Comment

Des Peelo explains the one pertinent question business leaders should ask before making any major decision.Better information means better decisions, which, in turn, means better outcomes. The critical point here is that understanding what the information is, and what it is not, makes for a more informed decision.Concerning major decisions, what is the most dangerous word in the vocabulary of politics, economics, or business? Most people would say ‘risk’, meaning that the result could go wrong, have a poor outcome, and/or have an unexpected adverse effect.Major decisions arise in many circumstances. Directors consider a significant business acquisition or seek to confront a crisis; a politician is pressed on a problematic public issue; an economist is asked to advise on substantial infrastructure spending. All involve risk. The human instinct is to avoid risk or at least minimise it.There is a more dangerous word than ‘risk’, however. That word is ‘assumption’. I have witnessed several difficult circumstances or court hearings where the evidence, written or verbal, involved statements like “I assumed…” or “the assumption was…” In other words, something has gone wrong in using an assumption. As Albert Einstein said: “Assumptions are made, and most assumptions are wrong”.Assumptions are higher up in the decision-making tree than risk. In fact, assumptions create risk. Decisions are made to create an outcome in the future. That purpose, by definition, means making assumptions as to the components necessary to make that decision. An understanding and assessment of risk, therefore, means evaluating the validity of the assumptions.There can be a pyramid of underlying assumptions in a situation. Take, for example, the view that investment in an improved rail network is a ‘given’ good idea (an assumption in itself). Assessing the viability of such an investment necessarily involves assumptions as to passenger volumes, fare prices, capital costs, timescale to completion, availability of finance, and so on. It is instructive to witness the debates about the development of public transport around Dublin, such as an underground rail service and airport link. On differing assumptions, any such capital expenditure can be justified or debunked.Assumptions are not facts, though often presented as such. Indeed, most assumptions are reasonably benign and have a historical comparison or rational basis. But assumptions are made by people and often reflect perceptions, prejudices, and biases. They are seen as valid if they conform to already held views or experiences.Even further back in the assumption analyses are demographics (i.e. the breakdown of the population as to age, location, birth rates, and so on). Almost any significant political or economic decision necessitates knowing and understanding the influence of underlying demographics. The three phases of life – education, work, and retirement – have evolving characteristics and interpretations. Statistics are endless and often challenging to interpret as to trends and reasons why, yet they likely influence significant decisions.Back to the decisions. An insistence on knowing and understanding the key assumptions is the obligation of those tasked with making decisions. For instance, the avoidance of subsequent large cost overruns in capital projects can only be addressed through a prior rigorous assessment of the underlying timescales, cost estimates, comparisons with similar projects and, most critically, a testing of the individuals and/or firms on their capabilities in making the assumptions.The history of major business acquisitions is littered with casualties. The cause is often later identified as being a lack of informed reasoning in making the acquisition in the first place, the underlying assumption being that it must be a good idea because the advisers said so.The pertinent question to ask before a major decision is, therefore: please list in order of importance or risk the top ten specific assumptions in making the project/circumstance work. But remember: vague assumptions (such as a “buoyant economy” or “no change in interest rates”) do not count as specific assumptions.

