Revenue has updated its guidance across several areas of Stamp Duty to reflect the recent amendments passed in Finance (No. 2) Act 2023. Stamp Duties Consolidation Act 1999 – Notes for Guidance 2023 Special provisions relating to uncertificated securities Exemptions and reliefs from stamp duty Transfers of land to young-trained farmers – section 81AA Farm consolidation relief – section 81C Levies Schedule 1: Stamp duties on instruments

The 2 percent reduction from 12 percent to 10 percent in Class 1 employee’s national insurance contributions (“NICs”), which was announced in the 2023 Autumn Statement, took effect from Friday 6 January 2024. HMRC has updated rates and allowances: National Insurance contributions to reflect this.  The legislation to enact this and the other NICs changes announced is contained in the National Insurance Contributions (Reduction in Rates) Act 2023 which received Royal Assent on 13 December 2023.   This Act includes the legislation to:   reduce the employee class 1 NIC rate from 12 percent to 10 percent from 6 January 2024;  set the blended rate for directors as 11.5 percent for 2023/24;  reduce the Class 4 NIC rate for the self-employed from 9 percent to 8 percent from 6 April 2024; and  remove class 2 NIC for the self-employed with profits above the lower profits threshold from 6 April 2024.   A further change to the treatment of VAT on sanitary products also took effect from 1 January 2024. 

As always, over the Christmas period, several Tax and Duty Manuals (TDMs) have been updated. Please take note of any areas of particular interest. Key Employee Engagement Programme (KEEP) (updated to reflect Finance Act 2022 amendments following EU Commission approval) Road Haulier Drives (Employees) – Subsistence rates – TDM 05-02-10 (updated for Enhanced Reporting Requirements (ERR)) Salary sacrifice arrangements – TDM 05-01-01k Taxation of Non-Irish Resident Landlords – TDM 45-01-04 The Provision of Free or Subsidised Accommodation – TDM 05-01-01c Special Assignee Relief Programme (SARP) – TDM 34-00-10 (including details of the new online portal for employer certification) Guidelines for Agents or Advisors acting on behalf of taxpayers – TDM 37-00-04b (including linking for ERR and SARP) VAT Notes for Guidance – ( updated to reflect Finance (No. 2) Act 2023) Registration and Filing Guidelines for DAC7 – TDM 33-03-05 Universal Social Charge – TDM 18D-00-01 (updated to reflect Finance (No. 2) Act 2023) Vacant Homes Tax – TDM 11B-01-01 (updated to reflect Finance (No. 2) Act 2023) Defective Concrete Products Levy – TDM 18E-00-01 (updated to reflect Finance (No. 2) Act 2023) Stamp Duty – Further levy on certain financial institutions – Part 9 (updated to reflect Finance (No. 2) Act 2023) Reporting Requirement for Payment Service Providers on Cross-Border Payments (related legislation effective from 1 January 2024) Recognised Clearing Systems – TDM 08-03-04 (updated to reflect Finance (No. 2) Act 2023) LPT – Meaning of a “residential property” – TDM 01-01 Mortgage Interest Tax Credit – TDM 15-01-11B VAT – Electronic Publications; VAT – Supply and installation of solar panels; VAT – Printing and printed matter; VAT – Flat-rate scheme for farmers; VAT – Sale of Live Animals by Auction (Mart) PAYE Regulation 16 – Arrears of pay being paid to an employee who has left an employment

As readers should be aware, the taxation of medical doctors participating in the General Medical Service (GMS) Scheme was high on the Institute’s agenda throughout 2023. In September of last year, we wrote to the Minister for Finance expressing our concerns about the proposal to assess GMS income on the treating doctor rather than as income of the practice, as we were unable to resolve the matter any further through the TALC process (as the matter required legislative amendment). Following our representations, the Minister introduced a Committee Stage amendment to the Finance (No.2) Act 2023 resulting in the introduction of section 1008A TCA 1997. The amendment provides that income received under a GMS contract by doctors in partnership can be treated as income of that partnership once the appropriate elections are made. Readers should note that employed doctors who are not partners in a partnership will taxed under self-assessment rules on GMS income from 1 January 2024. Revenue has now updated its guidance - General Medical Service (GMS) Scheme payments to medical practitioners – TDM 04-01-15 – setting out how medical partnerships can apply the new provision and the time-limits for making the necessary elections.

