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. 

Revenue has published a new Tax and Duty Manual to provide guidance for Payment Service Providers (PSPs) who have an EU Cross-Border Payments (CESOP) reporting obligation in Ireland. The manual includes: guidance on the registration process and procedures for resident and non-resident PSPs for the purpose of CESOP reporting in Ireland, an outline of the process for filing CESOP reports in Ireland, and an outline of the technical specifications required for filing CESOP reports in Ireland. The registration facility for CESOP filers will open in Ireland on 1 February 2024.

Revenue has published a new Tax and Duty Manual – Requests for Transfer Pricing Documentation, which documents Revenue’s operational policy for requesting transfer pricing documentation as part of its risk appraisal process. According to the detail of the TDM, this process seeks to ensure that a consistent approach is applied to all transfer pricing documentation requests and that such requests appropriately fit within Revenue’s Compliance Intervention Framework.

Revenue has updated the Tax and Duty Manual which provides guidance to taxpayers who wish to continue to rely on an opinion or confirmation issued by Revenue in the period 1 January and 31 December 2018, in respect of a transaction, period or part of a period, on or after 1 January 2024. Application for renewal or extension of such an opinion or confirmation is required to be made by a taxpayer on or before 29 March 2024.

Revenue has updated the Tax and Duty Manual which provides guidance on the Charities VAT Compensation Scheme. The updated guidance reflects the increase to the annual capped amount available to be paid out of the Charities VAT Compensation Scheme fund. With effect from January 2024, the annual fund is set at €10 million.

Revenue has published a new Tax and Duty Manual to provide guidance on the income tax exemption of certain profits from the microgeneration of electricity by an individual at their sole or main residence. Section 216D TCA 1997 provides for an exemption from income tax, USC and PRSI for certain profits arising to a qualifying individual from the microgeneration of electricity. For tax years 2022, 2023 and 2024 the exempt amount is €200, a qualifying individual is not required to declare such profits in an income tax return, any amount in excess of the exempt limit is required to be declared as income. Finance Bill (No. 2) 2023 includes a proposal to amend section 216D TCA 1997 by increasing the amount of profits exempt from income tax, from €200 to €400 per year and extending the scheme by one year to the end of 2025. In this regard, the manual will be updated following enactment of the Bill.

A reminder to readers that Finance Bill (No.2) 2023 introduced an amendment to the collection and reporting requirements for taxes related to share options. The taxation of a gain realised on the exercise, assignment or release of share options no longer falls under individual self-assessment. Instead, taxes must be accounting for through the payroll system.  This means that employers will be responsible for collecting income tax, USC and PRSI from employees on share option gains and remitting those taxes to Revenue as part of the payroll process. This treatment will apply to gains realised on or after 1 January 2024.

From 1 January 2024, the upper age limit for exemption from PRSI is being raised from 66 to 70 years for employees, their employers and the self-employed. From that date, all employees and self-employed persons aged between 66 and 70, and born after 1 January 1958, will continue to be liable for PRSI until they have been awarded the State Pension (Contributory). For those who have already reached age 66 by 1 January 2024, their PRSI position will be unaffected by the changes. In conjunction with these changes, from 1 January 2024, an individual will be able to draw their State Pension (Contributory) between ages 66 and 70, providing them with an opportunity to improve their contribution record at date of drawdown. Further information is available here.

The Institute, under the auspices of the CCAB-I, has responded to the public consultation on the roadmap for the introduction of a participation exemption to Irish corporation tax. This consultation focuses primarily on the dividend participation exemption. The key message remains that the CCAB-I supports the introduction of a participation exemption for both foreign dividends and foreign branch profits. The main points from our response are: In recent years, measures introduced under the EU Anti-Tax Avoidance Directive (ATAD), OECD’s Base Erosion and Profit Shifting (BEPS) initiative, and the EU Minimum Tax Directive are aligned with a territorial system of taxation (of which a participation exemption for dividends is one part). We recommend careful consideration of the method of relief, i.e. whether the optimum relief is by way of an exemption (similar to section 129 Taxes Consolidation Act (“TCA”) 1997) or as a deduction from total profits. Our initial sense is that a deduction will be preferable when considered in light of the EU Minimum Taxation Directive and the Interest Limitation Rule. We recommend that the relief is drafted to provide broad optionality. Ideally, we recommend that taxpayers can opt to apply the rules on a distribution-by-distribution basis. We recommend that the exemption should apply by default with the option to claim double taxation relief on a distribution-by-distribution basis. We strongly support the formation of a committee under the umbrella of the Main Tax Administration Liaison Committee (TALC). In the context of the implementation of the EU Minimum Taxation Directive, the TALC BEPS Sub-Committee has proven the benefit for all stakeholders in addressing technical, legal, accounting and commercial uncertainties.

Following the signing of a Commencement Order by the Minister for Finance last week, all employers will be required to make returns of certain non-taxable benefits and expenses in real-time under the Enhanced Reporting Requirements (ERR) from 1 January 2024. Revenue has however advised that “a service for compliance approach will be taken until the 30 June 2024”. During this period, Revenue will not be operating any compliance programmes in relation to the ERR and will not seek to apply any penalties for non-compliance. Since the measures were first announced in last year’s Finance Act, the Institute, under the auspices of the CCAB-I, has consistently raised our members’ concerns with the new requirements. In addition to several submissions to Revenue, we wrote to the Minister for Finance on two separate occasions (here and here), seeking the abolishment of the real-time reporting requirement and more recently a delay to the implementation date. While disappointed with last week’s announcement, we urge members to ensure they are enabled to commence reporting under ERR from 1 January 2024. For the avoidance of doubt, the non-taxable benefits which will be reportable in 2024 are: Non-taxable reimbursements of travel and subsistence Benefits provided under the small gift exemption The remote working daily allowance. There are three ways employers can choose to report: Direct reporting through a software package ROS File upload ROS Online Form. The video for converting CSV files to JSON format had just been uploaded to the ERR hub page on the Revenue website. We understand the regulations underpinning the legislation will be published shortly and will include details on penalties for non-compliance.  You can find more information on the measure on Revenue’s website and we will keep you up to date on developments in Tax News.

The OECD has published the seventh annul peer review report on exchange of information on tax rulings. The 2022 report indicates that over 54,000 exchanges of information took place in respect of over 24,000 tax rulings across the 131 jurisdictions profiled. Of the 131 jurisdictions included in the report, 100 are fully aligned with BEPS Action 5.  

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.  

HMRC’s latest schedule of live and recorded webinars for tax agents is available for booking. Spaces are limited, so take a look now and save your place. 

This month’s tidbits cover updated guidance in several areas and the publication of the Administrative Burdens Advisory Board’s 2022/23 report.