Sep 29, 2020
Comment

Annette Hughes discusses the root causes of Ireland’s housing affordability and supply problems, and the possible solutions.Successive governments have had housing and the restoration of a properly functioning housing market as a priority for many years. Despite numerous initiatives, policies, and reports highlighting the persistent problems in the market, EY-DKM’s new report, Putting Affordability at the Heart of the Housing System, has found that the issues are many and complex and there is no single, quick fix.The report, which was prepared for the Irish Home Builders Association (IHBA), highlights the structural defects in the market that have led to rented accommodation costing more per month than a mortgage. Our analysis also shows that there is a significant affordability gap for first-time buyers (FTBs), as their income is insufficient to purchase the median FTB property in 13 mainly urban areas out of 34 areas examined.The report also finds that the deposit required is a significant barrier to homeownership. The average deposit paid by FTBs is 14% of the property price, with many getting support from parents. The cost of the average deposit varied widely, however, as did the time taken for first-time buyers to save it. Saving periods ranged from nearly two years in Kilkenny to more than 15 years in Galway City, Wicklow, Waterford City, Cork City and Dublin City due to differences in income, expenditure, and house prices.36,000 new homes are required each year over the next 21 years to meet housing demand in Ireland but this is unattainable if urgent action is not taken to address affordability issues.A series of measures could reduce the delivery cost of residential development. These include direct financial supports for FTBs, a root and branch reform of the planning system, waiving development levies, accelerating the servicing of zoned lands, actions to address the cost of funding for builders, a full assessment of the impact of new regulations, and the introduction of tax incentives to stimulate development in key locations.The increased tax relief for the ‘Help to Buy’ scheme announced in the July Stimulus should be extended to 2025 and a State-backed shared equity scheme for affordable units on private lands, supported by a Government-funded equity loan of 25-30% of the price, should be introduced.The State takes an estimated 20% of the average delivery cost of a new home. The report, therefore, suggests that consideration should be given to reducing this component for FTBs.A key recommendation is restructuring the planning process to enable, where appropriate, outline planning permission to be obtained early in the process. This would reduce the time frame for delivery, which could, in turn, reduce the cost of financing. The cost and availability of development finance are also covered, with the suggestion that Home Building Finance Ireland (HBFI) should consider accessing EU loans to provide funds at more competitive rates.The quality of new homes in Ireland is much higher than in the past, reflecting new regulations and higher building standards – all of which have a cost. Estimates suggest that these policy-imposed costs account for around 20% of the total delivery cost of a new home. The report recommends that any new regulations under consideration should be carefully evaluated against their impact on the viability of residential construction and subject to a cost-benefit analysis.Under tax considerations, the Government is urged to consider expanding the scope and duration of tax relief available under the Living City Initiative to include newly constructed apartments in designated urban areas to provide a buy-side incentive to encourage their construction.This report is intended to support the Government in achieving the stated objective of putting housing affordability and homeownership at the heart of the housing system. The solutions, while varied, need not be complicated. The early adoption and implementation of even a small number of the recommendations could make an almost immediate difference to many homebuyers and developers, and set Ireland on the road to meeting its housing requirements for the next two decades and beyond.Annette Hughes is Director at EY-DKM Economic Advisory.

Sep 29, 2020
Comment

Economists may have a plethora of letter-named predictions for the post-pandemic recovery, but Chartered Accountants are depending on a ‘B-shaped’ comeback. Dr Brian Keegan thinks we need to look to Brexit and the US general election for any real answers.Professions are notorious for using jargon, and different professions have preferred styles for their jargon. Doctors tend to abbreviate the ailments they treat, like the “flu”. Accountants tend to prefer acronyms such as IAASA, IFRS and FRC. Economists, on the other hand, use labels, often with reference to the chief protagonist within the economic phenomenon, hence “Laffer curve”, “Keynesianism” and, even at a stretch, “Pope’s children”.Creeping into the commentary at present is an alphabet soup of labels to describe the nature of the post-pandemic recovery. At the outset, we all hoped for a “V-shaped” recovery, denoting a rapid fall-off in activity matched by an equally rapid recovery. Then, more creative economic types, possibly channelling medical concerns over a second surge of the pandemic, started talking about a “W-shaped” recovery. This way, things will start to get better, lapse again and then recover more fully. The latest commentary talks about a “K-shaped” recovery, whereby some sectors of the economy will recover quite quickly, but others will continue to decline. However, judging from our most recent members survey, there is an expectation among Chartered Accountants of what could be termed a “B shaped” recovery, whereby over time most sectors will loop back to their level of activity post-pandemic. Almost all of our respondents thought that business activity would eventually get back to something resembling pre-COVID-19 days. The main area of disagreement was the amount of time this might take, with our members in the Republic of Ireland expecting a quicker recovery than our members in Northern Ireland. The expected difference in recovery time between the north and south of the island is borne out by the ultimate truth serum of economic status, which is the analysis of tax receipts published each month. Counting money will always give a more accurate picture than counting questionnaire responses. Not only that, because of the recurring nature of tax payments, it is possible to trace a coherent and reliable set of comparisons. Tax receipts in Ireland overall have remained remarkably stable, despite the impact of the pandemic. Yet, tax receipts in the UK are showing a serious decline year-on-year. One reason for the difference is down to timing. Ireland counts tax receipts from 1 January; the UK from 6 April by which time, of course, the pandemic was in full surge. However, the differing financial years do not fully explain the disparity. Consumption has fallen in both countries, as evidenced primarily by VAT receipts, but production, as evidenced by income tax and corporation tax receipts, has not shown the same decline in Ireland as in the UK.Resilience in production over consumption could prove to be critical in the coming months since coronavirus is only the first international crisis of 2020. Despite the behaviour of the respective governments, we are all paying too little attention to the impact the end of the UK’s transition period with the EU in December will have on Irish business. There is also insufficient attention being paid to the economic policies of the two main contenders in the US presidential election, nor much being discussed on how the outcome of that election could shape US trade, international corporation tax policy and foreign direct investment because of the focus on the country’s civil discord.The recovery prospects on the island of Ireland will indeed be B-shaped in 2021, but not because of the shape of the economic trajectory. Think instead about the impact of Brexit, and whether or not there is a Biden presidency. Dr Brian Keegan is Director of Advocacy & Voice at Chartered Accountants Ireland.