This week we bring you the most recent news and information bulletin from HMRC and the latest Agent Update 115 was published last month. Readers are reminded that from 1 January 2024, the new reporting rules for digital platforms commenced and HMRC recently launched a new voluntarily disclosure facility to enable taxpayers to pay any unpaid tax on crypto assets.  Agent Update 115  Agent Update: issue 115 is available. Get the latest guidance and information including:  how to help contractors steer clear of tax avoidance schemes;  changes to the Self-Assessment helpline and Agent Dedicated Line;  changes to the process for claiming payment protection insurance tax relief repayments;  preparing for changes for goods moving from the island of Ireland to Great Britain which commence from the end of January 2024; and  national insurance contributions rate changes in 2024.  New reporting rules for digital platforms  Readers are reminded that from 1 January 2024, UK digital platform operators are required to report details of their sellers to HMRC. As a result, HMRC has updated its guidance on selling online and paying taxes. The guidance explains if you regularly sell goods or services through an online marketplace, this activity could be treated as a ‘trade’ for UK tax purposes, and you may have to pay tax on your profits. However, if you are just selling some unwanted items that have been laying around your home, such as the contents of a loft or garage, it is unlikely that you will have to pay tax. If you buy goods for resale or make goods with the intention of selling them for a profit, then you are likely to be trading and will have to pay tax on your profits.  However, if your total income from trading or providing services online was less than £1,000 (before deducting expenses) in any tax year, you are not required to inform HMRC nor pay any tax on the profits (this is due to the Trading and Miscellaneous Income Allowance).  Crypto asset disclosure facility  At the end of November 2023, HMRC launched a new voluntarily disclosure facility to enable taxpayers to pay any unpaid tax on crypto assets. The launch of this facility follows on from the joint statement earlier in November 2023 by the UK Government and 47 other countries, to implement new transparency and information sharing requirements in respect of crypto-asset platforms by 2027 via the Crypto-Asset Reporting Framework. The joint statement confirms the intention of signatories to implement that standard by 2027.   HMRC has now begun sending emails to some taxpayers which it believes has unpaid tax on crypto asset transactions.    

Following the recent Supreme Court decision in Karshan (Midlands) Ltd t/a Domino’s Pizza [2023] IESC 24 (“Karshan”) which ruled that delivery drivers should be recognised as employees, Revenue has updated its Code of Practice on Determining Employment Status (Employed or Self-Employed) – TDM 04-01-17. Several linked TDMs have also been updated and Revenue will be issuing separate guidelines addressing the implications of the judgment. Revenue will also be updating its guidance on the taxation of couriers in due course.

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 and Cabinet Office Borders bulletins are also available. We also update you on the rules of origin for electric vehicles and batteries and the latest work of the House of Lords Windsor Framework Sub-Committee. HMRC has also sent an email reminder with useful preparation hints and tips for the first phase of its Border Target Operating Model which takes effect from 31 January 2024 for goods imported directly into Great Britain from Ireland.  UK and EU agreement on rules of origin for electric vehicles and batteries extended to  2026  The UK and EU have agreed to extend the Trade and Co-operation Agreement rules of origin for electric vehicles and batteries until 31 December 2026. This was confirmed by the release of a UK Press Notice and is confirmed in the Partnership Council decision.  House of Lords Windsor Framework Sub-Committee update  The House of Lords Windsor Framework Sub-Committee (formerly known as the House of Lords Protocol Sub-Committee) recently wrote to the Foreign Secretary asking for greater clarity on the regulatory divergence issues arising from the Windsor Framework, following consideration of evidence it received as part of the recent inquiry.  In November 2023, the Committee launched a short inquiry into regulatory divergence arising from EU and domestic legislation, in the context of the Windsor Framework and took evidence from academic, policy and legal experts, a range of business organisations, farming representatives and the government.  In its letter, the Committee draws attention to a number of key issues which were highlighted in the evidence it received, including:  The impact of regulatory divergence;  Potential opportunities of regulatory divergence;  Benefits of the Windsor Framework relating to regulatory divergence;   Potential risks relating to regulatory divergence; and  Mechanisms for managing regulatory divergence.  Miscellaneous updated guidance etc.   The following updated guidance, and publications relevant to EU exit are available:-  External temporary storage facilities codes for Data Element 5/23 of the Customs Declaration Service;  Bringing commercial goods into Great Britain in your baggage;  Notices made under the Customs (Import Duty) (EU Exit) Regulations 2018;  Restricted and controlled goods for merchandise in baggage;  Notices made under the Customs (Export) (EU Exit) Regulations 2019;  Declare commercial goods you’re bringing into Great Britain in your accompanied baggage or a small vehicle; and  Data Element 2/3 Documents and Other Reference Codes (National) of the Customs Declaration Service (CDS). 

The Minister for Finance, Michael McGrath TD issued a press release welcoming the implementation of the EU Minimum Taxation Directive (Pillar Two) into Irish law. The legislation will see Irish companies who are part of multinational enterprises with global turnover in excess of €750 million paying a minimum effective rate of taxation of 15 percent on their profits. While over 99 percent of companies in Ireland will be unaffected by the rules, the legislation represents the most significant update to tax law in recent years. Commenting on the new rules, Minister McGrath noted: “In October 2021, Ireland, along with almost 140 other jurisdictions, signed up to the OECD Two Pillar solution to address the tax challenges arising from the digitalisation of the economy. This has been described as a once-in-a-generation agreement and the pinnacle to the process of international tax reform that began over a decade ago. The rules become effective today in Ireland and in many other jurisdictions across the world. By implementing the global agreement on minimum effective corporate tax, Ireland demonstrates our continuing commitment to agreed, multi-lateral international tax reforms. The decision to join this global agreement was not taken lightly. Ultimately, it is our assessment that the positive effects will be greater than the challenges, as the agreement has the potential to bring much-needed stability to the international tax framework after the turbulence and uncertainty of recent years, safeguarding our future competitiveness by providing a sound and stable basis for inward investment into Ireland in the long-term. It is important to note that Revenue estimates that there may be approximately 1,600 multinational entity groups with a presence in Ireland that will come in scope of Pillar 2. The vast majority of businesses, those with revenues of less than €750 million per annum, will continue to pay corporation tax at the 12.5% rate. It is my firm belief that a key benefit of a more settled international tax policy environment will be an increased scope to focus on domestic tax policy in the enterprise sector, with several initiatives to improve aspects of the overall tax system announced in Budget 2024. These include an increase in the R&D tax credit from 25% to 30% which will incentivise businesses of all sizes to invest in their future productive capacity, as well enhancements to the Employment Investment Incentive, Start-up Capital Incentive and Start-Up Relief for Entrepreneurs schemes and a new lower rate of CGT for angel investors.”

