Over the course of several editions of Chartered Accountants Tax News in March and April, we summarised the proposals in HMRC’s consultation “Raising standards in the tax advice market – strengthening the regulatory framework and improving registration” and asked for your feedback. This week we’re issuing a final reminder to let us know your views, especially on the three options presented, mandatory membership of a professional body, a hybrid HMRC and industry enforcement model, or regulation by an independent statutory body. The Institute has condensed all the proposals in this consultation into one document and encourages members to send their feedback to us by close of business on Tuesday 7 May. Email tax@charteredaccountants.ie to let us know your views.  Members may also wish to respond to the consultation themselves (closing deadline is 29 May 2024). To facilitate this, HMRC has launched a consultation survey. Alternatively, you can email raisingstandardsconsultation@hmrc.gov.uk.  

Readers will be aware that last month HMRC announced a series of permanent changes to its helplines which were to begin from 8 April 2024. However, on 9 April, HMRC  announced that the changes were being halted while HMRC “considers how best to help taxpayers harness online services”. Chartered Accountants Ireland recently discussed this with HMRC at its most recent Representative Body Steering Group (“RBSG”) meeting, the highest-level forum meeting for the Professional Bodies. Read on for an update on that discussion and key messages for members.  At the RBSG meeting, HMRC staff made clear that quarters one and two of 2024/25 are likely to see a further decline in services whilst HMRC considers the way forward. A bespoke meeting is expected to take place next month with the Professional Bodies (including the Institute) to discuss further.  Last week HMRC’s Chief Executive and First Permanent Secretary Jim Harra appeared in front of the Treasury Select Committee to provide oral evidence on HMRC service levels. Mr Harra did not rule out returning to the proposed helpline changes but did say that HMRC is reviewing its strategy and that it should have ‘taken more time to go through the evaluation of last year’s trial and spent more time explaining how people would be supported’. Mr Harra also confirmed that from 1 April 2022 to the end of the current financial year, HMRC expects to have to reduce the size of its customer service group by about 5,000 staff but confirmed that there really is only one alternative plan, and that is to deploy more helpline resources. HMRC “currently do not have the funding to do that, but we are of course in discussions with Ministers, following the decision not to go ahead with these changes, about what we will do.”  The Institute and its NI Tax Committee is monitoring this issue and will be attending next month’s bespoke meeting. However, we are disappointed that a request for a bespoke meeting before the formal announcement was made by HMRC last month was rejected and only now is one being set up to discuss our concerns in more detail. Feedback on HMRC services can be sent at any time to the Institute.  The Administrative Burdens Advisory Board (“ABAB”) 2024 Tell ABAB annual survey on HMRC is also currently open until tomorrow 30 April 2024 to feedback on HMRC performance and tax compliance. The survey provides crucial insight on the big issues faced by small businesses in the tax system and is commissioned by the ABAB, an independent body who are passionate about listening to and understanding the needs of the small business community. Results from the survey will be published in a report, which is targeted for publication on GOV.UK in September 2024. 

Last week HMRC picked up a new VAT email scam associated with a QR code. HMRC has posted about this on its social and digital media channels to issue a warning. Essentially HMRC became aware of a small number of cases where the paper bank details variations form (VAT484) has been wrongly used in an attempt to gain access to a business’s VAT repayments.   According to HMRC, action is being taken to address any cases identified to date, including writing to businesses to confirm changes made to their details since January 2024, and putting in place solutions to minimise any further instances. The warnings issued last week are available here:-  X - https://twitter.com/i/status/1782803752388342084; and  Facebook - https://fb.watch/rDBLKlAsfd/.  Anyone receiving any type of phishing attempt should report this to HMRC. 

In this week’s EU exit corner, we bring you the latest guidance updates and publications relevant to EU exit. The most recent Trader Support Service bulletin is also available and from tomorrow 30 April 2024 we remind you that the next stage in the UK’s Border Target Operating Model commences. HMRC has also provided a new portal which can be used to test the new computerised transit system (“NCTS”) which commences from July 2024.  Next stage in BTOM commences from tomorrow  From tomorrow 30 April 2024, to import live animals or animal products from non-EU countries into Great Britain, you’ll need to:-  find the BTOM risk category for the commodity you’re importing; and  follow the sanitary and phytosanitary rules for that import risk category.  The BTOM categorises live animals, germinal products, products of animal origin and animal by-products as high risk, medium risk, or low risk. Each category has different requirements.  NCTS portal  The new computerised transit system (“NCTS”) phase 5 web portal is expected to be available from July 2024. In preparation for this, HMRC has launched an online service which can be used to test the new portal. Note that any declarations or notifications completed in the service are for test purposes only and will not be submitted to HMRC.  If you are a UK trader, you should use the NCTS to submit electronic transit declarations. The Common Transit procedure can be used for movements between the UK, the EU, and other common transit countries. You must use the system if you’re a trader and want to move goods under the Common Transit Convention. You can keep up to date with news affecting NCTS users by reading the transit newsletters.  Miscellaneous updated guidance etc.   Recently updated guidance, and publications relevant to EU exit are set out below:-  Customs Importer and Exporter Population 2023;  Customs importer and exporter population 2023: methodology notes;  Customs UK Importer and Exporter Population - business count data tables 2023;  Manage your import duties and VAT accounts;  Importing SPS controlled goods that interact with ALVS;  Data Element 2/3 Documents and Other Reference Codes (National) of the Customs Declaration Service (CDS);  Customs Declaration Completion Requirements for The Northern Ireland Protocol;  Part 1 Tariff Supplement for CDS Volume 3 for the Northern Ireland Protocol; and  Part 2 CDS Declaration Completion Requirements for The Northern Ireland Protocol. 