Sep 29, 2020

When I failed SFMA and Financial Reporting, it felt like an unexpected break-up. I hadn’t anticipated failing. All that time invested in study and now I had to start all over again!Work smarter, not harderBut that’s just it- you’ve already put in the hard work and laid the foundation. You are not starting from scratch. This time round it’s about working smarter, not harder. Use your time and energy wisely.Take a few days for yourself if you need to. It is a form of loss and can be a very lonely time. Talk things through with supportive people, indulge in some self-care and do things that make you happy.I remember the Partner in my Department calling me at the time and encouraging me to “get back up on the horse!”. That’s what I did and know that you can, too.Ways to get back on trackCapitalise on the time and energy you’ve already invested studying by preparing for the repeat in the following ways:Boost your confidence. It’s helpful to write down all of your achievements to date, as far back as you can remember. Look at them- aren’t you proud? Reflect on your study routine and exam technique. Be honest with yourself:-What do you need to do more of? What do you need to do less of?-What should you do differently?-What can you start doing?-What must you stop doing altogether?  You know best! What resources are available to help you?You are not on your own with this challenge. Utilise the resources available to you, which include:-          Role models- Senior colleagues may surprise you by sharing their stories of failure with you. When I realised that others ahead of me had failed, I felt less alone and also realised that I could still advance in my career even after this set-back. You can learn from others how they achieved success when it seemed impossible. -          Additional classes and grinds-Taking additional classes run by Chartered Accountants Ireland was really valuable. A group of us who were repeating also arranged a day of grinds which was very beneficial. -          Help from colleagues and peers- Reach out to people who have sat exams recently. I received a great deal of support from colleagues the year ahead of me when I struggled with past paper questions. Don’t be afraid to ask for help and advice. Most people will be happy to assist, as they’ve been there too! You might also arrange calls and study sessions with others who are repeating where you can share thoughts. -          CA support- CA Support are here to assist you and can be contacted on email at casupport@charteredaccountants.ie or on 01 637 7342 or 086 024 3294.  There are also other video supports and articles available on our site.  Ease back into study by reading relevant articles that make the subject come to life for you and keep it interesting. Make it an activity that you enjoy and build your confidence back up this way! While the process is still fresh in your mind, going through as many sample questions and past papers as you can may be easier than immediately going back to the text books.  Take time for you every day. Your well-being is more important than anything else, so do something that you love daily. Prioritise yourself and make sure that you eat well, get enough exercise, fresh air and rest. It sounds simple, but it’s easy to have tunnel vision when in study-mode.And finally…This experience is a tough one to go through. It might feel very unfair, stressful and worrying. Please know that even if it doesn’t seem like it right now, it will all come together in the end and although it sounds cliché, you will be stronger. You may become a future specialist in an area because of the additional time you’ve had to spend studying it! Opportunities can come from the most surprising places. As you continue your studies, celebrate the results that you have already achieved in your life!By Charlotte Keating. Charlotte is a Chartered Accountant and the founder of Act On It Coaching, www.actonitcoaching.comCA Support is here to support our students, members, and their families. Contact the CA Support team on mobile: (353) 86 024 3294 or email:  casupport@charteredaccountants.ie 

Sep 29, 2020
Audit

The Technology Working Group of the International Auditing and Assurance Standards Board (IAASB) has released non-authoritative support for using automated tools and techniques when performing audit procedures.  The publication assists auditors in understanding whether a procedure involving automated tools and techniques may be both a risk assessment procedure and a further audit procedure. It also provides specific considerations when using automated tools and techniques in performing substantive analytical procedures in accordance with International Standard on Auditing 520, Analytical Procedures. This publication does not amend or override the ISAs, the texts of which alone are authoritative. Reading the publication is not a substitute for reading the ISAs.