Last year, the Exchequer recorded a surplus of €1.2 billion, down €3.8 billion from 2022. Although there was a growth in tax revenues, this was offset by increases in public expenditure as well as the transfer of €4 billion to the National Reserve Fund. Commenting on the figures, Minister for Finance Michael McGrath TD noted: “The end-year figures show an Exchequer surplus of €1.2 billion in 2023. Tax receipts came in largely as anticipated and reflect the underlying strength of our economy, especially the labour market. It must be acknowledged, however, that the budgetary surplus includes windfall corporation tax receipts which, if excluded, would result in an underlying deficit. In this regard, it is important to stress the more modest growth rate in this revenue stream over the past year as well as the inherent volatility in these receipts. Indications are that pandemic-era surge in exports in a small number of sectors – which drive corporate profitability in Ireland – are now unwinding; this would mean more modest growth in corporation tax receipts in the coming years. These developments underscore the importance of ensuring that permanent fiscal commitments are not made on the basis of transitory revenues. The establishment of the two new-long term savings vehicles (the Future Ireland Fund and the Infrastructure, Climate and Nature Fund) will allow us to prepare for future structural challenges while limiting our exposure to volatile windfall revenues. At the same time, Government continues to invest in public services and in boosting the productive capacity of our economy.” For more information, you can read December’s Fiscal Monitor.

Last week, Revenue published preliminary headline results for 2023 showing record-breaking total collections for tax and duties of €87.2 billion, as well as a further €26 billion on behalf of other government departments (including local property tax and PRSI). Income tax, corporation tax and VAT were the largest contributors to the tax take in 2023 at €32.9 million, €23.8 million and €20.3 million respectively, all higher than 2022 figures. The next highest contributor was excise at €5.6 million. Combatting non-compliance remains a key priority for Revenue, as well as confronting taxpayers seeking unfair advantages by means of various tax-avoidance schemes. In addition, administering the new Pillar Two legislation (ensuring certain multinational enterprises pay a minimum level of taxation) will be a priority. Businesses will also be required to settle warehoused debt by 1 May 2024. At the time of writing, debt warehoused under the Debt Warehousing Scheme stands at €1.4 billion. In their press release, Revenue noted: “The past four years have been a period of exceptional disruption in which we suspended our enforcement activity for a considerable period of time. This has had an impact on timeliness of payment and the levels of debt. At the end of 2019 the debt available for collection was €0.9 billion compared to €1.4 billion now. Our Debt Management System, which we developed in 2019, is now fully deployed in dealing with outstanding liabilities. Where taxpayers experience challenges in being timely compliant, we strongly encourage them to engage with us as soon as such difficulties start to emerge so that a mutually agreeable solution that takes account of their financial circumstances can be agreed. In the absence of meaningful and timely engagement with Revenue, Revenue will proceed with appropriate collection and enforcement action to recover the debt.”