By realising the full potential of consistent networking, accountants can achieve personal and professional growth. Jean Evans explains why Consistency matters when you start networking. Working out what networks provide a consistent platform with which to engage is a crucial part of the magic sauce to leveraging and getting strategic with your networking efforts. Consistency is crucial for successful networking for several reasons: 1. Consistency builds trust Consistency helps establish trust and reliability among your network connections. When you consistently show up, deliver on promises, and maintain a certain level of professionalism, others are more likely to trust you and be willing to engage with you further. 2. Consistency keeps you relevant Regular interaction with your network helps you stay top-of-mind. If people consistently see your updates, contributions, or engagement within the network, they are more likely to think of you when opportunities arise. 3. Consistency demonstrates commitment Consistency demonstrates your commitment to your network connections, that you value the relationship and are willing to invest time and effort into maintaining it. This can lead to stronger and more meaningful connections over time. 4. Consistency builds credibility Consistency in networking activities, such as attending events, sharing valuable insights, or offering assistance, helps to build credibility. When others consistently see your expertise and willingness to help, they are more likely to view you as a credible and knowledgeable resource in your field. 5. Consistency expands opportunities Consistently engaging with your network expands your opportunities for new connections, collaborations, and career advancements. Regularly networking and nurturing relationships increase the likelihood of coming across new opportunities and being referred for relevant ones. 6. Consistency creates reciprocity Consistent networking efforts often lead to a culture of reciprocity within your network. When you consistently support and provide value to others, they are more likely to reciprocate by offering their support, advice, or opportunities when needed. 7. Consistency makes you adaptable Networking is not just about what you can get from others but also about what you can offer. Consistently engaging with your network allows you to adapt to changes in your industry or profession and remain relevant. It also opens opportunities for learning from others and gaining new perspectives. Reap the benefits Overall, networking consistency helps foster strong relationships, build credibility, and create opportunities for personal and professional growth. You can reap the benefits of a strong and supportive professional community by consistently investing time and effort into nurturing your network connections. Jean Evans is a Networking Architect and founder of NetworkMe

After a decade of little change, the tax regime for research and development in the UK has undergone a ‘credit style’ revamp, writes Liam McHenry  New research and development (R&D) rules for businesses in the UK with an accounting period beginning on or after 1 April 2024 have commenced. These entities are within the remit of the newly merged, research and development expenditure credit (REDC) expenditure scheme – with the exception of “highly R&D-intensive companies”. Companies with over 30 percent of their yearly expenditure qualifying for R&D tax relief can still claim under a restricted version of the SME scheme. Given this high bar, however, it is likely that only small technology start-ups will qualify.  For everyone else, the new rate will provide a benefit worth about 15p per £1 of qualifying expenditure, so not all is lost for those exiting the SME scheme, as a generous tax incentive remains for potential claimants. Reduced complexity? The stated aim of the merged scheme is to reduce complexity for claimants and their advisors. With two schemes remaining post-merger, however, the new scheme is actually more complex than its predecessor.  Subcontracted expenditure had previously been excluded under the RDEC scheme in any meaningful way. Under the new merged scheme, a new system has been put in place with the aim of rewarding whichever party decides to undertake the R&D activity. This adds a new dimension to determining the eligibility of qualifying R&D expenditure insofar as a subcontractor will now need to determine whether they believe their customer knew in advance that a project would require R&D activity. The theory is that this approach will remove the potential for both parties to claim on the same project, but it is easy to see how ambiguity might arise. When agreeing the terms of contracts with customers, claimants must pay additional attention to any clauses relating to intellectual property (IP) generation and whether they indicate that R&D will be required. Taking care at this stage could help claimants identify and preserve their right to claim the corresponding tax relief. Overseas expenditure A restriction on overseas expenditure was also introduced on 1 April 2024. Unless there is a compelling reason why the expenditure could not reasonably have been incurred in the UK, it will not be eligible for inclusion in the claim. However, recognising the unique position of Northern Ireland and its significant integration with the neighbouring Republic of Ireland, claimants can bypass this new restriction. By doing so, they could gain up to a maximum additional benefit of £250,000 every three years. This may require some additional administration, but it is still a welcome reprieve from the restriction, which would have been costly. Increased scrutiny This article offers a summary of the main rule changes coming into effect this month. In reality, there are more of which claimants should be aware. His Majesty's Revenue & Customs (HMRC) has dramatically increased its compliance efforts, with recent revelations from the Public Affairs Committee indicating that upwards of 20 percent of new R&D claims are now under scrutiny. While this fact alone should not be a major concern, it is worth noting that this increased scrutiny often comes with an aggressive stance, beginning with the assumption that R&D claims should be disallowed. The experience of one claimant to another can dramatically vary depending on which caseworker is allocated to the enquiry. Regardless, opening an enquiry can be a prolonged process before a conclusion can be reached. In the event of an unsuccessful enquiry defence, HMRC will be obligated to consider whether any penalties should be levied, depending on whether they determine that the claim was prepared carelessly. In addition, depending on the level of disclosure provided in previous claims made in recent years, HMRC can (and is actively encouraged to) look into these previous claims beyond the normal enquiry window. Planning ahead The implementation of the new R&D tax rules marks a significant shift for businesses heavily reliant on R&D activities for growth and innovation. As businesses adapt to the new regime, strategic planning and collaboration with tax advisors will be essential in maximising the benefits. Liam McHenry is Director of Tax at Grant Thornton