Sep 29, 2020
Tax

A few weeks ago we advised that the Trader Support Service (“TSS”) was expected to be launched in late September. The free to use digital service went live yesterday and the UK Government is now encouraging businesses to sign up to the service with fewer than 100 days to go until end of EU transition period. The service can be used by any business moving goods between GB and NI or bringing goods into Northern Ireland from outside the UK. This Institute continues to engage with both Government and HMRC as 1 January 2021 approaches.HMRC is also in the process of writing to VAT-registered businesses in Northern Ireland highlighting actions they need to take to prepare for new processes for moving goods under the Northern Ireland Protocol from 1 January 2021.According to HMRC, the benefits of the TSS are two-fold:-Traders who sign up to the Trader Support Service will be guided through the new processes under the Northern Ireland Protocol and can also use it to complete digital declarations to manage import and safety and security declarations on their behalf; and/orThe service will educate businesses on what the protocol means for them, and the steps they need to take to comply with it. This will include online training sessions and webinars, with information being continually updated as we move closer to 1 January 2021.This means a business can choose to use the TSS in a way that suits it; either by using it to complete the relevant digital declarations and/or skill up on what the protocol means for their business.

Sep 29, 2020
Tax

In the September issue of tax.point Norah Collender considers that while the TWSS has saved jobs it may have put a strain on workplace relations. Rob Heron and David Reaney write about Brexit and the Northern Ireland protocol. Regular content includes tax developments in Ireland, the UK and internationally. Brexit and Public Policy updates also feature.  Subscribers should have received their September issue of tax.point in the post. If you have not received your issue in the post, please contact Maud Clear. TaxSource Total is also updated with the September issue.  

