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The Institute was represented by Dr. Brian Keegan, Director of Advocacy and Voice, at the National Economic Dialogue (NED) 2022 last week.  The theme of the forum, hosted by both the Department of Finance and the Department of Public Expenditure and Reform, was Building Economic Resilience to deal with International Challenges. The NED provides a forum for public consultation and discussion ahead of Budget 2023. The discussion centred on the cost-of-living challenges arising against an economic backdrop of war and global energy spikes, the risk of exacerbating inflationary pressures and the need to ensure sustainable public finances whilst reducing dependence on corporation tax receipts. Dr. Keegan emphasised to Ministers the importance of capacity building within the economy and the contribution of the accounting profession to the services sector. He also took the opportunity to outline elements of the CCAB-I’s pre Budget 2023 submission which was launched this week.  Documents and speeches from the NED can be found on gov.ie.

Stopping flow of landlords leaving the market critical to address housing crisis Frontload personal tax allowances for younger workers to halt brain drain  23 June 2022 – Tax measures that support individuals and make Ireland an attractive place to live and work are critical to protect competitiveness, according to the main accountancy bodies in Ireland. CCAB-I which represents over 50,000 professional regulated accountants published its pre-Budget submission today, containing a range of measures to alleviate cost of living pressures and to tackle barriers to recruitment and retention across the Irish economy. CCAB-I identifies two key areas for Budgetary focus; improving housing supply to address the crisis in the housing market, and reforming personal tax allowances to help people as they build careers, homes, and families.  Parity in the treatment of corporate and individual landlords Ireland needs a functioning housing market to attract and retain talent to our shores. The submission states that the residential property market is in crisis, with not enough houses to buy or rent in the private sector and not enough houses being built by the State for those who need social housing. Government sees the private rental market as a source of taxes, and this is not the correct approach in a housing crisis. Commenting Cróna Clohisey, Tax & Public Policy Lead, Chartered Accountants Ireland said “Landlords are an essential feature of a fully functioning residential property market, however in general, landlords consider it to be no longer economical for them to continue in the market. In the Irish tax system, corporate landlords holding rental property have a more favourable tax treatment, at 25%, whereas individuals face rates of 52% and beyond.  “The 25% rate should be extended to individuals to address some of the inequity. By removing disparities, the tax system could be effectively harnessed to encourage landlords to stay in the market and new entrants to meet the supply shortage.” The submission also proposes:  Local property tax should be allowed as a deduction against rental income Wear and tear rates for fixture and fittings should be increased from 12.5% to 25% per annum to facilitate landlords investing in the maintenance of properties Where landlords retrofit a property to improve its energy rating, 100% capital allowances should be offered in the year of work To incentivise loss making landlords to remain in the market, rental losses in a tax year could be used against other income (such as employment income) to reduce tax payable.  Capital tax solutions to encourage the supply of accommodation As landlords withdraw from the rental market, some opt to sell the property, others do not. The current rate of capital gains tax (CGT) of 33% is too high.   The CCAB-I proposes the following measures will prevent the extraction of rental properties from the market, reduce the displacement of tenants, and result in more residential properties becoming available to purchase: Make available a relief from CGT on disposal of a rental property, conditional on the property being sold with a tenant in situ and/or a requirement for the property to continue in use as a rental property. Reduce the standard rate of CGT from 33% to 20% to release residential property back into the property market for younger generations. Outside of housing, as detailed in full in the submission, a lower rate of CGT would also encourage innovation and risk taking which in turn would drive investment activity and improve returns for entrepreneurs. Reforming personal tax allowances Traditionally Ireland’s investment policy has focused on taxation from the employer’s perspective, however in 2022, retaining talent is a prominent concern among employers. The CCAB-I proposes that consideration be given to reforming personal tax allowances so that allowances are ‘frontloaded’ at the outset of a person’s career. The submission suggests that such reform is in line with government policy on FDI which notes “talent” among the key areas which makes Ireland a consistent target for such investment    Clohisey continued “We need to turn our attention to personal tax rates, as they are impacting attraction and retention of talent. Recalibrating personal tax allowances is a long-term project and the biggest obstacle will be overcoming political resistance to change. Nonetheless, personal tax allowance reform should form part of Ireland’s overall policy to retain talent. “Speaking on behalf of a profession where most are in the early stages of their careers, this could be achieved by increasing allowances available to those under 35 at a time when many are taking the first major life steps such as starting a family or approaching the first rung of the property ladder, while reducing the allowances available to those over 55 for example. ” In addition to reforming personal tax allowances, the CCAB-I supports the proposal to introduce a third rate of income tax. Presently, a worker in Ireland begins to pay tax at their marginal rate once they have earned €36,800 which is below the average industrial wage. A third rate would make the tax system more equitable provided that the entry levels to each band of tax are appropriate. Other measures proposed by the CCAB-I include    Leave Employer’s PRSI unchanged to remove barriers to employment creation. Overhaul and simplify the R&D credit to make it more accessible to SMEs. Reform the discriminative tax treatment of service companies if Ireland is serious about encouraging the prosperity of indigenous businesses.  Avoid any measures which diminish the already modest capital tax reliefs available to Irish entrepreneurs.  To encourage FDI and competitiveness, Section 110 companies should be allowed to deduct withholding taxes suffered on the receipt of distributions or interest received.  Pension auto-enrolment incentives should not disturb established tax reliefs for pension contributions.  A more flexible Tax-Saver Commuter ticket should be introduced to match the hybrid working model that has emerged for certain workers. ENDS Issued by Chartered Accountants Ireland on behalf of the Consultative Committee of Accountancy Bodies-Ireland (CCAB-I). Read the submission in full here.  For more information Jill Farrelly  PR & Communications Manager   Chartered Accountants Ireland  About the Consultative Committee of Accountancy Bodies-Ireland (CCAB-I) The Consultative Committee of Accountancy Bodies-Ireland is the representative committee for the main accountancy bodies in Ireland. It comprises Chartered Accountants Ireland, the Association of Chartered Certified Accountants, the Institute of Certified Public Accountants in Ireland, and the Chartered Institute of Management Accountants which combine to represent over 50,000 professional regulated accountants in Ireland.  