Do boards truly understand the risks and opportunities AI presents? Ryan McCarthy explains why many are ill-prepared for this game-changing technology There can be no doubt that the era of artificial intelligence (AI) has arrived. Barely more than a year since ChatGPT landed with a bang, investment has poured into the sector. Google has launched its Gemini system and Elon Musk’s X has introduced Grok, an AI modelled on the Hitchhiker’s Guide to the Galaxy. Spurred by the proliferation of AI tools in the EU, the European Council and Parliament have reached provisional agreement on the world’s first comprehensive AI law. Given all this, you might expect that AI must surely be on the agenda at every board meeting. This is not quite the case, however. We’re not yet seeing AI discussed around boardroom tables in any meaningful way. When it is discussed, it is generally with very little depth. This needs to change. Every board member must take it upon themselves to understand the issues and implications of AI now and in the future – don’t leave it to someone else. Threat and opportunity On the occasions AI does come up at board meetings, the discussion invariably turns to the emerging threat or risks it may pose. What hasn’t been discussed yet are the business opportunities it may also present. AI tends to be viewed as an external factor that could affect an organisation rather than an operational item to be examined from the inside. Thematically, we are seeing continued focus on AI as a broad, external and conceptual threat. Board room discussion remains very much at the surface level. Risk: rules vs principles Boards have become focused on risk primarily from a corporate governance, rather than a practical, point of view. The risk section in a typical annual report is getting thicker and thicker – not without reason, but it can contain a lot of ‘cookie-cutter’ risks: cyber-attacks, supply chain challenges and climate change, for example – and now, AI. There has been a steady drift over time towards rules rather than principles. People ask whether the risk is written down and documented, as opposed to asking, ‘What’s really going to sink the ship?’ You rarely find a strong example of a business identifying a risk that is clearly explained alongside an outline of how it has been contained or overcome. Advising the experts So, if boardroom discussions about AI are still only skin-deep, what will move it onto the business agenda? You have to look at modern governance structure, which involves companies drawing on specialists in areas including audit, risk, nomination/remuneration matters and, more recently, sustainability. Some companies, particularly in the US, have created the dedicated role of Chief AI Officer. There may be a gap for a technology or ‘emerging tech’ committee at board level. There are already requirements regarding the correct number of financial experts needed on a board. Should every board now also have technology experts? Diversity behind the boardroom door This leads to a broader point: given the close correlation between youth and emerging technology, does the typical top-level boardroom have the right demographic to deal with AI? We have come a long way in terms of boardroom diversity, but there is another layer to diversity that is exposed here: do we have young people?  Do boards have people from different educational and skill backgrounds, particularly when it comes to technology and innovation? I would say that many don’t. Outside the boardroom, a company’s executive – including the HR function – should also be getting to grips with AI. If something like the AI opportunity is not coming up through the organisation to the board level, then you’ve probably got to ask whether you have an executive that is tuned in. In the same way you need day-to-day skills to fully embrace environmental, social and governance requirements, do you have the right skills for AI? The workforce question What I haven’t yet discussed with any client is the opportunity AI could potentially present for the workforce. Part of the reason is that we haven’t yet fully figured out use cases. It looks as if these use cases will become more apparent in 2024 and beyond. One Dublin hospital has begun using AI to assess radiology scans, for example, while the National Weather Service has an academic collaboration in place to explore the use of AI and data science in weather and climate services.  The medical profession is producing more and more diagnostic information yet there is a worldwide shortage of people to review it. Could AI provide a possible solution? Companies with large customer service operations have been through the cycle of using onshore customer service teams to moving some elements offshore and then introducing bots or some combination of all three. Could AI provide a better option? Curiosity is key I expect AI to feature more prominently in boardroom discussions in the future. The best board members – and by extension, the best boards – have an innate curiosity. Right now, there are two things in the world we should be curious about now: one is geopolitics, and the other is technology – more specifically, AI. If you sit on a board and you’re not curious about these two things and their potential impact on your business, you may be in trouble. Ryan McCarthy is Audit Partner and Board Leadership Centre Lead at KPMG

As finance leaders grapple with the Corporate Sustainability Reporting Directive and its complex demands, IT collaboration will become increasingly important, writes David Codd Finance Directors and Financial Controllers are working hard to understand the implications of the Corporate Sustainability Reporting Directive (CSRD) and to put the necessary reporting in place in their businesses. But their colleagues in IT also have a vital part to play. This is an unusual challenge for IT, and it’s important to consider how to collaborate effectively. What are the pitfalls to avoid? And how can you build a strong partnership to deliver your sustainability reporting programme? The CSRD, finance teams and IT The CSRD will expand sustainability reporting which will become mandatory for publicly listed companies (plcs) in 2025 for 2024 performance and a year later for all large companies. Finance teams are now performing double materiality assessments and assessing what new measures and information will be required. However, the underlying data itself must be identified and sourced, its reliability established, and processes put in place to extract and interpret the data and report accurately on an ongoing basis. This has the potential to become very onerous. IT support will be critical to an effective and efficient process, i.e. high-quality reporting with minimum manual intervention. An unusual IT challenge This is an unusual challenge for IT departments for various reasons: The scope is exceptionally broad The activities that impact the environment are conducted across an organisation’s operations and – for Scope 3 emissions – through multiple steps in the supply chain. So, the systems and datasets your IT colleagues will have to work with are unusually disparate and will even fall outside the boundaries of the technology estate they control. The standards are still being rolled out IT project managers like clear definitions at the start of a project. However, the first sustainability reporting standards have only recently been released, and the taxonomy for digital reporting is a work in progress. Plus, the “limited assurance” concept will give rise to different interpretations of the quality of the audit trail needed. This is a big project without a conventional monetary business case Chief Information Officers usually have many more attractive-sounding initiatives in the pipeline than they can deliver at once. So, they work with their finance and functional colleagues to prioritise, and resources are allocated based on financial payback or loss avoidance. Your CSRD-driven reporting programme does not neatly fit these criteria.      How to manage risks There are several risks when working with an IT team on sustainability reporting. Confused responsibilities You usually work with a financial systems team, but IT business partners for supply chain or manufacturing operations will already have been partnering with sustainability managers to develop scorecards. Muddled ownership and communications can result in lost time. In a large business, reporting is a full-blown programme consisting of several streams. It needs experienced management to coordinate it and manage the relationship with you. I would also recommend that accountability for IT delivery sits with the head of financial systems, and the IT project manager should sit on the team. This keeps the ownership and lines of communication as simple as possible. Your IT team can’t resource the project Since the 2000s, IT resource has shifted from enterprise systems to ecommerce, data analytics and security. Enterprise resource planning systems teams have been staffed to make incremental changes on the basis that resources can be contracted in as needed. However, consulting firms are now experiencing heavy demand for their sustainability reporting expertise as deadlines approach. The work should be scoped out with IT as early as possible. Most of the scope can be clarified now. Finance and IT should accept that adjustments will be needed, but it’s wise to use resources now and make progress. In this case, perfect is the enemy of good. Motivation The tech community loves stimulating work – through either buying into a goal or working with innovative technology (and preferably both). You need enthusiastic professionals volunteering for this project, but you’re competing with exciting fields such as artificial intelligence and the possibility of going to other employers. The people you need have lots of options. Be aware of the nuanced differences between finance and tech culture and accept that you’re competing for talent. Reach out to the IT community in your business, explain that CSRD prevents greenwashing and that high-quality reporting is a noble undertaking that will help your business to show the world what you’re doing. True partnership is key Recognise the significant challenge presented for both IT and finance by the imperative to develop a quality, efficient sustainability reporting process at pace. A true partnership between finance and IT is the key to successful reporting. David Codd is a Non Executive Director and Strategy and Transformation Consultant