Sep 28, 2020
Tax

After postponing the Autumn Budget in the face of worsening coronavirus infection rates and increased restrictions, the Chancellor announced his ‘Winter Economy Plan’ last week which we summarised in Friday’s Chartered Accountants Tax News. Was it a trick or a treat? We welcome your feedback on the measures announced. We will also update our COVID-19 hub with more on each of the announcements made by the Chancellor. Many of measures announced by the Chancellor were recommendations of this Institute in its Next Financial Year position paper published in early July.Job Support SchemeA new Job Support Scheme is to be introduced from 1 November 2020 after the job retention scheme ends. This will be available to businesses “facing lower demand over the winter months due to coronavirus” – more information is awaited on this aspect of the scheme.Under the scheme, which will run for six months until 30 April 2021, the Government will contribute towards the wages of employees who are working fewer than normal hours due to decreased demand.Employers will continue to pay the wages of staff for the hours they work - but for the hours not worked, the Government and the employer will each pay one third of their equivalent salary. This means that employees will be paid at least two thirds of their salary per hour for every hour not worked.Employees must be working at least 33% of their usual hours and the level of grant will be calculated based on an employee’s usual salary, capped at £697.92 per month.To be eligible to apply for the grant, employees must: be registered on PAYE payroll on or before 23 September 2020; andwork at least 33% of their usual hours during the first three months. This level of hours will be reviewed by the Government at a later date for the remaining months of the scheme. Employers must pay at least two thirds of employees’ salary for every hour not worked. Employers will need to fund the difference between this and the grant and pay National Insurance and pension contributions from their own funds. Claims will open in December and grants will be paid on a monthly basis from this date. The scheme is designed to sit alongside the Jobs Retention Bonus. Businesses can benefit from both schemes in order to help protect viable jobs. Some more information is available in a newly published factsheet.The Job Support Scheme will be open to businesses across the UK even if they have not previously used the Job Retention Scheme. Further guidance is expected soon.Self-Employment Income Support Scheme (SEISS) - grant extension Self-employed individuals and members of partnerships who are eligible for the SEISS, and who are actively continuing to trade but are experiencing reduced demand due to COVID-19 (again, more guidance on this is to come), will be eligible for a further SEISS grant.Grants will be paid in two lump sum instalments each covering three months. The first grant will cover a three-month period from the start of November 2020 until the end of January 2021. This will be a taxable grant to cover 20 per cent of average monthly trading profits, and capped at £1,875 in total.An additional second grant, which may be adjusted to respond to changing circumstances, will be available to cover the period from February to the end of April. Some more information is available on GOV.UKVAT cut for tourism and hospitality sector extendedAs part of the package, the Government also announced it will extend the 5% VAT rate for the tourism and hospitality sectors which was due to end on 12 January 2021 to 31 March 2021. Self-Assessment - Time to Pay extension facilityMany taxpayers deferred the payment of their second 2019/2020 payment on account which was due on 31 July 2020 until 31 January 2021. As these taxpayers will need to pay this deferred amount, plus any balancing payment for 2019/20 and the first 2020/21 payment on account all by 31 January 2021, their 31 January 2021 tax bill may be larger than usual. Any taxpayer unable to make these payments in full by 31 January 2021 may be able to set up a Time to Pay payment plan of up to 12 months online without needing to contact HMRC. Taxpayers with self-assessment tax debts up to £30,000 and who need extra time to pay will be able to access this Time to Pay facility and can get automatic and immediate approval. Those with self-assessment debts over £30,000, or who need longer than 12 months to repay their debt in full, will still be able to set up a Time to Pay arrangement but they will need to contact HMRC to set it up. More information on this is expected soon.VAT deferral - new payment schemeVAT due in the period 20 March 2020 to 30 June 2020 was due to be paid by 31 March 2021. Businesses will be able to make 11 interest free smaller repayments in the 12 months to 31 March 2022. Again, we expect more detail on this in the coming weeks.

Sep 28, 2020
Tax

The Institute meets regularly with HMRC via various different groups and fora. In recent months, our focus at meetings has mainly been on providing feedback in respect of various COVID-19 supports. Key points arising from a meeting held last week are as follows:-HMRC will shortly be launching a new online process to enable employee’s to claim relief for work related expenses;Comms around the 31 January 2021 filing deadline for 2019/20 are being developed by HMRC in conjunction with feedback from the Professional Bodies; We are engaging with HMRC in the context of its 10 year strategy announced in July for further digitisation of the UK tax system; andHMRC’s Talking Points programme and how it can more effectively support agents and taxpayers in the run up to the 31 January 2021 deadline is being reviewed. 

Sep 28, 2020
Tax

Readers are reminded that next Monday 5 October is the deadline to notify HMRC of a new source of income or gain for 2019/20. This is also the deadline to register a trust newly liable to tax in 2019/20. Failure to register by 5 October can result in failure to notify penalties. Businesses who registered for Eat Out to Help Out are reminded that they have until Wednesday 30 September to claim for the days they operated the scheme.  