To be truly successful in the fast-changing world of work, employers must start to think more strategically about the skills they need now as well as the skills they will need in the future, writes Niamh O’Brien. We are hearing a lot these days about emerging workplace trends and disruptors, such as Artificial Intelligence, smart working, and the gig economy. While it’s clear that all are having a marked impact on how we work and experience the workplace, what is less clear for many employers is how best to factor these far-reaching changes into their ongoing approach to people management. Evolution of technology, processes and skills Technology not only influences the work employees do but can also change the entire working environment—by facilitating remote working and providing access to a broader talent pool, for example, or transforming everyday processes and procedures. As a result, employers must start to think differently about their people, the skills they need right now, and the skills they are likely to need tomorrow. For many, this will require a more strategic, agile, and future-focused approach to managing their talent pool—not just for ‘right now’, but also for the future. Adding to this challenge are the evolving needs and demands of today’s workforce. More people are looking for greater opportunities to experience meaningful work, greater flexibility in their working lives, and more opportunities for personal development, training and upskilling. Employer value proposition To be truly successful, your people strategy must therefore encompass and build on all of these elements, but—no matter how complex or demanding the process of putting it together may be—your future-focused people strategy won’t, in itself, be enough.   As with any strategy, the real challenge often lies in bringing it to life, and it’s impossible to talk about people strategy without touching on Employer Value Proposition (EVP). Your EVP – that is, your employee branding and the way your organisation markets itself to attract talent – is integral to your people strategy. Without robust employee branding, you will lose people to your competition. The only way to gauge an active and engaged EVP is through measurement and KPIs. Keep on top of this and you are far more likely to achieve the desired results. This is because a measurable strategy, with clearly defined KPIs and a cyclical model of assessment and realignment, is far more likely to deliver results. Future-proofing your people strategy Your strategy should also span your entire talent ecosystem, including permanent employees, temporary or contingent staff, contractors, consultants, and gig workers. Only by mapping flexible solutions, which allow you to fill skills gaps in your organisation today and plan for the future, will you be able to implement a truly effective people strategy that can support long-term growth. Niamh O’Brien is Director of Talent Management at BDO.

Pat O’Neill outlines his priorities for the year ahead, including the need to increase the supply of accounting talent nationwide and reach out to members globally post-pandemic.  As Pat O’Neill begins his term as President of Chartered Accountants Ireland, his driving focus will be on tackling the ongoing capacity constraints facing the profession. Speaking at his election by members at the Institute’s 134th AGM in Dublin recently, O’Neill pointed to the urgent need to address the ongoing shortage of critical accountancy skills in the Irish labour market. “Despite the recent and current challenges of the pandemic and the re-emergence of significant inflationary pressures, the economy continues to grow,” O’Neill told attendees at the AGM on Friday, 20 May.  “Our economic pillars of large-scale foreign direct investment and successful domestic business require appropriate levels of accounting talent, both within their organisations and also in the accounting profession upon which they rely for their transactional and regulatory compliance needs.”  Despite this fundamental need, however, the reliable supply of accounting talent continued to be disrupted by structural issues requiring urgent action, O’Neill said. “If we don’t work hard to tackle significant issues facing accounting supply in this country relating to education, qualifications and permits, this ongoing shortage could have a significant impact on businesses here, both indigenous and FDI, potentially harming the wider economy in the future.” Second-level syllabus One of the primary factors impeding the supply of accounting talent nationwide is the accounting syllabus at secondary level. “The syllabus was introduced over 25 years ago,” said O’Neill.  “Not only does this mean that our students are being taught material and concepts, which are now somewhat obsolete, but the syllabus also does little to introduce our young people to the breadth of what the modern accountant’s role actually is—and how they add value to businesses, the economy, and society as a whole.”   It is crucial that the syllabus be reviewed, refreshed, and made “truly fit for purpose” in the 21st century, O’Neill said.   “Without this, students will be deterred from pursuing further studies and a career in accounting due to a fundamental misunderstanding of what accountancy involves and the career opportunities and choices it provides,” he said.  “Another consequence is that we have an insufficient number of students emerging from second level through third level and into professional qualifications. Ultimately, this means Ireland won’t have enough ‘bench-strength’ to support Irish businesses—but, thankfully, it is within our power to create positive change now.”   Departmental submission The Institute, under the auspices of the Consultative Committee of Accountancy Bodies-Ireland, last year made a submission on this matter to the Department of Education, including the findings of its accounting syllabus review.   “The National Council for Curriculum and Assessment has published its Report on its Senior Cycle Review and, whilst we are heartened that reform of the senior cycle is now recognised as necessary, the pace of change is just too slow,” O’Neill said.   “It has taken four years to reach this stage and it will likely be 2027 by the time we see changes coming through in the first tranche of subjects, which are still to be determined.  “Unfortunately, during this time, the issues facing Irish businesses in terms of the lack of supply of accounting talent are only likely to worsen.”  As it stands, the accountancy profession is already included on the Government’s Critical Skills Occupations List.  Compiled by the Department of Enterprise, Trade and Employment, the list catalogues professions required for the proper functioning of the economy, which are being impacted by a shortage of qualifications, experience or skills. The Northern Ireland Executive has also listed accountancy as an in-demand skill north of the border. Recognition of qualifications In addressing the capacity issue, O’Neill also referenced the need to ensure that the needs of business and the profession are met through the adequate recognition of qualifications. With more than 30 years’ experience as an audit partner with EY, he has significant involvement at board level with many plcs, providing insight and best practice guidance regarding boards’ risk and corporate governance agendas. “In the Republic, a substantial amount of the work required for the audit qualification must be statutory audit work,” O’Neill said. “This means that, despite students spending a significant amount of their training supporting US FDI businesses with their US reporting requirements—and with much of this controls work also used in the statutory audits of Irish subsidiaries—it will not count towards qualification. “The same goes for experience gained in auditing UK subsidiaries by students based in the Republic. The Department of Enterprise Trade and Employment and the Irish Auditing and Accounting Supervisory Authority (IAASA) must be involved in finding a solution to this situation.” Sourcing overseas talent O’Neill noted that, as a growing economy, if Ireland cannot source sufficient accounting capacity at home, we must ensure that we do all we can to attract candidates with the necessary skills from other countries. “It is my steadfast belief that people and businesses achieve great things when they come together and that diversity of background and thought is key to any profession,” he said. “I benefited from my own upbringing from an early age in Shannon, Co. Clare, which was at the time perhaps a uniquely multinational community in the regions. “Early in my career in audit, I moved from Dublin to the UAE where I spent some time working in Dubai in the early nineties. I was thrown in at the deep end and had the opportunity to work with some companies over there that followed US accounting rules.   “That experience turned out to be incredibly useful for me professionally for many reasons, not least because—when I returned to Dublin in 1995—Ireland’s tech boom had begun and indigenous companies like CBT, Smartforce, Iona, and Trintech, were listing on the Nasdaq.  “The experience I had gained working with those companies in Dubai following US accounting rules was suddenly invaluable, so I know first-hand just how important experience gained in other jurisdictions can be in our career.” Chartered Accountants Ireland has been working closely with the government in recent months to promote the need to reduce application processing times for Critical Skills Employment Permits granted to accountants from outside the European Economic Area who have been hired to work here.  “The improvement now coming through in the processing time for such permits as a result has seen wait times reduced to six to eight weeks from as high as four months,” said O’Neill.  “Now, however, we must retain—and even improve upon—these shorter processing times to attract the right talent.” Northern Ireland Protocol  O’Neill highlighted the need for certainty and stability in the wake of the most recent Assembly Elections amid ongoing disagreement on the Northern Ireland Protocol.  “The Protocol remains a subject of debate now more than ever, and there is no doubt that challenges exist, but predictability and certainty are key for business and the economy in Northern Ireland,” he said.  “The Institute was an early advocate for the unique benefits of the Protocol for businesses located in Northern Ireland.  “We have almost 5,000 members there, and it is incumbent upon us to convey the positive feedback the Institute has received regarding the unique market access they have into both Britain and the EU.” Power of connection Now that the worst of the COVID-19 restrictions are behind us, O’Neill stressed the need for greater connection and acknowledged the crucial role played by the Institute in supporting a global network and helping to forge valuable professional and personal connections among members the world over.  “The benefit of networking to our 30,000+ members, and the critical importance of the physical interaction of our students, cannot be understated,” he said.    “We will continue to work towards a return of our networking events to pre-pandemic levels to the extent we can over the coming year. We have been highly successful in our innovations in training, and ability to shift to examining our students remotely through the pandemic.   “Through the Institute’s Education Department, and in conjunction with our training firms, we will be looking at how to achieve a balanced blend of online and physical learning delivery in the future to facilitate this interaction.”  O’Neill is a longstanding member of the Institute who has served on the Council of Chartered Accountants Ireland since 2014. He is a former Chair of the Institute’s Audit, Risk and Finance Board, and a former Chair of its Leinster Society.   “The importance of the Institute and our District Societies both here, across the Island of Ireland, and abroad in connecting—and now reconnecting—our members is not lost on me,” said O’Neill.  “I have benefited enormously from my membership over the years, and during my Presidency, my hope is that I can give back to the Institute and to all of our members whose commitment is so highly valued.” Global membership Established in 1888, Chartered Accountants Ireland today represents more than 30,000 members in over 90 countries and has responsibility for educating 7,000 students.   The Institute’s objective is to create opportunities for members and students, and ethical, sustainable prosperity for society.   It is a founding member of Chartered Accountants Worldwide, the international network of over one million Chartered Accountants. It also plays key roles in the Global Accounting Alliance, Accountancy Europe, and the International Federation of Accountants.     “The Institute is here to serve our members and students and I feel privileged to be able to support this effort in my role as President,” said O’Neill.  