Kevin Empey explores the three phases of flexible work adoption, from foundational steps to future-focused strategies As we enter a new year, there is still a noticeable gap between desired employer policy and employee practice and expectations as to how flexible work arrangements should operate. This gap narrowed in 2023, with both employers and employees taking steps to make flexible working fit-for-purpose more standard practice, but the evolution of more flexible work models is far from over. The employment market in 2024 looks set to be split between two types of employers. First, there will be the employers who continue to be open about how and where work is done with an eye to emerging influences such as artificial intelligence (AI) and the four-day work week. Second, there will be those who revert to more ‘fixed’, pre-COVID work models and mindsets with minor concessions to demands for some form of hybrid working offering.  While other business and employment priorities take over the agenda in 2024, it doesn’t mean flexible work design is done and there is further change ahead.  In our experience, there are three distinct phases in the transition to flexible work models and how organisations are adapting to new and emerging realities. Phase 1: Base camp Some organisations (not many) are still in the early stages of settling on their flexible working vision. They are continuing to lay the groundwork for establishing new work models that cater to evolving work patterns and demands as well as organisational priorities. This phase involves embracing the basics, getting the framework up and running and also considering their flexible working strategy for frontline roles and work that cannot be done remotely. Phase 2: Integration Most businesses find themselves in this second phase. They have spent 12 to 24 months adapting to their declared approaches (the ‘what’) and are now in a position to refine and integrate their flexible models (the ‘how’) with the demands of their business. This involves addressing specific challenges encountered in recent months, bridging gaps between employer policies and employee preferences, and adapting legacy processes and definitions of productivity. The opportunity presented by this phase is to ensure that work redesign will be an ongoing expectation and reality and is just not about getting hybrid right. The risk of this phase is that employers allow poor habits and practices to set in and that the expectation and need for ongoing reform and improvement is not made clear.   Employees are also considering whether their employer’s flexible working models align with what they want. Continued flexibility and ongoing dialogue will be critical to keeping people on board.  Phase 3: Beyond hybrid Organisations that have reached this stage have moved beyond the hybrid conversation. They have integrated hybrid working into a broader flexible work model. Their experiences and approaches provide valuable insights into how this transition can best be managed. A critical theme in this phase is the shift in narrative, where the focus is not solely on the hybrid debate but on achieving work flexibility and adaptability more broadly across the organisation. This will include open work design conversations involving AI solutions, four-day work week options and other influences on how and where work can be done better and faster. This encompasses reforming processes, enhancing employee experiences, reconfiguring workplaces and aligning change with ongoing cultural and transformational agendas. In this phase, the emphasis also shifts to enabling teams to drive changes and improvements collaboratively rather than imposing them from the top down. Furthermore, continuing support for managers to lead ongoing change becomes paramount in ensuring sustained success. It is also quite common to see some organisations shift from one phase to another and back again, as they re-set strategies and solutions with employees and their people leaders. The future agenda  As we move forward into 2024 and beyond, the perspective is shifting beyond the mere transition to hybrid working models. Building on recent hybrid working experiences and fostering a culture of adaptability and agility will be transformative for both employers and employees, narrowing the gap between what employers offer and employees want. The journey towards a flexible and adaptive workplace is ongoing and will continue at pace, with new chapters and milestones on the horizon. Those organisations that prioritise learning from recent experiences and adapting to change as an ongoing habit will be best-equipped to succeed and minimise the employer/employee gap. Kevin Empey is the Managing Director of WorkMatters

As the new year commences, so too do the new obligations for employers under the Enhanced Reporting Requirements. As previously advised, all employers are now required to make returns of certain non-taxable benefits and expenses in real-time. Revenue has advised that “a service for compliance approach” will be taken to 30 June 2024. During this period, Revenue will not be operating compliance programmes in relation to ERR and so we understand that Revenue will not seek to apply any penalties for non-compliance during this time.