Recent comments by the CEO of America’s biggest bank suggest AGMs are losing power and relevance. David W Duffy delves into the details Annual general meetings (AGMs) are crucial in corporate governance. They are a legal necessity and provide a valuable opportunity for shareholders to speak to leaders. These days, however, criticism is surfacing in some companies that AGMs are becoming a nuisance. Activist pressure So, what exactly is turning the tide on AGMs and their perceived value? In short, the activist pressure exerted recently at some very high profile AGMs.  At Disney’s most recent AGM in early April, for example, shareholders were encouraged to vote in favour of a proposal that would see the entertainment giant pay for services for people choosing to detransition. The Disney proposition had no material impact on the company’s strategy, and JPMorgan Chase Chief Executive Jamie Dimon took issue.  According to Fortune, Dimon claimed that AGMs were falling victim to “spiralling frivolousness”, dominated by lobbyists, activists and interest groups, which bear little relation to the company’s strategic direction.  There’s no “right or wrong” for a statement like this; it is really just a measure of whether or not other corporate leaders agree.  The leaders of some companies could easily agree with Dimon, especially those at the helm of companies whose AGMs are rife with debate. In companies where AGMs are quieter – sometimes to the point of formality – leaders may not need to worry. Importantly, board members and other stakeholders must remember that anything is possible at an AGM. They could, for example: serve as a hotbed for debate; become a forum for topics considered politically charged (anything from geopolitics to religion to social issues to climate change); feature shareholder proposals put forward solely to make a point, win support or express anger; or seem like a waste of time to corporate leaders because of all the above.  None of this is a given, however. It is far more likely in bigger, global companies – household names consumers feel are so big that their impact stretches beyond their mission statement. In these scenarios, stakeholders generally want the company to take a stance on every political issue, and shareholder proposals at AGMs are part of this. Are AGMs fit for purpose? The threat of any of the above scenarios may mean that some companies’ AGMs are not fit for purpose. It depends on the goals of the people who attend. Companies can’t just get rid of AGMs, however.  AGMs are a cornerstone of business. They often serve as the one opportunity many small shareholders have to speak to the company’s leaders – and, by law, this chance must always be available.  An organisation considering changing its AGM must first examine its articles of association. These are usually where AGM rules like voting procedures and scheduling are found. Beyond this, there may be wiggle room. AGM options It is advisable that leaders and participants accept that the AGM will be active, full of differing opinions and multiple proposals that go nowhere, making it feel like a distraction. If you approach the situation with this prepared mindset, you might find it easier to register the elements of impactful processes beneath the noise.  It’s also advisable to get proactive about issues. You may be better prepared if you anticipate the problems that shareholders are likely to raise and discuss them at the executive and board levels. In the process, you could gain critical insights that shape your understanding of shareholder opinions and frame a more robust conversation. However, if an organisation still wants to change their AGM – and the articles of association allow it – boards can change things like length, the requirement for in-person attendance and the time balance between corporate leaders and shareholders. It must be noted, though, that if a board changes any of these elements, it may appear to be attempting to be creating barriers to debate and shareholders might not respond well. The bright side Many companies have seen their AGMs dominated by activist noise in recent years. While this issue can be addressed by making changes, the bottom line is that the AGM as a concept is here to stay. Organisations should view the “noise” as an invitation to develop relationship management skills and stay on top of emerging trends. These are hugely important for good corporate leaders, and a busy AGM could be the time to flex those muscles. David W Duffy is a founder of the Corporate Governance Institute

The former Italian Prime Minister Enrico Letta recently launched a report on the EU Single Market. The report focuses on competitiveness, streamlining EU regulations to boost the data economy, investment in digital innovation, governance, tax, energy/climate, and SME competitiveness. There is anecdotal feedback that the document is being considered as a key document for the next EU Parliament. The Taoiseach has noted that while Ireland supports the integration of capital markets, this should not involve the harmonisation of corporate tax or insolvency laws.