With demand for electricity expected to double by 2030, renewable sources will be key to decarbonising Ireland’s energy sector, writes Laragh Musselwhite. The decarbonisation of our electricity system has been one of Ireland's great success stories. Emissions from electricity generation in Ireland fell by 51.4 percent from 2001 to 2020.   This sizeable drop reflects improvements in the energy efficiency of modern gas-fired power plants as well as the increased share of renewables in the electricity system here.  The government has set ambitious targets for the ongoing roll-out of renewable energy generating capacity, including five gigawatts of offshore wind by 2030. Given that demand for electricity is expected to rise by anywhere from 19 to 50 percent over the next decade, meeting these targets will not be without challenge. Electricity in the Climate Action Plan The Climate Action Plan identifies the energy and electricity sector as a key enabler to Ireland meeting our Net Zero goal by 2050. The plan sets out an overall target of reducing carbon dioxide equivalent (CO2eq) emissions in the sector to between two to four mega tonnes of CO2eq by 2030. Our most significant challenge is, however, the rapidly rising demand for electricity across Ireland. In a high-demand scenario, our electricity needs are expected to as much as double by 2030. At the same time, our electricity emissions need to be reduced by 60–80 percent. Renewable energy Renewable energy will be key to decarbonising the sector. In 2020, electricity generated from renewable sources accounted for 42.1 percent of all electricity generated in Ireland — up from 33.3 percent in 2018. Ireland has significant renewable energy resources, with wind energy accounting for 36 percent of the country's electricity in 2020. We currently have an installed wind capacity of 4.2 megawatts, and the Climate Action Plan commits to increasing this to 13 gigawatts of combined onshore and offshore wind by 2030. The generation opportunity Alongside large-scale renewables, microgeneration and small-scale generation have an important role to play in empowering and driving engagement and participation. Both create opportunities for domestic, community, farming, and small commercial customers to take the first steps towards investment in renewable technologies, potentially helping to shape electricity demand and decarbonise homes and businesses. The Climate Action Plan also provides for a Microgeneration Support Scheme (MSS) aimed at supporting the deployment of an anticipated 260megawatts of new micro renewable generation by 2030. A separate small-scale generation scheme will also come into effect to support the deployment of rooftop and ground-mounted solar photovoltaic (PV) modules in cohorts not suited to other support measures. What does this mean for businesses? While the large-scale deployment of renewables will facilitate the decarbonisation of the national energy system, a growing number of individuals are also seeking to decarbonise their own operations. Options here include: investment in energy-efficiency; corporate power purchase agreements for renewable energy; and small-scale renewable asset deployment. As a first step, businesses are advised to calculate, monitor, and report on their Scope 2 emissions. These are the indirect emissions associated with the purchase of electricity, steam, heat, and cooling. By doing this, businesses can help to identify opportunities for reducing these emissions—and it’s worth noting that improving the energy efficiency of both property portfolios and business operations is crucial here. Potential measures for reducing Scope 2 emissions include securing direct renewable energy contracts, upgrading electric systems (e.g. lighting), generating renewable energy on-site, and optimising manufacturing and production facilities. Given the ongoing volatility in energy prices, the business case for reducing these emissions has never been stronger – and, by making considered choices, businesses can also expect to save on operational costs. The decarbonisation of Ireland's electricity system, therefore, presents a potential opportunity for businesses. In addition to the potential cost savings, other benefits could include reduced exposure to energy price volatility, stakeholder alignment, regulatory compliance and improved brand perception. Laragh Musselwhite is an Analyst at KPMG Sustainable Futures.

The Chartered Accountants Ireland Annual Report 2021 was published today. Entitled "Vibrant, Resilient, Connected", the report features Institute activity and financial statements for 2021. The report can be read here.