Sep 28, 2020
Tax

On Thursday 1 October 2020, further changes to the job retention scheme take effect. Details of the forthcoming changes are set out below. Please note that the scheme ends on 31 October 2020 and is being replaced by the job support scheme announced last week by the Chancellor.From 1‌‌ October 2020-31 October 2020, HMRC will pay 60 per cent of usual wages up to a cap of £1,875 per month for the hours furloughed employees do not work. Employers will also continue to pay furloughed employees’ National Insurance and pension contributions from your own funds. What employers need to do from 1‌‌ OctoberContinue to pay furloughed employees at least 80 per cent of their usual wages for the hours they do not work, up to a cap of £2,500 per month. Employers will need to fund the difference between this and the CJRS grant themselves.The caps are proportional to the hours not worked. For example, if an employee is furloughed for half their usual hours in October, employers are entitled to claim 60 per cent of their usual wages for the hours they do not work, up to £937.50 (half of £1,875 cap). Employers must still pay their employees at least 80 per cent of their usual wages for the hours they don’t work, so for someone only working half their usual hours they’d need to pay them up to £1,250 (half of £2,500 cap), funding the remaining portion themselves. For help with calculations, check the guidance on GOV‌.UK.Make sure your data is rightIt’s important that employers provide all the data HMRC needs to process claims. Payment of employers’ grants may be at risk or delayed if they submit a claim that is incomplete or incorrect. HMRC will get in touch if any employee data is missing from previous claims.Claiming for 100 or more employees – use our new template The easiest way for employers to provide HMRC with the data needed is to use the updated template. To help prevent mistakes, the XLS and XLMS versions of the template now highlight any missing information needed to make a claim before you submit it. Where information is missing, fields will be red and once the missing information is filled in, the data fields will turn green. Employers can also now flag if an employee has recently returned from statutory leave, to ensure claims with any new employees are processed correctly.Claimed too much in error?It’s important that employers continue to check each claim is accurate before submitting it. HMRC would also recommend checking previous claims to avoid any penalties for claiming too much.If an employer has claimed too much CJRS grant and has not repaid it, they must notify HMRC and repay the money by the latest of whichever date applies below:90 days from receiving the CJRS money which the employer was not entitled to; or90 days from the point circumstances changed so that an employer was no longer entitled to keep the CJRS grant; or20‌‌ October 2020, if on or before 22 July the employer received CJRS money it was not entitled to, or if circumstances changed. If an employer does not do this, interest and a penalty  may arise in addition to the requirement to repay the excess CJRS grant. How to let HMRC know if you have claimed too muchAn employer can let HMRC know as part of their next online claim without needing to call HMRC – the system will prompt you to add details if you have received too much. If an employer has claimed too much and does not plan to submit further claims, they can let HMRC know. Find out how to make a repayment online. According to HMRC, “We are supporting our customers while tackling serious fraud and criminal attacks. We understand mistakes happen, particularly in these challenging times, and will not seek out innocent errors and small mistakes for compliance action.”

Sep 28, 2020
Tax

Set out is a selection of the key updates, announcements, developments, and guidance issued in recent weeks to help businesses and individuals prepare for the post EU transition period. Note that some of the guidance still refers to a no-deal Brexit scenario. See our Brexit section also and HMRC’s most recent Brexit transition update.  NI businesses are being encouraged to access support from Invest Northern Ireland and InterTradeIreland. Resources include online Brexit tools, webinars, and EU Exit support vouchers.  HMRC has also created a series of short videos aimed at helping those businesses brand new to customs:What is Customs? What you need to know to bring goods into the UK? What you need to do to send goods out of the UK?HMRC is introducing a new bulking facilitation called ‘Bulk Import Reduced Data Set’ which comes into effect on 1 January 2021. This is designed to enable traders and intermediaries to declare an unlimited number of low value items in one single customs declaration. The new application form is now live, so you can start to prepare your application, ready to submit to HMRC from 1 October. 

Sep 28, 2020
Tax

HMRC has asked us to share the below reminder about the loan charge deadline which is approaching on 30 September 2020.  “There’s still time to file, pay or discuss a Time to Pay arrangementWith the 30 September 2020 deadline approaching, customers with loans subject to the Loan Charge should be mindful of any actions they need to address well in advance of the 30 September deadline.If any individuals have disguised remuneration loans that are subject to the Loan Charge, the deadline to report the details of their loans is 30 September 2020. These can be reported using the online form on GOV.UK.Anyone who wants to elect to spread their disguised remuneration loan balances evenly across the 2018 to 19, 2019 to 20 and 2020 to 21 tax years also needs to do so by 30 September 2020. They can do this using the same online form on GOV.UK.By 30 September 2020 customers also need to have filed their 18/19 tax return and either to have paid their 2018 to 2019 liability in full or agreed a Time To Pay arrangement. They should call the Loan Charge helpline on 03000 599110 as soon as possible to make a TTP arrangement. Missing the deadlines above can result in customers being charged late filing penalties and/or interest for the period 1 February 2020 to 30 September 2020. On the 13 August 2020 HMRC set out how its debt management processes work, which includes detailed examples of how the department agrees time to pay arrangements. HMRC will work with anyone worried about their ability to pay the Loan Charge to help them find solutions and access support. Please encourage anyone with concerns to get in touch.” 