Last Thursday on Tax and Maintenance Day, the Government published a written ministerial statement setting out further detail on various commitments made at the March 2024 Spring Budget. This includes the launch of a consultation on the impact of recent High Court rulings on the VAT treatment of private hire vehicles and an update on the recent consultation on tackling non-compliance in the umbrella company market. The government also announced two further technical tax policy proposals.  In summary, the announcements were as follows:- VAT treatment of private hire vehicles – a consultation has been launched on the potential tax impact of recent High Court rulings on the private hire vehicle sector. This consultation also invites views on potential Government interventions that could help to mitigate any undue adverse effects on this sector and its passengers. The consultation is open until 8 August 2024; Tackling non-compliance in the umbrella companies market – the Government will publish a response to this consultation in due course. HMRC will publish new guidance later this year which will include an online pay checking tool. At present, the Government is considering introducing a statutory due diligence regime for businesses that use umbrella companies and will continue to engage with the recruitment industry and other key stakeholders on the detail of this;  VAT treatment of charitable donations - to encourage charitable giving, the Government will consult later this year on introducing a targeted VAT relief for low value goods donated to charities by businesses which the charities then give away free of charge to those in need; and  Mandating postcode provision for freeports and investment zones national insurance contributions (“NICs”) reliefs – a legislative change will be introduced which will require employers operating in a freeport or investment zone special tax site to provide their employee’s workplace postcode to HMRC if they are claiming the relevant secondary Class 1 NICs relief through payroll. This will be underpinned by a four-week technical consultation on the draft regulations required to implement this.  Full details of the various publications and announcements made are available at:- https://www.gov.uk/government/publications/summary-of-tax-administration-and-maintenance-spring-2024. 

In recent weeks we have issued several reminders that 30 April 2024 is the deadline for the end of the VAT margin scheme in respect of second-hand vehicles moved to Northern Ireland from Great Britain prior to 1 May 2023. If these vehicles are sold after 30 April 2024, VAT will therefore be chargeable on the full selling price and not on the margin made.   Readers are also reminded that vehicles moved to Northern Ireland from GB on or after 1 May 2023 can use the new VAT related payment scheme, if certain conditions are met. However, this is not available if the vehicle was moved to Northern Ireland prior to 1 May 2023.  

Check out the latest items on the Agent Forum. Remember, in order to view each item, you must be signed up and logged in.   All agents, who are a member of a professional body, are invited to join HMRC’s Agent Forum. This dedicated Agent Forum is hosted in a private area within the HMRC’s Online Taxpayer Forum. You can interact with other agents and HMRC experts to discuss topical issues and processes. 

Do you use HMRC online services? Don’t be caught out by the planned downtime to some services. HMRC are warning about the non-availability of specific services on the HMRC website, a range of services are impacted. Check the relevant page for information on planned downtime. 

In this week’s EU exit corner, we bring you the latest guidance updates and publications relevant to EU exit. The most recent Trader Support Service bulletin is also available and InterTrade Ireland is hosting a series of free webinars to help businesses navigate trade between Ireland, Northern Ireland and Great Britain (“GB”). HMRC has also launched a new online service for businesses importing goods into GB and Northern Ireland and we update you on some matters discussed at a recent meeting of HMRC’s Northern Ireland Joint Customs Consultative Committee.  New online service for importers  Businesses importing goods into any part of the UK can now use a new HMRC online service for the following purposes:- view and manage your cash account (top up and withdraw funds);  set up a Direct Debit for and top up a duty deferment account;  request older statements and certificates;  view and manage your general guarantee account;  manage the email address linked to your account;  access secure messages from HMRC related to your account; and  set up, manage, or view account authorities.  You can also view and download:- duty deferment statements;  import VAT certificates (C79);  postponed import VAT statements; and  notification of adjustment statements.  In order to use the service, you must be subscribed to the Customs Declaration service (“CDS”) and can sign in to the new service using the Government Gateway user ID and password used to subscribe the CDS.  Meeting of HMRC’s Northern Ireland Joint Customs Consultative Committee (“NI JCCC”)  The Institute was in attendance at the most recent meeting of HMRC’s NI JCCC, a stakeholder forum to discuss Northern Ireland specific customs issues as a result of the UK’s departure from the EU.  At the meeting HMRC presented on the issue of consumer parcels being sent from GB to NI. A new system will be operational from Spring 2024, the UK Carrier Scheme, before the next phase of the Windsor Framework takes effect from 30 September 2024. In summary, from 30 September 2024, consumer parcels will be able to be sent from GB to NI without customs declarations. However, some information will need to be provided in bulk under the new UK Carrier scheme which aims to remove the burden from the border.  HMRC will issue further guidance and stated that they will not be auditing large movements of parcels. However, if there is a perception of potential abuse of the scheme, for example by moving goods from GB to NI for the purposes of onwards movement into the EU, HMRC will raise this with carriers. A number of upcoming milestones were also highlighted which we will provide more details on in due course.   The consultation on the introduction of the UK’s Carbon Border Adjustment Mechanism (“CBAM”) was also discussed. This will be introduced from 1 January 2027. The Government is considering minimum thresholds and plans to operate this like a domestic tax making the person who is responsible for the goods the person responsible for paying this tax, not the customs agent. This will be implemented by primary and secondary legislation and will also be followed by the development of guidance.   A question was asked if there is a liability to the EU CBAM for Northern Ireland importers if Northern Ireland importers are moving the goods into the EU, but the goods are coming from GB into Northern Ireland. HMRC confirmed that imports into Northern Ireland are not subject to the requirements of EU CBAM. Imports into the EU, including Ireland, are subject to the EU CBAM.   Miscellaneous updated guidance etc.   Recently updated guidance, and publications relevant to EU exit are set out below:-  External temporary storage facilities codes for Data Element 5/23 of the Customs Declaration Service;  Data Element 2/3: Documents and Other Reference Codes (Union) of the Customs Declaration Service;  Known error workarounds for the Customs Declaration Service (CDS);  Apply for a voluntary clearance amendment (underpayment) (C2001);  Access trader testing for the New Computerised Transit System Phase 5;  Customs Importer and Exporter Population 2023; and  Customs Importer and Exporter Population. 