Movement on automatic enrolment welcome but sustained momentum needed to meet ambitious timeline Close adherence to timeline required to ensure passage of legislation and establishment of Central Processing Authority (CPA) achieved without delay €1 for €3 model should be withdrawn and existing, well-established model of tax relief for contributions should apply  29 March 2022: Today’s launch by Minister for Social Protection, Heather Humphreys T.D. of Ireland’s long-awaited automatic enrolment pension scheme is positive news, but Chartered Accountants Ireland has noted the ambitious timeline and cautioned that legislative hurdles, the tendering process, and the establishment of the CPA must progress at pace.    The largest professional accountancy body on the island of Ireland made the comments in response to confirmation by Government today that an automatic enrolment pension scheme for workers will be introduced in January 2024.    Commenting, Cróna Clohisey, Tax and Public Policy Lead with Chartered Accountants Ireland said: “While today’s announcement is welcome given the pension crisis facing us, the timeline is ambitious to say the least. A significant amount of work needs to be done not just to develop the legislation underpinning the scheme, but also to finalise its design and to establish the various mechanisms that will be required for it to function.     “Employers will also need sufficient time to plan and budget for its introduction. Payroll service providers tell us that a lead-in time of at least 18 months would be required to properly develop, test, and deploy a fully operational system. As the legislation progresses, the Government must work closely with businesses to advise and help them prepare for the introduction of automatic enrolment.”   Over 90 percent of respondents to a 2021 survey by the Institute supported the introduction of automatic enrolment, a scheme by which workers would automatically be enrolled in a pension scheme by their employers, and both employers and employees as well as the State would contribute to the pension fund. Chartered Accountants Ireland has also called for the existing model for tax relief at both standard and marginal rates for pension contributions to apply to automatic enrolment. It calls for the proposal to introduce a second model, whereby the State contributes €1 for every €3 paid in by an employee, to be withdrawn.  Ms Clohisey continued: “One of the issues that remains unclear is how the existing and well-established model for tax relief at both standard and marginal rates for pension contributions will sit alongside the €1 for €3 State model that is planned for automatic enrolment. The operation of essentially two tax systems between auto-enrolment and private pension schemes will cause needless tax arbitrage and confusion within the market. We are therefore calling for the existing model of tax relief to apply to automatic enrolment and for the proposed State model to be abolished.”   ENDS For more information Jill Farrelly PR & Communications Manager Chartered Accountants Ireland     

HM Treasury has published a Money Laundering Advisory Notice about the risks posed by jurisdictions with unsatisfactory money laundering and terrorist financing controls. This note also provides details of the new statutory instrument the Money Laundering and Terrorist Financing (Amendment) (High-Risk Countries) Regulations 2022 due to come into force on 29 March 2022 which specifies the updated list of high risk third countries. Once effective, this will replace the current list within the Money Laundering Regulations 2017. Members are reminded of the legal requirements within the Money Laundering Regulations 2017 to apply enhanced customer due diligence and enhanced ongoing monitoring in relation to high risk third countries. 

The Consultative Committee of Accountancy Bodies in Ireland (CCAB-I) and in the UK (CCAB) have issued statements to the accountancy profession following recent and ongoing developments in Ukraine. The statements: remind accountants of their legal and professional obligations, including ethical considerations, relating to the sanctions regimes and in managing their duties to clients, employers, and other stakeholders to cope with consequent disruptions; collate links to sanction lists, guidance and government advice in the UK, Ireland and the EU; highlight risks presented by current developments in the context of compliance with anti-money laundering legislation, the potential impact on professional indemnity insurance for members in practice, and the fast-moving nature and complexity of the situation and need to obtain specialist advice; refer to requirements in the Code of Ethics for Professional Accountants of particular relevance when an accountant is confronted with a dilemma or difficult situation concerning compliance with financial and trade sanctions and other restrictions. As people across the world condemn the attack by Russia on Ukraine, they also want to show their support through donations and using their influence for humanitarian intervention. Professional accountants will find themselves in positions of influence with many stakeholders including clients, employers, employees, and local communities.  The following are some considerations for accountants in this context: Fundraising for humanitarian or other reliefs People and organisations are looking to help the millions of Ukrainians displaced by the invasion by donating directly or running fundraiser events. Be aware of fraud risk and recommend controls that ensure the safeguard of any monies raised and that they are used for the purpose for which they were raised. Ensure the necessary licences are obtained for any public fundraising activity. Be clear on the purpose for the funds and how they will be channelled to the beneficiaries. Ensure compliance with charity law and check that charitable donations are only made to a properly registered charity (Register of Charities: Charities Regulator (Republic of Ireland) and The Charity Commission for Northern Ireland).   Social Media Understandably, many people and corporates are sharing their views on Russia's invasion of Ukraine via social media. The distinction between when a view is a personal view or that of the organisation where a person works is not always clear. If you are an officer of a company, e.g. a director, chief executive, or the public relations officer, and you are commenting on a matter related to your area of responsibility, then it is very difficult to separate your view from the corporate view. For this reason, many organisations will have clear corporate social media policies in place and that is the first reference point if in doubt. However, before reacting to a colleague's personal post, it is important to also consider their right to hold and express an opinion. There can be a cultural aspect to this within an organisation, especially where respect, tolerance, diversity and inclusion, and psychological safety are highly valued. The specific circumstances of the person expressing the view might also be taken into account, for example their emotional proximity to the issue.   Developing Corporate Positions Many organisations are using their influence for good by publicly denouncing the invasion of Ukraine, with some going further to withdraw from investments and business operations in Russia, and any dealings with Russian state-owned entities. These decisions are not always the most straightforward to implement. Legal and other expert advice should be sought to consider how an organisation can address contractual obligations, restructure, and relocate operations. Many Russian citizens are against the actions of the Russian Government, and Russian employees, contractors, etc., should receive fair treatment and not be discriminated against. Reporting progress and being transparent on these positions, including any setbacks, is very important as corporates will be held to account by stakeholders and members of the public to honour their commitments. Careful thought should be given before making any wide-sweeping statements. The global economy, with its complex interconnected markets, creates practical difficulties when seeking to divest of everything connected to Russia.   Whistleblowing and Speaking Up Clearly defined and well-communicated whistleblowing and speaking-up policies and procedures can increase an organisation’s awareness of how it may be exposed to the issues highlighted in the CCAB/CCAB–I statements referred to above. Communicating to employees the organisation’s position in relation to this crisis and reminding them about whistleblowing and speaking-up policies and procedures, promotes a safe environment in which individuals feel comfortable to raise any concerns about the organisation’s actions, or inactions.   Corporate Reporting While the scale of the impact of this crisis on organisations will differ, it will be dwarfed by the impact on millions of Ukrainians. Organisations have important social obligations and responsibilities to corporate stakeholders. Accountants should ensure transparency and accountability in corporate reporting by highlighting the impact of the crisis on the organisation’s operations, asset valuations and exposure to liabilities. Examples of the sources of this impact include: supply-chain disruption; the cost of ceasing operations in Russia or the conflict/invasion zones; rising commodity prices; inaccessibility of certain markets due to trade or travel restrictions; difficulty maintaining required levels of capital reserves; and loss of key customers. Accountants will have a central role in collecting, measuring, and reporting the necessary information and ensuring it is reported in accordance with legal and regulatory requirements and relevant reporting frameworks. They should also understand the limitations to their expertise and call for the involvement of experts where necessary. Directors and senior management will need to consider expert advice when making highly judgemental decisions on values and estimates and in determining the future implications for the organisation.   Boundaries between Personal Life and Professional Life Negative emotions, such as anger and fear, increase the risk of self-defeating behaviours. The developing situation in Ukraine will understandably evoke such emotions in many. In this context, it is useful to refer to guidance issued by the CCAB bodies, in July 2021, to help accountants consider and distinguish if their personal behaviour could be viewed as conduct that might discredit the profession. While the facts and circumstances of every situation will differ, the CCAB guidance provides some examples of such behaviours, including the use of seriously offensive or threatening language causing distress, or threatening behaviour, towards a client or a member of the public outside of the work environment. This non-exhaustive list of considerations may need to be reconsidered as the crisis in Ukraine develops. In many situations, increasing ethical awareness or the ability to address an ethical dilemma requires reflection. Professional accountants may find it useful to refer to, or circulate to professional accountancy staff, the Chartered Accountants Ireland Ethics Quick Reference Guide available from our Ethics Resource Centre. Níall Fitzgerald FCA, Head of Ethics and Corporate Governance Update: Chartered Accountants Ireland have created a dedicated page collating key information on sanctions in response to the crisis in Ukraine.

