not received a notice from HMRC, should contact their case manager as a priority. What’s next? It is expected that MTD will eventually be extended to income tax and corporation tax. An exact timeline for implementation has not been confirmed, but HMRC has stated that it will not be before April 2020. MTD for income tax and corporation tax will likely require periodic disclosure of income, expenditure and profit data, which is not currently disclosed until annual tax returns are filed. Many commentators view this as signalling the beginning of the end of the tax return as we know it. There has been a clear shift in recent years towards real-time reporting and greater collection of data by tax authorities. This is perhaps most evident in Spain, where the 2017 introduction of Immediate Supply of Information requires detailed invoice data to be filed with the Spanish tax authorities within four days of the transaction. This prompts the question: when will such measures be introduced in Ireland? Revenue’s first step into the world of real-time reporting, PAYE Modernisation, is now up and running. Changes to the administration of VAT and other operational taxes may be a logical next step as Revenue continues to modernise Ireland’s tax system. Conclusion As tax authorities’ analytics capabilities become more sophisticated, businesses will have to deploy significant resources to react to tax authority changes. While the exact requirements may vary across jurisdictions, the principle of ‘garbage in, garbage out’ holds true across the board. Many businesses, especially those with operations in multiple jurisdictions, are using MTD as an opportunity to revamp outdated compliance processes and seek out opportunities to automate time-consuming processes before the compliance burden gets even larger. As businesses seek to future-proof their tax reporting process, the starting point for tax and finance teams is typically a data cleansing exercise and a review of tax functionality in finance systems to eliminate the root cause of existing inefficiencies and workarounds. Key steps in preparation for Making Tax Digital Businesses should assess the impact of MTD on their UK VAT reporting process to ensure that they are compliant from 1 April 2019. This assessment should include:  Reviewing the existing end-to-end process to ensure it is efficient and accurate; Securing confirmation from HMRC where entities are eligible for deferral; Verifying that the business is capable of submitting VAT returns digitally via an API for the first VAT return period commencing on or after 1 April 2019; Reviewing existing records to confirm that they meet the MTD digital record-keeping requirements and are retained in functional compatible software; Putting a plan in place to ensure that the journey of information, from source to VAT return, will be compliant with the digital link requirement from 1 April 2020. As this may involve changes to finance systems and business processes, early engagement with IT is key; and Where the deferral applies, ensuring that correspondence has been received from HMRC to this effect. Jennifer Upton is a Director in KPMG’s Belfast VAT team. Senan Kavanagh is an Associate Director in KPMG’s Tax Technology team.

David Duffy highlights the latest VAT cases and discusses recent VAT developments. Irish VAT updates  Brexit Omnibus Bill At the time of writing, it is uncertain whether the United Kingdom will exit the EU on 29 March either with or without a deal. However, given the risk of a no-deal Brexit, on 22 February 2019, the Irish Government released the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Bill 2019, more commonly known as the “Brexit Omnibus Bill”. The Bill contains a number of measures in relation to VAT. Most significant is the proposal to introduce postponed VAT accounting for imports of goods coming into Ireland from non-EU jurisdictions post-Brexit. Postponed VAT accounting means that Irish VAT registered businesses could account for VAT on imports of goods into Ireland from outside the EU in their VAT return rather than at the point of import. Where the business is also entitled to full input VAT recovery, a VAT cashflow cost would be avoided as the input VAT on the import would be deductible in the same VAT return. This is similar to the VAT rules applying to acquisitions of goods into Ireland from other EU countries. As well as helping avoid a VAT cashflow cost on post-Brexit imports from the UK, this measure would also apply to imports from other non-EU countries, thereby providing a cashflow saving compared to the current position. However, it is important to note that any customs duty arising on imports would generally still be payable at the point of importation unless a separate relieving measure applies. The Government indicated that postponed VAT accounting would initially be available to all traders for a period to alleviate immediate cash flow issues arising from Brexit. However, continued qualification for postponed accounting may depend on Revenue authorisation from a later date to be agreed and may be subject to certain criteria and conditions. The Bill also contains proposed changes to VAT legislation in respect of VAT56 authorisations. By way of background, a VAT56 authorisation allows qualifying taxpayers to buy-in most goods and services at the 0% rate of VAT. In order to qualify, the business must derive at least 75% of its annual turnover from 0% rated supplies of goods to other EU member states or to non-EU countries, or from certain supplies of contract work. The measures contained in the Bill appear to tighten the conditions to qualify for the authorisation and to give Revenue additional powers in cases where an authorised business no longer meets the conditions for the authorisation.  VAT rate on food supplements The last edition of VAT Matters advised of a proposed change in Revenue practice which was to result in the VAT rate for sales of certain food supplement products increasing from 0% to 23% with effect from 1 March 2019. Revenue has since confirmed in eBrief 034/19 that the current practice will remain unchanged until 1 November 2019. In the interim, the Minster for Finance will undertake a public consultation process to examine the policy and legislative options inthis area. Court of Justice of the EU (CJEU) VAT Updates VAT recovery for branches in the financial services sector In the financial services sector, it is common for companies to have branches in other countries which both support the head office’s activities as well as supply services to customers in those other countries. Given different interpretations and rules regarding the VAT exemption for financial services between EU member states, this can give rise to complex issues when considering the VAT recovery position of the branch. This was the case in Morgan Stanley (C-165/17), where Morgan Stanley’s French branch provided services to French customers and also supported its head office in the UK. The services supplied by the branch to its French customers were subject to VAT (as France has an option to tax for financial services). The support services to the UK head office were ignored for VAT purposes (as they were within the same legal entity) but were used to support activities which were VAT exempt in the UK. However, those services would have had VAT applied from a French perspective and, therefore, the French branch claimed full input VAT recovery on its costs. However, the French tax authorities challenged VAT recovery relating to Morgan Stanley’s activities carried on for the UK head office on the basis that the costs were used to provide services which were VAT exempt in the UK.  The CJEU concluded that the French branch could not recover VAT on costs which were used to support the VAT exempt services in the UK. The judgment also set out certain formulae to calculate the VAT recovery position for a branch’s general overhead costs. Therefore, the application of the judgment could be complex and would need to be carefully considered by businesses which have a head office or branches in other jurisdictions. Valuation of supplies In most cases, the amount which is subject to VAT on a supply of goods or services is clear cut. However, in cases where goods or services are provided in exchange or part exchange for other goods or services, the issue becomes more complex. In the A Oy case (C-410/17), the CJEU considered the taxable value of demolition services provided by A Oy to customers, where A Oy was able to sell on the scrap metal it removed from the customer’s site. The customer did not charge A Oy for the scrap materials, but A Oy factored the resale value of the scrap metal into the price of its demolition services. The question referred to the CJEU was whether there was a VATable supply of scrap metal supplied by the customer to A Oy and whether the taxable value of A Oy’s demolition services should also take account of the value of the scrap metal. The CJEU concluded that there was a VATable supply to A Oy and the value of this supply was the amount by which A Oy reduces the demolition price it charges. The fact that this may not be the same as the amount it gets for the scrap metal when it sells the metal is irrelevant. The value of the demolition services on which VAT was due was therefore the price paid by the customer for the demolition plus the value attributed by A Oy to the scrap when it works out the price to charge for demolition. In addition, A Oy was deemed to purchase the scrap metal and this supply was also subject to VAT under the reverse charge rules.  David Duffy FCA, AITI Chartered Tax Advisor is a VAT Partner at KPMG.

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.