With the first reporting deadline for CESOP around the corner, it is critical that your company is fully prepared, writes Emma Broderick From 2024, all European Union (EU) payment service providers (PSPs) will be required under legislation to record and report transactional data in excess of 25 cross-border payments quarterly. This includes banks, electronic money institutions and other regulated payment institutions. The information given will be stored in a centralised European database – the Central Electronic System of Payment (CESOP) – and all information will be made available to anti-fraud experts. This has been brought in to help combat e-commerce VAT fraud. The first reporting deadline is 30 April 2024, meaning payment service providers have less than two weeks to file the report. Here are five key points to consider when helping payment service providers. The Central Electronic System of Payment (CESOP) report must be filed in the country where the PSP provides a payment service according to the payment license. For many providers offering payment services in multiple countries under an EU passport, a CESOP report must be filed in each country. Registration is required in most countries, but the manner of registration differs. In some countries, the PSP must apply to access the CESOP portal, while tax registration is required in other countries. Sometimes, the PSP must apply for a certificate. Unfortunately, in a few countries, it is necessary to have all three. The CESOP registration for Irish-resident PSPs can be completed using the online system operated by the Revenue Commissioners (Revenue). Revenue has also developed a Non-Resident Registration app for PSPs resident outside Ireland. In some cases, filing the CESOP report requires the use of special software, an electronic certificate, special encryption or an electronic signature. For example, in the Netherlands, you must have a public key infrastructure (PKI) government certificate and access to the Digipoort bestandsuitwisseling FTP. In Ireland, a PSP can engage the services of an intermediary to prepare and file the CESOP report without the PSP having to use any further technical tools. That is also the case in many other countries. There is a standard XML format for preparing and filing the CESOP report, but a specific heading is required in several countries. Revenue will have guidance on the headings needed for Ireland. The data in the CESOP report must comply with the CESOP requirements. There are various ways to check this. The European Commission website has a CESOP validation module, for example. However, please be aware that the European Commission has recently released new explanatory notes on the requirements of the file. The explanatory notes state that PCPs must consolidate all transactions for a single account under the same payee. Reporting per payment instead of per payee results in an incorrect report. Next steps We recommend PSPs establish the countries in which a CESOP report must be filed as soon as possible. If those countries require registration, it is important to do this immediately to meet the 30 April deadline. Although the market has asked for this, there is currently no general extension, which means many countries will continue to maintain the 30 April deadline. It is a good idea to test the data that will be filed to avoid it being rejected or returned with error messages. Emma Broderick is a Director with KPMG

Ireland’s placement in this year’s PwC Private Business Attractiveness Index has been helped by our start-up ecosystem and talent but challenges remain in other areas, writes Colm O’Callaghan Ireland ranks ninth among 33 EMEA countries as a location for private businesses to thrive, according to this year’s PwC Private Business Attractiveness Index. This is higher than Ireland’s 2022 ranking in 14th place, but below last year’s ranking in seventh place.   The index ranks the relative attractiveness of the environment and conditions needed for private businesses to thrive based on ten categories. These include: Macroeconomics. Private business landscape. Tax and regulatory environment. Sustainability and climate. Social responsibility and governance. Public health. Education. Skills and talent. Technology and infrastructure. Start-up ecosystem. While sustainability and climate, social responsibility, governance and public health all impact this year's rankings, three categories correlate highly with the countries’ overall ranking. These are private business landscape, technology and infrastructure, and start-up ecosystem. Virtually all jurisdictions in the higher positions perform strongly in these areas, more than making up for their lower scores in other categories. Conversely, tax and regulatory regimes and macroeconomic data categories – or even GDP per capita – have less bearing on the overall performance in the index. The index confirms that countries need to focus continually on the fundamentals that support an attractive environment for businesses in order to encourage and attract entrepreneurs and business founders. Trends in Ireland Several positives are driving Ireland’s attractiveness as a place for private businesses to thrive: It is in sixth place for ‘start-up ecosystem’; It is in ninth place for ‘education, skills and talent’; and It is in tenth place for ‘tax and regulatory environment’, up from 20th in 2021. Some concerning trends have outweighed these positives this year, however. Ireland’s ranking for ‘macroeconomics’ has fallen to sixth place this year, down from first last year. This is a significant slide, much of it stemming from the cost of living crisis and the fact that rising costs in the private business sector were most keenly felt in 2023. In this regard, Ireland ranked 30 out of 33 for the cost of electricity and 29 out of 33 for the cost of living metrics, impacting its overall macroeconomic standing. Ireland also scores 13th place and eighth, respectively, for ‘sustainability and climate’ and ‘social, responsibility and governance’. Ireland's overall fall by two positions to ninth place in this year’s index reflects the intense pressure some private businesses are under and the urgent need for continued support for this important sector of our economy.  In recent years, private businesses have had to deal with the pandemic followed by a period of steep inflation, high interest rates, electricity price rises and other cost pressures, often while working with restrained cash flows. Private businesses now face further cost pressures ranging from an increased minimum wage, pension auto-enrolment and employer PRSI hikes all coming together. It is good news that the Minister for Finance has announced that the interest rate on tax debt (frozen since the pandemic) has been cut to zero and that the Revenue Commissioners has indicating that it will take a flexible approach to the repayments. However, new and creative long term solutions may still be needed to help businesses service or repay the debt due while continuing to grow.  A key driver of Government over the next 12 to 24 months must be simple, clear and longterm policy measures aimed at supporting private businesses and further encouraging entrepreneurship and innovation. In particular, Ireland needs to do more to help support indigenous private businesses to become world leaders in their sector. Supporting businesses to invest in their finance teams and performance-led transformation could, for example, help them scale and internationalise faster. Business owners could also be given access to the reduced 10 percent rate of Entrepreneur Relief on the payment of a salary instead of having to sell their business. This would encourage the retention of businesses in the private sector and help to create more world-leading companies in Ireland under private ownership. Overall, if the Government can introduce a clear, simple and stated policy to help private businesses flourish and grow, doing so could make a long-term contribution to Ireland’s economy and naturally hedge our dependency on foreign direct investment. Colm O'Callaghan is a partner with PwC Private