With Russia’s invasion of Ukraine signalling further hikes in energy prices, Neil Hughes asks if the government’s cost of living package will really make a difference for Irish households facing spiralling costs. The Russian military invasion of neighbouring Ukraine will undoubtedly carry devastating consequences for its people and economy. At our firm, our thoughts are with our colleagues at Baker Tilly Kyiv as their country faces the greatest challenge in its 31-year history as a democratic European state. The crisis has also presented the Irish government with a fresh set of unwelcome challenges concerning the spiralling cost of living here. The €505 million support package announced earlier this month covers several areas the government has prioritised to help alleviate the recent spike in consumer prices. Chief among them is the surge in energy prices, now more pressing in the face of the Ukraine invasion. Cost increase factors The rising costs we are seeing are down to factors including global energy prices, inflation for basic commodities, and pandemic-induced supply chain issues in critical locations. Russia accounts for the highest EU imports of natural gas (41.1%) and solid fuel (46.7%), according to 2019 Eurostat research. As Russia has such a stranglehold on the energy market, sanctions introducd by the EU, UK and US (among others) will inevitably destabilise energy costs in the coming months. Government supports The Irish government is offering cost of living supports in a number of ways: Electricity rebate The government announced plans for the €100 rebate before Christmas, but has since opted to double the amount to €200. The rebate will be VAT inclusive and will apply automatically to electricity bills through the March and April billing cycle. It will be added as a credit of €200 to pay-as-you-go providers. Public transport Public transport fees will be reduced by 20 percent from the end of April. Fare reductions will apply to Bus Éireann, Irish Rail, Dublin Bus, Go Ahead, Luas, DART and Local Link services. Fuel allowance Families receiving the fuel allowance will be given a lump sum payment of €125 before St Patrick’s Day. Health The Drugs Payments Scheme, which sees households paying €100 or less per month for specific medicines, will now be reduced to €80 per month.  School transport The family cap for school buses will be cut to €150 per family at primary level and €500 per family for secondary schools. Family payments The Family Working Payment will be brought forward, kicking in from 1 April instead of 1 June. The weekly tax-free payment is targeted at employees with children and supports low pay workers. Is it enough? Although these government supports are welcome, they will not benefit everybody in the same way. For instance, someone from commuter counties, like Wexford or Louth, who is reliant on their car for work will not benefit from the public transport price cut in the same way as a Dublin commuter might. On top of that, the electricity rebate is not being rolled out in a targeted manner. Instead, it will be made available to every household as a blanket payment of €200, no matter the energy rating or financial situation of that household. This support might have been better suited to a claims process, similar to the pandemic support subsidies made available to businesses, so that the more a household needs the support, the more they could receive by claiming through a centralised process. The decision not to implement a claims process might have been down to a perceived time-crunch. As the impact of the Ukraine war may now render the package woefully inadequate for many families, however, this strategy could come back to bite the government in the next election. Neil Hughes is the Managing Partner of Baker Tilly. He is the author of A Practical Guide to Examinership, published by Chartered Accountants Ireland.

As restrictions ease and businesses fully open again, what does the future hold for Irish insolvencies? Ken Tyrrell explains.   Given the hardship businesses have faced over the past two years, a rise in insolvencies in Ireland would be no surprise. A recent PwC report examining 18,000 business failures over the past 17 years sheds further light on the current state-of-play for companies around the country.  Measuring the correlation between key economic indicators and other trends with rates of insolvency, the report found that Government pandemic supports saved at least 4,500 Irish companies from going bust during the pandemic, representing an average of 50 companies per week during the period. A new enhanced measure for business failures developed as part of the research identified the ‘insolvency rate per 10,000 companies.’ When looking at business failures per 10,000 companies per county in Ireland, Kilkenny had the highest number of insolvencies in 2021, with 25 business failures per 10,000. Dublin ranked second with 24. Cork averaged 12 failures per 10,000 companies. Irish insolvency rates Overall, the Irish insolvency rate (number of liquidations and receiverships per 10,000 companies) stood at 14 in 2021, down 87 percent from its 2012 peak of 109 per 10,000 companies. The arts and entertainment sector was the most heavily impacted last year, with 85 insolvencies per 10,000 companies. Other sectors to feature at the higher end of the scale included travel and transport (47) and health (36). The research shows that retail (8), hospitality (16) and construction (15) had a much lower than expected rate of insolvency, an indicator that Government supports targeting these job-intensive service sectors were effective. At the other end of the spectrum, analysis of the report shows that the lowest insolvency rates per 10,000 in 2021 were in the information and communications, professional, scientific and technical sectors. This is likely due to the strong performance of FDI-heavy sectors, and the ability of people employed in these industries to transition to working from home during the pandemic.  Comparing the Irish results with those of our UK neighbour, Ireland’s rate of liquidation in 2021 (11 per 10,000 companies) was significantly lower than the corresponding UK figure of 26. The analysis also revealed that, over the past 17 years, the liquidation rate in the UK has historically trended 35 percent higher than in Ireland. Debt overhang of at least €10 billion  The pandemic and its successive lockdowns have certainly resulted in many businesses struggling to survive. PwC estimates that there is currently a debt overhang of at least €10 billion among SMEs in Ireland, made up of warehoused revenue debt, loans in forbearance, supplier debt, landlords, rates and general utilities.  Small Company Administrative Rescue Process (SCARP)  Based on the relatively low rates of business failure in the retail and hospitality sectors during the pandemic, it is clear that many of the 4,500 companies buoyed by the Government’s COVID-19 supports are in these sectors. While they have not gone bust, many are on life support and will need additional financial support to repair their balance sheets as the service economy fully reopens. Some businesses will agree to new terms with lenders and trade suppliers. Others will need to repair their balance sheets proactively. Many of these companies will need to restructure their debts and will look to formal processes such as the Government’s recently launched SME restructuring SCARP process, as well as traditional processes such as examinership. I expect to see a step-up in restructuring activity throughout 2022. As businesses recover and the economy fully reopens, critical areas for review will be liquidity, working capital and new funding avenues to finance growth.  Ken Tyrrell is Business Recovery Partner at PwC. Read the full PwC report.