Welcome to this week’s Technical Roundup. In developments this week, the CCAB-I Insolvency Committee has recently published Technical Release 01/2024 - Personal Insolvency (Amendment) Act 2021. This TR outlines how the provisions of the Act reflect practical amendments arising from Covid-19 and also the evolving nature of the existing legislation governing personal insolvency.  In other news the three European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) have launched a second consultation related to the joint guidelines on the system for the exchange of information relevant to fit and proper assessments.  Read more on these and other developments that may be of interest to members below. Auditing TR 04 2023 Reporting on covenants  This new guidance, issued in December 2023, provides assistance to firms reporting in connection with financial covenants in loan agreements and other facilities.  Loan agreements often contain a number of covenants with which the borrower is expected to comply. Compliance with such covenants is intended to help assure the lender of the continuing security for the loan; borrowers are expected to provide periodic reports on their compliance, which may include a requirement for the borrower to provide the lender with certain reports prepared by their auditor. This Technical Release gives guidance to professional accountancy firms and practitioners in these situations. This TR replaces M36 Firms' Reports and Duties to Lenders in Connection with Loans and other Facilities to Clients and Related Covenants. The TR can be accessed on the Institute's Technical Hub.  In December the FRC published an updated overview of competition in the UK's audit market for public interest entities (PIE). The report shows a small increase in market share for challenger audit firms but the Big Four accounting firms continue to dominate, earning 98% of FTSE 350 audit fees in 2022. In December 2023 the IAASB issued the new International Standard for the Audits of Less Complex Entities. Where it is adopted, or permitted, the standard is effective for audits of financial statements for periods beginning on or after December 15, 2025, (i.e. 2026 calendar year audits) with early adoption being permitted and encouraged. The standard has not yet been adopted for use in Ireland or the UK. The standard can be downloaded from the IAASB website. Financial Reporting The International Accounting Standards Board (IASB) has issued its December 2023 update. This includes updates to its various research and standard setting projects and maintenance projects considered at its December meeting. The IASB has also released its December 2023 podcast. The IFRS Foundation have issued a summary of news and events for December 2023. The IASB has published its December 2023 IFRS for SMEs Accounting Standard Update. This includes an update on the IASB’s deliberations of the proposals contained in the draft third edition of the IFRS for SMEs standard. The update also includes details of the requirements to be included in the forthcoming IFRS Accounting Standard for SMEs (Subsidiaries without Public Accountability), which is expected to be issued in the first half of 2024. Following the endorsement of amendments to IAS 1 Presentation of Financial Statements, EFRAG has issued its updated Endorsement Status Report. The Financial Reporting Council (FRC) has launched a consultation on its plan and budget for 2024-25 which sets out its priorities and resources for next year. Insolvency The CCAB-I Insolvency Committee has recently published Technical Release 01/2024 - Personal Insolvency (Amendment) Act 2021. This Technical Release outlines how the provisions of the Personal Insolvency (Amendment) Act, 2021 reflect practical amendments arising from Covid-19 and also the evolving nature of the existing legislation governing personal insolvency. The previous technical guidance document TA/02 2016 Personal Insolvency (Amendment) Act 2015 is still of relevance and guidance to members save for any amendments set out herein. Sustainability The International Sustainability Standards Board (ISSB) have issued its December 2023 update and podcast. These releases reflect on the ISSB’s progress in 2023, as well as their highlights in December. The ISSB has published amendments to the SASB Standards. These are intended to enhance their international applicability. EFRAG, the European Financial Reporting Advisory Group has issued a call to SMEs for participants to test its forthcoming exposure drafts on voluntary sustainability reporting standards for non-listed SMEs and ESRS for listed SMEs. EFRAG and the Taskforce on Nature-related Financial Disclosures (TNFD) have announced that they have signed a cooperation agreement and have highlighted their shared commitment to enhance corporate transparency related to biodiversity and ecosystems. On 22 December 2023, the ESRS Delegated Act and Annexes were published in the EU Official Journal. Details of its journey from Project Taskforce to Delegated Act are summarised on EFRAG’s page. In order to support the implementation of the European Sustainability Reporting Standards (ESRS), EFRAG has published three draft Implementation Guidance documents. These documents are open for public comment until 2 February 2024. The publications issued cover the following areas; Materiality assessment implementation guidance Value chain implementation guidance Detailed ESRS datapoints implementation guidance Anti–money laundering The Professional Standards Dept of Chartered Accountants Ireland has recently published two news items which members should take note of. One news item relates to high-risk behaviours and typologies associated with the Trust and Company Service Provider (TCSP) sector and gives details of an AML alert from the UK National Economic Crime Centre to highlight the high-risk behaviours and typologies associated with the TCSP sector. The other news item highlights the risks associated with verification work which might be undertaken by firms in relation to the UK Register of Overseas Entities. You can read details of the news item and the risks here. Other news The three European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) have launched a second consultation related to the joint Guidelines on the system for the exchange of information relevant to fit and proper assessments.  The Central Bank of Ireland issued its final Quarterly Bulletin of 2023 on 19 December. The Corporate Enforcement Authority (CEA) issued its first newsletter in December 2023. The December issue can be accessed by the following link https://account.createsend.ie/t/r-7C238FCAE6B22F622540EF23F30FEDED. Readers should note that there is the subscribe button on the CEA website for people to sign up to CEA newsletters for 2024.  You can subscribe to the CEA newsletter in 2024 for updates on CEA news and events as well as relevant updates on company law by clicking the following link  Subscribe to the CEA Newsletter. The Pensions Authority has published its engagement audit findings report for 2023.  The purpose of this report is to share observations on the key findings identified during the Authority’s engagement and audit activity in 2023. The Pensions Authority has published information on the supervisory review process (SRP) provided for under the Pensions Act, following the transposition of the IORP II Directive. The COVID “interim period” which was introduced under the Companies (Miscellaneous Provisions) (Covid-19) Act 2020 introduced measures such as virtual meetings and increasing the threshold for when a company is deemed unable to pay its debts. The interim period has been extended a number of times but most of the measures are gradually being unwound. At the end of 2023 the Dept. of Enterprise Trade and Employment (DETE) announced that the Minister has further extended the interim period in respect of holding virtual meetings, including AGMs. The provisions have been further extended to 31 December 2024. Click here to read details of the extension in the DETE press release and here for our recent news item. However, the measure which increased to in excess of €50,000 the amount at which a company is deemed to be unable to pay its debts in the interim period is not renewed. Therefore, beginning 1 January 2024, a company is deemed to be unable to pay its debts under section 570 of the 2014 Act where indebted to a creditor in an amount exceeding €10,000 or indebted to two or more creditors in an amount exceeding €20,000. Click here for our recent news item. The Competition and Consumer Protection Commission CCPC has published its annual merger report, which includes statistics on the number of mergers and acquisitions notified to and reviewed by it in 2023. All mergers and acquisitions which reach certain financial thresholds must be notified to the CCPC and it examines whether any notified transaction could result in the substantial lessening of competition in markets for goods and services in the State. Click here for the press release and here to access a copy of the report. Click here to read more about the National Standards Authority of Ireland five New Year's resolutions that can bolster cyber-resilience in 2024, These are regular cybersecurity health checks, embrace multi-factor authentication, educate and empower employees, secure cloud environments and establish an incident response plan. The Minister for Finance recently published a progress update on review of funds sector in Ireland. The progress update highlights the main trends, risks, challenges and opportunities facing the funds industry in Ireland out to 2030, as identified in the responses to a consultation conducted in the summer of 2023. Click here for a press release with more details. For further technical information and updates please visit the Technical Hub on the Institute website. 