Navigating capability issues in the workplace demands both empathy and procedural diligence. Gemma O’Connor explores how to address poor performance fairly Your employees are human; just like anyone, their work performance may dip occasionally. If this becomes an ongoing issue, an informal chat with the employee can often help shed light on what may be affecting their ability to complete their duties. Once the cause is identified and the employee receives suitable support, their performance will hopefully improve. After this, no further action will be necessary. However, if this informal approach does not work, it may be time to address the employee’s capability to do their job. What is capability? Capability in the context of employment law refers to an employee's skill, aptitude, health or any other physical/mental quality that allows them to complete their duties. Employment law recognises that employers may need to dismiss staff who no longer have the capability to complete their work. To understand whether an employee's poor performance may be due to their capability, you must ascertain if it is the case that they cannot do the work versus will not do the work. The latter may fall under the category of conduct. Capability policy A capability dismissal may be lawful if an employee does not have the capability, competence or qualifications to perform the work they are employed to do. A capability policy clearly outlines how the business will address capability issues that arise in the workplace. To do this, you will need to take steps to support your employees in working effectively. An informal discussion with the employee will often prevent the need for formal disciplinary action. A mutually agreed performance management solution should be explored first to help the employee overcome any capability issues. Performance-related capability dismissal The procedure to establish the basis for the dismissal must comply with the rules of natural justice and the terms of your written disciplinary procedures. In competency cases, you must outline the nature of the performance issues you need the employee to improve on. To determine whether a dismissal related to employee competency is fair, management should ask themselves if the employee is incapable of carrying out the job, and if so, do they have reasonable grounds to support that belief? Before moving to dismiss on the grounds of competence, you must first highlight the performance issues to the employee and grant them an opportunity to improve. With the right training and support, the employee may turn things around. Medical capability dismissal In many cases, the incapability of an employee to continue performing their job may result from ill health. Even if the employer's conduct is caused by ill health, dismissal will not necessarily be unfair, although it may also mean that the employer should take greater steps to avoid dismissal than would otherwise be the case. Before dismissing someone on the grounds of medical capability, you should obtain detailed medical evidence confirming that the employee’s return to work or recovery is unlikely. A dismissal based on medical capability must follow the principles of natural justice. You should: make sure you fully possess all material facts concerning the employee’s condition; ensure the employee receives fair notice that the question of a medical capability dismissal is being considered; and provide the employee with an opportunity to prove their case; if the employee isn't capable after a medical expert deems them so, ensure you explore reasonable accommodations that could render the employee fully capable (for instance, changing hours of work, etc). Unfair dismissal laws and capability Most unfair dismissal claims arise when an employer fails to follow fair procedures prior to confirming a dismissal. The Workplace Relations Commission will examine the following questions in an unfair dismissal claim, which are also applicable in cases involving capability: Did the employer believe that the employee was guilty of misconduct as alleged? If so, did the employer have reasonable grounds to sustain that belief? Did the employer carry out as much investigation into the matter as was reasonable before dismissing the employee? If so, was the penalty of dismissal proportionate to the alleged misconduct? The best way to minimise the risk of unfair dismissal claims is to have thorough disciplinary policies and procedures in place and to follow them strictly before confirming a dismissal. Gemma O’Connor is Head of Service at Penisula Ireland