While 2021 was a big year for ESG pledges, climate ambitions and keeping the 1.5°C target within reach, 2022 will be the year of action. Russell Smyth outlines the seven ESG themes we will likely see this year. The global emphasis on environmental, social and governance (ESG) issues increased significantly in 2021 among governments, NGOs, the business sector, and other stakeholders. Given the remarkable momentum achieved last year, mainly stemming from the run-up to, and discussions at COP26, we expect the ESG growth trend to continue apace in 2022. Here are seven ESG themes we expect to see throughout the year. 1. Moving beyond the pledges At the close of the year, more than 2,000 companies worldwide had set or committed to setting emission reduction targets in line with the Paris Agreement climate goals through the Science Based Target initiative (SBTi). At COP26, global leaders agreed to the Glasgow Climate Pact, securing a near-global net-zero with over 90% of world GDP now covered by net-zero commitments. These actions have kept the 1.5°C target alive, but 'its pulse is weak', as stated by COP26 president Alok Sharma. In the year ahead, there will be increased pressure and scrutiny on corporates and countries to deliver on these (often vague) commitments, with regulators and stakeholders seeking transparent and robust evidence of tangible action, quantifiable progress, and interim targets well in advance of 2050. Companies failing to act on their climate and broader ESG goals risk suffocating the already weakening 1.5-degree target as well as experiencing the expanding impact inaction will have on business continuity. 2. You've got to bring your supply chain with you For companies, a key opportunity to deliver effective change in 2022 sits within their supply chain. Supply chain emissions, or so-called ‘Scope 3’ emissions, are typically the most difficult emissions for companies to track and influence depending on the complexity of their supply chain. However, tackling them can be transformational for corporate climate action. This stems from the fact that supply chain emissions often significantly outweigh a company's direct emissions – on average, supply chain emissions are 11.4 times that of operational emissions. Decarbonising Scope 3 emissions will require a rethink and possible redesign of current value chains but also provides a significant untapped opportunity in the drive towards a net-zero carbon economy. 3. Quantifying climate risk The corporate ESG agenda has to date focused on quantifying and reducing the impact companies have on the environment (e.g. carbon emissions, waste production). Now, however, the focus is shifting to the impact of ESG, particularly climate change, on companies. This will include quantifying, in monetary terms, both physical risk (e.g. flooding risk to factories) and transitional risk (e.g. new regulations, changing consumer sentiment) to a business, driven by the requirement to report against frameworks such as the Task Force on Climate-Related Financial Disclosures (TCFD) and investor demands. This will involve moving beyond qualitative assessments of climate and environmental risk to the provision of quantified and financially-based risk assessments to inform investors on the business's risk profile and assist management in business planning and strategy. 4. ESG reporting is coming of age The ESG disclosure and reporting rhetoric has been dominated by the challenges posed by the proliferation of competing metrics and, subsequently, the lack of consistency in measurement and disclosure. In 2022, however, a tipping point has been reached, and the next phase of ESG reporting is unfolding rapidly. This includes: EU Taxonomy: A new type of classification system which establishes a list of environmentally sustainable economic activities. The Taxonomy will require financial market participants and companies to disclose their climate change mitigation and adaptation performance in a comparable way by the start of 2022 and other environmental objectives by January 2023. The Task Force on Climate-Related Financial Disclosures: Provides a framework for companies to issue climate-related financial information. Corporate Sustainability Reporting Directive (CSRD): CSRD will come into effect in December 2022 and will entirely replace the NFRD. The proposed changes made by the CSRD include the extension of reporting requirements to include additional categories of companies and the inclusion of the 'double materiality concept'. International Sustainability Standards Board (ISSB): The ISSB is tasked with developing mandatory corporate ESG disclosures. 5. Biodiversity Biodiversity is fundamental to long-term business survival. Businesses depend on highly-functioning ecosystems for important inputs into their production processes and essential services like air, soil and water quality. This year will see the global biodiversity conference, COP15, take place in China after two years of delay due to the pandemic. The conference aims to set a Paris Agreement-style global goal for nature, with many organisations calling for a worldwide goal for businesses to be "nature-positive." A nature-positive world requires no net loss of nature from 2020, a net positive state of nature by 2030, and full recovery by 2050. To mitigate impacts on biodiversity, businesses are asked to avoid and reduce pressures on nature loss, restore and regenerate, so that the extent and integrity of nature can recover, and transform underlying systems to address the drivers of nature loss. It will be easier for companies to solve these issues by setting science-based targets for both nature and climate.   6. The emergence of the green consumer According to the Harvard Business Review, consumers want more sustainable products, but when faced with them, they don't consistently buy them and "keep reverting to old, habitual behaviour". The tide seems to be changing in 2022 as consumers become more aware of how individual actions can be part of climate change mitigation. In addition, governments are increasingly pressuring businesses to nudge consumers towards making that sustainable purchase. 7. The role of the circular economy In 2022, all businesses should investigate measures for enhancing waste management, increasing product durability and quality, and seek to involve recycling/take-back schemes for product end-of-life. These methods, among others, are examples of how companies can begin to implement circular economy principles into their day-to-day processes to become a more sustainable business. In Europe, the Commission has estimated that adopting circular economy principles could increase EU GDP by 0.5 percent by 2030 and create an additional 700,000 jobs. In the context of Ireland, EPA estimates suggest a 5 percent material reduction in the 100 million tonnes used annually could correspond to an annual €2.3 billion opportunity. In December 2020, Ireland launched its first Whole of Government Circular Economy Strategy, in which it estimates that annual savings of €2.3 billion could be achieved by boosting Ireland’s circularity. Russell Smyth Sustainable Futures Partner in KPMG.

When entering a period of organisational change, leaders need to remember that people are their most vital asset. Patrick Gallen explains how organisations can best engage with employees to transition successfully. The Greek philosopher Heraclitus said, “you can never enter the same river twice”, meaning somewhere between 535BC and 475BC, we knew that change would be a challenge we would grapple with throughout human existence. So, why do organisations still find it so difficult to change? There are several reasons but, generally, people find it difficult to leave behind old comforts, nurtured over the years and move towards something new, often unknown and not entirely predictable. We have learned many lessons since the onset of the COVID-19 pandemic in March 2020. Perhaps one of the greatest lessons has been that we must always be prepared for rapid change. For almost two years, it has been difficult to forecast the business landscape month-to-month in the way we might have been able to in 2019 and before. Another lesson organisations worldwide have learned since the beginning of the pandemic has been  that people are an organisation’s greatest asset. This is not just a headline for the careers page but a fact. Without the dedicated people who make up an organisation, you cannot meet company objectives or deliver excellent client service. People turn ideas into reality and strategy into action. So, when entering a period of organisational change, it is essential to put people at the centre of this change. To take your people on a journey with you, they must be willing to travel the distance. You must engage them, communicate your vision with them, and excite them about wanting to reach that destination. How can you do this? Communication Communicate early and often. If people are not connected to the ‘what’ and ‘why’ in the change process, it is difficult to convince them of the desired outcome. Updating staff on the status of the change and how it fits into your overall plan makes it much more likely that they will be accepting of, and excited about, it. Mobilise your change team Find the key influencers within your organisation, those who have earned their colleagues’ trust and respect. Getting these people behind your programme for change allows you to spread the word more quickly and effectively. You can use them as a sounding board to understand how change is perceived throughout the organisation.  Listen Employees may have lots of comments, questions, and worries throughout the change process. You must listen to this feedback openly, validate it, and address it honestly. Even if you can’t address their concerns right away, ensure that you listen to them and let them know you will address them when you can. Managing organisational change can be daunting, but that isn’t a reason to avoid it. When executed correctly, change will inject energy and progress into your organisation and help you and all of your people reach new heights. Patrick Gallen is Partner of People & Change Consulting in Grant Thornton Northern Ireland.