Childcare reform key to greater female participation in workforce: two-thirds of members pay up to €2,000/ month for childcare Workers need certainty in tax system to reflect hybrid working norms and bring an end to pandemic experimentation period.    5 January 2024 – Stronger government action to improve childcare costs and availability would boost capacity in the workforce, according to a new policy paper published today by Chartered Accountants Ireland. The Next Financial Year: Building Capacity is the first of several policy papers that the Institute will publish this year on priority areas identified by Institute members which would support the economy.  The Institute is the largest and longest-established professional accountancy body on the island of Ireland.  It has 33,000 members, two-thirds of whom work in business. Published as an open letter to policymakers and legislators, the policy paper sets out recommendations on how Government can build capacity in the economy by: Enabling greater female participation in the workforce through targeted childcare reforms  Easing cost pressures for developers & landlords to stimulate housing supply  Giving certainty to workers on place of work & commuter costs in the tax system  Building digital capabilities & resilience for businesses to succeed  Childcare reform can unlock economic contribution of female professionals Institute members identified the steep cost and lack of availability of childcare as the biggest challenge facing working parents in the profession today, with two thirds of members currently paying up to €2,000 per month in childcare costs, and 16%, mostly female members, having to reduce their working hours to care for a child. Chartered Accountants Ireland highlights solutions available to Government to increase female labour market participation such as: Increased funding, capital investment and grant support to the sector to better match the cost of providing childcare services, to meet surging demand for places & to encourage providers to grow. Reform of National Childcare Subsidies (NCS) to encourage childminders to register with Tusla, giving parents of up to 80,000 children easier access to subsidised childcare. Sinead Donovan, President of Chartered Accountants Ireland, said: “For too long, policymakers have framed childcare policy as a social issue, not an economic one. Our evidence shows that affordable, quality childcare drives more sustainable, inclusive economic growth and competitiveness. Government’s ambition to tackle the provision of childcare is welcome for businesses in today’s tight labour market. Paving the way for greater female participation in the workforce should be a priority for policymakers in 2024.”  On housing, the policy paper identifies specific measures to ease cost pressures for developers and landlords to stimulate supply, including: A deferral of PAYE and VAT payments for developers and builders on salary, material, and other costs incurred during construction, to be payable as the units are sold. This would reduce development costs, ease cash-flow concerns and make investment more appealing.  Further encouraging private landlords to remain or move into the Irish market through the taxation system. Allowing Local Property Tax as a deduction against rental income and allowing non-resident landlords to collect rents directly from tenants, rather than through Revenue or a collection agent, could provide such an incentive. In the workplace, giving certainty to workers on how their place of work and commuter costs are to be treated in the tax system would put Ireland’s employment environment on a more progressive footing, and bring to an end the pandemic experimentation period. Measures proposed include:   Introducing a more flexible version of the TaxSaver Commuter Ticket Scheme, to offer tax relief on season tickets to commuters who only use public transport 2-3 days a week, reflecting new norms around hybrid working, while promoting public transport use.  Rules to establish a normal place of work, fundamental to the tax treatment of employee travel and subsistence reimbursements, should be updated to reflect the changed circumstances that hybrid working has created.  Digital skills are essential to meet current and future workforce needs. Building digital capabilities & resilience for businesses to succeed requires Government to do more to meet its target of 80% of adults having at least basic digital skills by 2030. The Institute recommends that the digital transformation of education and training focuses on schools, equipping children with the skills needed for the jobs of the future, underpinned by the Digital Strategy for Schools to 2027. Dr Brian Keegan, Director of Public Policy for Chartered Accountants Ireland, said: “In Building Capacity, Chartered Accountants Ireland has put forward practical recommendations to help our economy thrive. Our members have once again provided vital insights into the major societal and economic challenges that both businesses and employees are facing. Our recommendations reflect their experiences and realities.  “We welcome Government engagement with many of our policy proposals in the last year, but more needs to be done. Building capacity in our economy does not stop at the bricks and mortar of much-needed housing supply. It must include targeted measures that actively facilitate women who want to work, and reflect the reality of a more dispersed, and digital-first workplace if businesses are to succeed long-term. It is within Government’s gift to put in place measures to increase economic capacity across the board, and futureproof jobs for generations to come.” ENDS