Welcome to the latest edition of Technical Roundup. In developments since the last edition, Chartered Accountants Ireland have responded to IAASA’s consultation on the adoption of a sustainability assurance standard in Ireland.  Fallon Judge, Director of Civil Enforcement at the Corporate Enforcement Authority (CEA), provided a very informative session and slides during  a recent edition of our Practice News Webinar. The IASB have also issued its latest standard- IFRS 18. Read more on these and other developments that may be of interest to members below. Financial Reporting The International Accounting Standards Board (IASB) has published its latest standard IFRS 18 Presentation and Disclosure in Financial Statements. The new standard will be effective for periods commencing on or after 1 January 2027 (with early adoption permitted) and will replace IAS 1 Presentation of Financial Statements. The new standard carries forward many requirements from IAS 1 unchanged and seeks to improve comparability of the statement of profit or loss, enhance transparency of management defined performance measures and group information in a more useful manner in the financial statements. To support the implementation of IFRS 18, the IASB has included supporting information on an IFRS 18 implementation webpage. This webpage contains educational materials, webinars and implementation questions. Following the issue of IFRS 18, EFRAG, the European Financial Reporting Advisory Group, has updated its Endorsement Status Report. EFRAG and the IASB are holding webinars to introduce IFRS 18 on the 7th and 11th June. The IASB has issued an April 2024 IFRS for SMEs Update, which summarises news, events and other information about the IFRS for SMEs Accounting Standard. The update includes details of recent proposed amendments to the standard. The IASB has concluded its project on Business Combinations under Common Control and has published a project summary which explains the reasons behind the IASB’s decision in November 2023 not to develop requirements for reporting Business Combinations under Common Control. In its recent article entitled “Digital financial reporting—Facilitating digital comparability and analysis of financial reports”, the IFRS Foundation discuss what digital financial reports are, how they are created, and their benefits to stakeholders and other investors. EFRAG has published its March 2024 update. This summarises public technical discussions held, and decisions taken during the month. EFRAG has been gathering stakeholders views on the post-implementation review of IFRS 16 leases and the deadline for submission of views in relation to this is 22 April 2024. EFRAG has published its final comment letter on the IASB’s Exposure Draft ED/2023/5 Financial Instruments with Characteristics of Equity (Proposed amendments to IAS 32, IFRS 7 and IAS 1). Whilst agreeing with many of the clarifications, EFRAG made some recommendations to the IASB to improve the standards. EFRAG has issued a Feedback Statement which summarises the main comments received on its 2022 Discussion Paper Accounting for Variable Consideration- From a purchaser’s perspective. Accountancy Europe has published its April 2024 SME Update. The UK Endorsement Board (UKEB) has issued a report entitled “The IASB Exposure Draft: Regulatory Assets and Liabilities- A Preliminary Economic Assessment”. The purpose of the report is to provide information and economic analysis that will inform the UKEB’s assessment of the wider economic impacts of a new IFRS standard covering Regulatory Assets and Liabilities, if adopted in the UK in future. The consultation period for the UKEB’s Endorsement Criteria Assessment on Lack of Exchangeability – Amendments to IAS 21 closes on 6 May 2024. The UKEB have announced some outreach activities on the IASB’s Exposure Draft Business Combinations – Disclosures, Goodwill and Impairment. Auditing and Assurance Chartered Accountants Ireland has responded to IAASA’s consultation on the adoption of a sustainability assurance standard in Ireland.  Anti–money laundering and sanctions The European Commission last month published a report from the Commission to the European Parliament and the Council on the implementation of the 4th Anti-Money Laundering Directive. This report assessed how the 4th Anti-Money Laundering Directive was implemented. It gives a comprehensive review and touches on particular areas such as beneficial ownership and politically exposed persons. Insolvency The next issue of Introduction to members of the CCAB-I Insolvency Committee was recently published and gives an insight into the career and experience of Committee member Shane McAleer of Somers, Murphy & Earl. Sustainability In the first episode of its new podcast series entitled “the ISSB Implementation Insights podcast” the IFRS Foundation discuss the recent Transition Implementation Group meeting on IFRS S1 and IFRS S2. The European Commission is hosting a half day event entitled “Supporting companies in applying the European Sustainability Reporting Standards (ESRS)” on 16th May. The event will seek to showcase ongoing initiatives and discuss ideas for further mechanisms to support companies that apply the new European Sustainability Reporting Standards. EFRAG is preparing guidance to help companies disclose their transition plans in line with the ESRS standards and are seeking assistance from European companies to provide input on a variety of practices and challenges in relation to this. Interested entities can apply by 23 April 2024. The Global Reporting Initiative (GRI) and the Taskforce on Nature-related Financial Disclosures (TNFD) have announced their collaboration to support the corporate reporting needs of market participants globally. In doing so they have announced some plans for further joint publications. IFAC, the International Federation of Accountants has released a publication which sets out four key areas where accountants need to update their knowledge to meet the growing demand for high-quality sustainability-related information. Central Bank of Ireland On 9 April 2024, the Central Bank of Ireland published its updated approach to Expectations for Authorisation of Payment and Electronic Money Institutions and Registration of Account Information Service Providers together with a document setting out its expectations regarding the authorisation/registration of these regulated fintech entities. Click here for more information. The Central Bank recently published its Financial Conditions of Credit Unions Report which provides an update on the financial performance and position of the sector for the financial year ended 30 September 2023. The publication provides sectoral data and commentary and identifies key trends and notes that the Credit Union Amendment Act 2023, enacted last December, is a significant development and will provide new business opportunities for credit unions. In other Central Bank news, the Director Financial Regulation, Policy and Risk recently spoke about the Central Bank’s current consultation on its proposed review of the Consumer Protection Code. The review seeks to provide enhanced clarity and predictability, secure customers’ interests and modernise the code. Click here to read the director’s comments. Corporate Enforcement Authority The Corporate Enforcement Authority (CEA) has recently issued Information Notice 2024/1 – ‘Circumstances leading to Disqualification under the Companies Act 2014 and the associated consequences.’  The Information Note provides guidance on the purpose and effects of disqualification, and on the various ways in which a person can be disqualified from acting as a company director and also provides guidance on the consequences of breaching a disqualification. The CEA have also issued their April 2024 Newsletter. This focusses on the information note mentioned above, recent media activities and other relevant developments. Fallon Judge, Director of Civil Enforcement at the CEA provided a very informative session and slides during Friday 12 April 2024 edition of Practice News Webinar. Fallon gave a comprehensive overview of the work of the CEA including its investigative capabilities, sources of work and its approach to enforcement. She also drew attention to the information available on the Authority’s website including recent information notes on accepting directorships and guidance regarding disqualification under company law referred to above. A free recording of the webinar is available on the Institute’s YouTube Channel. Department of Enterprise Trade and Employment The Department of Enterprise Trade and Employment and Knowledge Transfer Ireland are jointly hosting a full-day conference on 23rd April 2024 at the Radisson Blu Hotel, Golden Lane Dublin 8 from 10am.The conference is entitled “Unlocking the Value of Knowledge Transfer Conference” This is part of the event series that the European Commission’s Directorate General for Research and Innovation are conducting across Europe.  Neale Richmond, T.D., Minister for Business, Employment and Retail will open the conference. You can read more here about the conference and how to register . Other The European Securities and Markets Authority (ESMA) has issued the fourth edition of its Report on the Quality and Use of Data which provides transparency on how the data collected under different regulations is used systematically by authorities in the EU and clarifying the actions taken to ensure data quality.   The Competition and Consumer Protection Commission is in the initial stages of a research study examining the state of competition across several sectors of the Irish economy. This project will provide an overview of the evolution of competition in Ireland over recent years and in doing so, it may identify competition or consumer protection issues that require further consideration or investigation. It is inviting interested parties to share their views. Click here for more information and details on how to contribute to the study. The closing date for submissions is 5pm Friday 17 May 2024. For further technical information and updates please visit the Technical Hub on the Institute website.    This information is provided as resources and information only and nothing in the information purports to provide professional advice or definitive legal interpretation(s) or opinion(s) on the applicable legislation or legal or other matters referred to in the information. If the reader is in doubt on any matter in this complex area further legal or other advice must be obtained. While every reasonable care has been taken by the Institute in the preparation of the information we do not guarantee the accuracy or veracity of any resource, guidance, information or opinion, or the appropriateness, suitability or applicability of any practice or procedure contained therein. The Institute is not responsible for any errors or omissions or for the results obtained from the use of the resources or information contained herein.  