Sep 28, 2020
Tax

Read the latest on Making Tax Digital and the Trust Registration Service in the latest update from HMRC for September 2020. 

Sep 28, 2020
Tax

The Government is seeking views about a National Insurance Contributions (NICs) holiday for employers who hire former members of the UK regular armed forces. The measure, announced at Budget 2020 in March, will exempt employers for any NICs liability on veteran’s salary up to the upper secondary threshold in their first year of civilian employment. This relief will be available to employers from April 2021. From April 2022, employers will claim this relief through PAYE in real time. However, transitional arrangements will be in place for the 2021-2022 tax year. If you would like to respond to this consultation, before it closes on 5th October, please visit GOV.UK

Sep 28, 2020
Public Policy

The EU Commission should not be appealing the decision of the General Court of the European Union in the Apple case, according to Chartered Accountants Ireland. The all-island body, representing 28,500 members, made the comments as the Irish government noted the decision of the European Commission on Friday to lodge such an appeal. Commenting, Brian Keegan, Director of Public Affairs with Chartered Accountants Ireland said “The appeal will serve little purpose. The Commission’s entitlement to look at tax issues when it comes to challenging state aid rules was confirmed by the July court ruling. This entitlement, along with the power of national officials to apply domestic law as best they see fit, may well be the only enduring lessons from the Apple case.  “The Commission should now be looking forward and outward. The power of the EU single market in a disrupted and unstable international trading environment is critical.  Commission resources should now be devoted to securing Europe's place as an international trading bloc and not fighting internecine tax wars with member states.  “The tax point at issue in the Apple case is no longer an issue, resolved neither by Irish legislation nor by European Commission activity but by changes in US tax law. The US Tax Cuts and Jobs Act of 2017 cancelled out the strategy of deferring tax on profits of US multinationals earned outside the US by keeping those profits outside the US. Decisions on where tax is paid are the focal point for the international corporation tax reform agenda led by the OECD, and Commission challenges in the Apple case will not further that agenda. “The European Treaties stipulate that a further appeal can only be on a point of law, which may be difficult given that the July ruling was largely determined on the facts.”  ENDS

Sep 25, 2020
News

In a new world where change is so fast-paced, how can businesses avoid rash decision-making? By adopting a flexible and holistic approach to working, we can move smoothly to the 'next normal', says Melíosa O'Caoimh. The journey to the ‘future of work’ has no definitive end as we are in a constant state of change. However, there are points of inflection where the change either alters course or is greatly accelerated. The Business in the Community Ireland (BITCI) Worker of the Future Sub-Group was established in 2018 to develop a view on the responsible business approach to the challenges presented by future-of-work scenarios.These challenges were accentuated when the COVID-19 pandemic struck, accelerating change beyond our expectations. However, this speed of change now could lead to risks of rushed decision-making and groupthink. The Sub-Group sees the need to reflect on the change that has occurred and on what needs to be retained and developed as we transition to the ‘next normal’.As with many other countries, digital channels became, for a while, the primary source of engagement in the retail and education sectors in Ireland. In every sector, workers were called on to be agile – to move from one part of the business to another, to take on extra responsibilities and to envisage how their roles could be fulfilled in a much-altered environment.For many office workers, the most disruptive development in recent months has been the scaling of remote working at a pace never envisaged in most future-of-work scenarios. For some companies, remote working was already core to their way of working and announcements have been made indicating no return to offices in the coming year, perhaps longer. For many more, remote working has meant scaling on an ad hoc approach, which has effectively meant home working, regardless of circumstances.These changes will have lasting impacts and will potentially trigger the next wave of innovation around workplace design and practices. Many decisions are currently being made in Ireland as some offices re-open, and while there are risks, there is also great opportunity if the worker experience is put at the heart of decision-making. It is worth reflecting on where we want to be in the coming months – what challenges have we faced and what guiding principles will underpin our wanted state? What examples of best practice are emerging? What businesses should ultimately be asking themselves is this: what is our vision and how is this reflected in our work culture, in the evolution to a learning organisation, an inclusive workplace, and an environment where the physical and mental wellbeing of all is core to how we do business?The challenge now for responsible business is to take the holistic approach in moving to new ways of working and ensure that what is good for business is good for the worker and for society. At this time of uncertainty, the challenge is to keep looking outward and not become too insular. Questioning the future impact of decisions now being made is essential. Melíosa O’Caoimh is Country Head, Northern Trust Ireland and Chair of the BITCI Leader Sub-Group on The Worker of the Future. You can download BITC’s Shaping the Future of Work publication here.