With the introduction of the Government’s Waste Action Plan for a Circular Economy, Ireland has the opportunity to become a leader in circularity and waste reduction – but  innovation and buy-in will be needed to succeed. Michael Quille explains. The Irish Government’s Waste Action Plan for a Circular Economy outlines bold ambitions to encourage a more circular, sustainable waste management model. Ireland can be a leader in waste reduction, given our legacy as one of the first nations to ban single-use shopping bags. We need to leverage that innovative spirit to find new pathways to zero waste. The ‘Waste Action Plan for a Circular Economy’ (the Plan) outlines an ambitious roadmap for Ireland’s waste policy up to 2025. Taking a holistic view of resources, the Plan actively encourages a more circular, sustainable waste management model that will maximise the value of materials throughout a product’s life cycle, putting climate action at the core of national resource management policy. The Plan contributes to the Government’s commitment to move towards a circular economy (set out in the Programme for Government) and is complemented by several Government publications at various stages of approval. Ireland has a real opportunity to become a leader in the EU and internationally by embedding a solid circularity ethos across society and the economy. Both the private and public sectors have gradually begun to integrate process innovations into business models which design-out harmful waste, extend product lifetimes and, in some instances, prevent waste from arising in the first place. There is a growing consensus among industry leaders and policymakers as to the economic potential of the circular economy business model. However, many companies struggle to incorporate circular thinking into their corporate strategy and day-to-day operating models due to a lack of understanding and technical capabilities. The Plan provides Ireland with coherent and actionable objectives that look at how we consume materials and resources; how we design the products that households and businesses use; how we prevent waste generation and resource consumption; and how we extend the productive life of all goods and products in our society and economy. Impact on households Under the Plan, households are challenged to reduce waste, improve recycling activities, and generally embrace and expand their social responsibility efforts. To encourage engagement, a deposit and return scheme for plastic bottles was signed into regulation in November 2021 and is set to become operational during 2022. Waste bin colours will also be standardised across the country, and apartment complexes will be required to segregate waste properly. Further changes are proposed to the regulation of the commercial and household waste collection market, improving consumer protection and ultimately promoting more equitable market competition. Nevertheless, many of the measures aimed at waste collectors, such as recycling targets and the levy on waste disposal, may ultimately be paid for by the consumer as pass-through charges. To smooth out the transition to a lower-waste household economy, targeted education and awareness campaigns are proposed to encourage better-informed consumption decisions and buy-in to a shared responsibility. Impact on business All business in Ireland will be affected by the requirements for circularity and the shift to a new macro perspective of holistic, zero-waste resource management. Indeed, the impact on some may be even more acute than our carbon ambition, demanding behavioural and mindset changes that are difficult to appreciate fully as we move from the linear make, use and dispose model to something with increased circularity. In light of these headwinds, business leaders should embrace and implement a proactive and sustainable business approach, addressing any compliance or regulatory requirement risks associated with implementing the Plan head-on. Organisations should review their existing business models and integrate a focused circular economy strategy to help fulfil circular expectations, reduce resource dependencies, anticipate legal constraints, generate cost savings and drive business value. Capacity to deliver Critical to the successful implementation of the Plan will be the capacity and overall ambition of both the private and public sectors to comply with and deliver on the Government’s ambitious agenda. The culture towards waste disposal in Ireland must further regenerate and evolve, with Government ensuring that the right leadership, governance, procurements, incentives and forms of contracting are in place. The transition to a circular economy offers the real possibility of a sustainable alternative future; it is an essential step towards a decarbonised economy and will create measurable long-term value for everyone. Ireland can be a leader – we were one of the first nations to ban single-use shopping bags and move to the “bag for life” concept. We are proven innovators and adapters for waste reduction, and now we need to leverage that resilience and innovative spirit to find new pathways to zero waste. Michael Quille is Strategy and Transactions Associate Director at EY Ireland.

As we embark on shaping the next phase of work, there is a mix of concern and excitement about getting the transition right. Kevin Empey explores what leaders can do with this once-in-a-generation opportunity to mould the future of work here and now. After overseeing the most dramatic shift to work in modern history over the last two years, leaders are now centre stage again with the expectation to guide and lead organisations through an even more complex and tricky phase of work design. As many have remarked in recent months, it was one thing to get people out of the office against the backdrop of a pandemic and a standard set of rules and guidelines for everyone; it is quite another to get people back to a new model of work that is complicated by choice and continuous comparison with what everyone else is doing. Three work phases Most organisations moving to a hybrid or more blended model (remembering that there are thousands of jobs where remote working is not an option) typically agree that we are looking at progressing through at least three phases: Experimental: a tentative, almost experimental type experience that is currently underway for many, influenced by the changing realities of COVID-19. Transitionary: a more deliberate, test and learn and strategic phase, with a transition to different ‘target’ working models that are more sustainable and hopefully free of the constraints and concerns around COVID-19. Most agree that we are also not likely to get this transition perfectly right the first time. Bedding-down: the realities, lived experience and outcomes from the transition to new target models are truly revealed, understood, and implemented over the next couple of years. On the back of these three phases, leaders need to consider two things: The operational and logistical challenge of getting people safely through these phases; and The strategic challenge of creating a new work model, associated people processes, and a leadership approach and culture that is ultimately successful and purpose-built for the organisation and its future. Strategic agility The exact sequencing of these three phases and two workstreams will differ from organisation to organisation. However, there is one foundational quality that will maximise the success of this change-management experience and prepare the organisation and workforce for further inevitable disruption into the future. That quality is strategic agility. Strategic agility is a complex, ambiguous, vulnerable leadership challenge for everyone: organisational leaders, managers, human resources, and employees. But the transition to the next phase of work is also an invaluable case study of agility in action – a case study that we can learn from, experiment with, and embed into our ways of working. The longer-term prize for leaders and employees Over the next 6 to 12 months, the potential prize for organisations is not just a safe and successful transition to a new, post-COVID-19 work model. It is also about using the learning and experience of this transition (along with the lived experience of leaders and employees over the last 22 months) to help organisations develop and embed more agile ways of working, leading and thinking for the future. Being deliberate about developing these skills over the coming months will give us the ability to deal with any change, uncertainly and disruption. Importantly, it means our leaders and our workforces will be able to flourish and thrive in the longer-term future of work and not just respond and cope from one disruption to the next. Conscious development of the sustained and deliberate capability of agility at an organisational, team and individual level will be the long-lasting legacy of COVID-19. And this prize can be won through our combined work over the next year as we go through the experience of co-creating new, successful working models and working lives. Kevin Empey is the Founder and Managing Director of WorkMatters. He is also the author of Thrive in the Future of Work, published in 2021.