The Economic Crime (Transparency and Enforcement) Act 2022 created the Register of Overseas Entities (ROE). It requires overseas entities owning UK property to reveal their beneficial owners and to register their entities on a publicly available register.   Information must be verified before an overseas entity makes an application for registration, complies with the updating duty or makes an application for removal. The Register of Overseas Entities (Verification and Provision of Information ) Regulations 2022 (SI 2022/725) set out the details of the verification system. The drafting of the Verification Regulations means that there is a strict liability in place and the accountancy professional body supervisors are concerned that any firm acting as a verifier will face significant challenges and expose itself to significant risk, including possible criminal prosecution, regulatory sanction, and reputational damage. Firms should carefully consider whether they should provide this verification work. The work required for verification under the ROE is not the same as the risk-based approach to client due diligence under Money Laundering Regulations 2017 and firms should familiarise themselves with the differences. The Government has produced further Guidance to assist. The Accountancy AML Supervisors Group (AASG) published an AML Alert highlighting key risks associated with this work. The Institute has previously shared this AASG AML Alert on ROE-Verification work with the MLCPs and MLROs but would highlight again the risks associated with this verification work.

This Alert is produced by the UK National Economic Crime Centre (NECC) to highlight the high-risk behaviours and typologies associated with the Trust and Company Service Provider (TCSP) sector. Although this Alert is produced in conjunction with law enforcement and financial sector partners in the UK, many of the risk indicators will also be relevant in Ireland. We would encourage regulated businesses to read this Alert. Professional Standards also published its TCSP Thematic Review earlier in the year. This document summarised the responses to a detailed Questionnaire issued to a sample of firms based in Northern Ireland. The majority of firms only provide TCSP services such as company formation / registered office and only provide such services to existing clients alongside other ancillary accountancy services (e.g. statutory audit, tax and accounts preparation).

Readers may recall that during the pandemic the Irish government introduced temporary measures amending the Companies Act, 2014. The Companies (Miscellaneous Provisions) (Covid-19) Act 2020 and regulations made under that Act provided for special measures for example for virtual meetings, execution of documents and temporary increase in the thresholds at which a company would be deemed to be unable to pay its debts during what was known as the “interim period”. While it seems that virtual AGMs are likely to become a permanent legislative provision (see here for our recent news item), other temporary measures continue to be  unwound by the government. In the most recent legislation, the measure which increased to in excess of €50,000 the amount at which a company is deemed to be unable to pay its debts in the interim period is not renewed. Therefore, beginning 1 January 2024, a company is deemed to be unable to pay its debts under section 570 of the 2014 Act where indebted to a creditor in an amount exceeding €10,000 or indebted to two or more creditors in an amount exceeding €20,000. This information is provided as resources and information only and nothing in these pages 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 pages. 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 these pages, 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 in these pages.

A new Technical Release has been published. TR 04 2023  Reporting on covenants This guidance assists firms to report in connection with financial covenants in loan agreements and other facilities and replaces M36 Firms' Reports and Duties to Lenders in Connection with Loans and other Facilities to Clients and Related Covenants, which was withdrawn in December 2023. Loan agreements often contain a number of covenants with which the borrower is expected to comply. Compliance with such covenants is intended to help assure the lender of the continuing security for the loan; borrowers are expected to provide periodic reports on their compliance, which may include a requirement for the borrower to provide the lender with certain reports prepared by their auditor. This Technical Release gives guidance to professional accountancy firms and practitioners in these situations. The TR can be accessed on the Institute's Technical Hub.