As part of the public consultation on proposed amendments to its fraud standard (ISA 240) the International Auditing and Assurance Standards Board (IAASB) has published a new four-part video series. The series will help stakeholders understand the proposed changes that strengthen auditor’s responsibilities related to fraud, and the rationale behind them. The proposed changes to ISA 240, published in February 2024,  significantly strengthen auditors’ responsibilities relating to fraud and the IAASB askes stakeholders to respond by June 5, 2024.

Chartered Accountants Ireland have responded to the consultation by IAASA on the adoption of a sustainability assurance standard in Ireland.    We believe that ISAE 3000 should be adopted for use for sustainability assurance reporting in Ireland as soon as is practical and that it remains in place until an EU standard is adopted. The first wave of reports will be required in early 2025 therefore it is imperative that a decision is taken quickly. We responded to the IAASB consultation on the proposed new standard ISSA 5000 in December 2023.  We are supportive of the development of this new assurance standard but the timeline for the finalisation and adoption of this standard in the EU means that an interim solution is needed for reporting.  

The Department of Finance held the third meeting of the Business Tax Stakeholder Forum at Government Buildings on Merrion Street last Friday morning. The meeting was chaired by Clare Costello (Acting Head of Tax for the Department of Finance). A delegation from the Institute, under the auspices of the CCAB-I, attended the meeting. Representatives from the American Chamber of Commerce, the Law Society, Enterprise Ireland, IBEC, and the Irish Tax Institute were also in attendance, as well as representatives from Revenue and the Department of Enterprise Trade and Employment. The agenda for these meetings is driven by the Department of Finance and the meetings are an opportunity to update stakeholders on the latest in tax policy on both the domestic and international fronts. Stakeholders in turn provide feedback to the Department of Finance on the matters raised. On the domestic front, the main topics of discussion were the first Participation Exemption Feedback Statement and the Strawman proposal, the review of interest deductibility (expected in Q3 this year), and the recent public consultation on share-based remuneration. The group was also informed that a report on the Funds Sector 2030 review and public consultation is expected by mid-summer. On the review of interest deductibility, the Department advised that this will be multi-year project. On the international front, the main areas discussed were the recent progress on Amounts A and B of Pillar One, the incoming OECD administrative guidance on Pillar Two, the UN Tax Cooperation initiative, and the latest developments with Ireland’s tax treaty network. Revenue’s Eugene Creighton (Assistant Secretary for International Tax) and John Bradley (Principal Officer – Transfer Pricing) gave a presentation on Ireland’s Competent Authority Function for Dispute Resolution under the Mutual Agreement Procedures (MAPs) and Advanced Pricing Arrangements (APAs).