While the economic future is bright for the island of Ireland, we mustn't take it for granted. Neil Gibson outlines lessons learned from the last two years and what challenges lie ahead. It is encouraging to report that the all-island economy ended 2021 in much better health than expected despite the economic and societal headwinds of the past 22 months. The economic rebound has been quick and substantive to date, driven by a combination of well-timed policy responses and the ingenuity and flexibility of the business base. The economy is dealing with labour shortages and price increases exacerbated by high demand levels. These problems can be viewed as consequences of success, but it does not make them any easier for businesses or policymakers to navigate. The emergence of the latest COVID-19 "variant of concern" adds renewed uncertainty to the outlook as many unknowns remain about its severity and impact at the time of writing. The 2022 outlook for the Republic of Ireland (ROI) and Northern Ireland (NI) has been revised upwards from forecasts produced in spring 2021, with the labour market outperforming expectations. The pandemic has hastened a trend that has been gathering momentum – not all growth is equal. Purposeful growth that brings together economic, societal, and environmental development has become the goal for policymakers, citizens, and business leaders alike. The resilience and adaptability of the all-island economy will be tested further as the challenges of the "three Ps" – people, planet, and prices – move into sharper focus this year. Can the headwinds become tailwinds? The headline economic performance may be better than expected, but not all businesses are booming. The ever-changing nature of the virus, supply chain disruptions, and rapidly increasing prices all present significant headwinds for many companies. A strong labour market recovery amid a slowdown in migration also means that many businesses struggle to attract and retain talent. The economic outlook appears much more daunting when these short-term challenges are coupled with the necessity to transform towards a more sustainable future. The evidence of the past 22 months has shown that the organisations that can turn these challenges into opportunities will achieve unparalleled success. Finding talent in new places, deploying technology to mitigate price increases, achieving sustainability goals through innovation, clear leadership, and targeted investment are all traits of businesses that have thrived in these uncertain conditions. The critical question for the wider economic outlook is whether a sufficiently broad cohort of businesses can participate in this transformation. Policy plan remains 'grow faster' The UK and ROI budgets emphasised the need to keep public spending levels high to tackle ongoing pandemic issues and accelerate efforts to address significant societal, environmental, and economic challenges. The two most prominent issues set out in the ROI and UK budget speeches were climate change and housing. It was evident that the key policy choice is to raise taxation to meet spending rather than curb spending to match income. There were no widespread austerity measures put in place across either economy despite the levels of borrowing incurred due to the pandemic. However, the UK did introduce two major tax increases to rebalance public finances and facilitate sustained elevated levels of public spending, increasing national insurance and the headline corporation tax rate. In ROI, strong levels of growth and tax receipts have safeguarded against any immediate tax rises for the time being. However, the OECD global tax agreement will modestly increase the corporation tax rate. Reassessing risks is an imperative Given the outperformance of the all-island economy, it may seem pessimistic to warn of complacency as a risk to economic growth. Still, as the emergence of Omicron demonstrates, it is essential not to take the strong recovery for granted in 2022. The availability of a seemingly endless supply of public money to deal with the pandemic, the assumption by most economists that inflation will be temporary, and the availability of low-cost finance are all open to challenge. The public finances will need to be repaired, particularly if interest rates rise sooner rather than later. Traditionally, technology, global competition, and labour supply would mute prices. However, these assumptions are now being challenged as wages are rising and consumers are becoming more conscious of suppliers' ethical and environmental standards. Growth is always hard-earned, and the ingenuity and adaptability that has been evident across the island economy will be required again. As scientific evidence shows, there is very little calm after the storm, but at least the economy faces the challenges from a more robust platform than predicted. Neil Gibson is the Chief Economist at EY Ireland.

HMRC has informed Chartered Accountants Ireland that late filing and late payment penalties are waived for one month for Self-Assessment taxpayers filing their 2020/21 returns.  The Institute made representations to HMRC before Christmas and earlier this week highlighting the health and safety risks facing accountants and taxpayers in meeting the 31 January deadline in wake of worsening COVID-19 case numbers.  The deadline to file and pay remains 31 January 2022 but those who cannot file their return by the deadline will not receive a late filing penalty if they file online by 28 February and they will not receive a late payment penalty if they pay their tax in full, or set up a Time to Pay arrangement, by 1 April.  Interest on late payment of tax, however, will apply from 1 February, as usual. On publishing news of the penalty waivers, Lucy Frazer, Financial Secretary to the Treasury, said: “We recognise that Omicron is putting people under pressure, so we are giving millions of people more breathing space to manage their tax affairs. Waiving late filing and payment penalties will help ease financial burdens and protect livelihoods as we navigate the months ahead.” HMRC noted that, of the 12.2 million taxpayers due to submit their tax return by 31 January 2022, almost 6.5 million have already done so. HMRC told Chartered Accountants Ireland that Time to Pay options are still available to assist taxpayers.  Once they have filed their 2020/21 tax return, taxpayers can set up an online payment plan to spread Self-Assessment bills of up to £30,000 over 12 monthly instalments.  HMRC noted that if taxpayers still cannot file by 28 February or pay (or set up a payment plan) by 1 April, the usual right of appeal against any penalty will be available, with COVID-19 as a possible reasonable excuse.   See HMRC’s press release for further details. 

In the first interview from our new governance webcast series, Dr Margaret Cullen and Níall Fitzgerald discuss board effectiveness, some of the issues currently impacting Irish and UK boards and how those issues can affect behaviours, and key concerns boards have in relation to their responsibilities at the beginning of 2022. Dr Cullen discusses a range of topics in this webcast, including: three competencies that are critical to board effectiveness; what senior management can do to self-manage behaviours and ensure their contributions facilitate effective decision-making; individual and collective accountability and the importance of good decision-making processes; and the governance issues that are having the greatest impact on SMEs, large private and listed companies. The interview with Dr Margaret Cullen is available to view on our YouTube channel. Dr Margaret Cullen is an experienced non-executive director, lecturer, and researcher. She is founder and principal of Think Governance Limited, a corporate governance consulting firm.