Sep 25, 2020
News

Rebuilding your business can seem daunting, but with a well-equipped business plan, you can be sure to bounce back stronger than ever before, says Siobhan McCreesh.In business, it is often said that the comeback is stronger than the setback.While the last six months have been difficult, lockdown has shown what businesses can achieve when they take control of a situation. Already, the world around us is adapting to the ‘new normal’. Health, wellbeing, physical, emotional and mental fitness have all come to the fore in the fight against COVID-19 and more people than ever are working remotely.Many of the changes forced on us are here to stay. Many of us are looking at further restrictions of our movements and businesses. As businesses plan their road to recovery, none will be too big or too small to respond smarter, rebound stronger and reflect clearer in the months ahead.Focus on the positiveWhile overcoming road-blocks on the path to recovery will test emotional and mental fitness, it is important to prepare for this and avoid being consumed by the challenges that arise. As each challenge emerges, try to ‘flip’ it by switching your focus from what you have lost to what you need to do to survive. Focus on identifying and planning how you can:diversify and rebuild; deploy staff into new, exciting roles; and source new opportunities for customers, suppliers and markets.Stay true to your ‘why’When plotting your road ahead, it is crucial to remain true to your business’s reason for being – your ‘why’. Keeping this why at the core of the business recovery plan will help established businesses refocus on their original purpose and give younger businesses a clear path to follow. Communication is also important. If you allow your ‘why’ to be miscommunicated, this can isolate loyal staff, customers and suppliers which, in turn, can have a damaging ripple effect across your business.Be realisticYour recovery plan needs to be achievable, focusing both on your personal goals and your business aspirations. It also needs to be flexible so that it can adapt quickly to the rapidly changing environment we are in. Bill Gates famously said most people overestimate what they can do in one year and underestimate what they can do in ten years. Make sure that your projections are realistic and that your recovery plan is split out into measurable phases. Short-term goals are important but mid- and long-term goals also need to be accommodated.Remember to ensure that you have the correct staff mix, systems, processes and financial resources in place to drive your business forward. Currently, various supports are available to help businesses recover from the impact of the COVID-19 pandemic.As lockdown restrictions come and go, and businesses adapt to the reality of trading with COVID-19, this is the time to make the connections you need to help your business, recover, survive and thrive. Siobhan McCreesh is an Associate Director at PKF FPM.

Sep 25, 2020
News

Innovation is essential for a company’s development and growth. How, then, can this be achieved? Taking advantage of R&D tax credits and incentives will go a long way to boost RD&I, write Ken Hardy and Eoin McCarthy from KPMG’s R&D Incentives Practice.It is well established that the creation and exploitation of new ideas are critical to a company’s development and growth. A clear example of this is in the tech industry, where the persistent development of new ideas is a core element of the business, very much built into their day to day culture. This strive for innovation has seen many of the tech giants of today make rapid ascents to the top in a relatively short period of time. In a broader sense, innovation is a key economic driver across most industries, enhancing commercial profitability and improving the landscape for consumers. So, how is innovation assessed, measured and compared?The Global Innovation IndexMeasuring innovation within global economies is led by the World Intellectual Property Organisation (WIPO), who publish the Global Innovation Index (GII) annually. The GII provides detailed metrics about the innovation performance of 131 countries across roughly 80 indicators including research & development (R&D), infrastructure, market and business sophistication, political environment, and education, as well as the impact and diffusion of knowledge and technology outputs.Ireland’s performancePublished in September this year, the 2020 assessment has Ireland at number 15 in the global rankings, slipping two places from last year. Although this may appear concerning at first, Ireland remains an innovation leader and scores highly in multiple critical economic drivers. For example, we rank first for FDI outflows, ICT services exports, knowledge impact and knowledge diffusion. This shows our strength in translating innovation investment into realisable, tangible returns, which is in part a reflection of the national support mechanisms from the IDA, Enterprise Ireland (EI), Knowledge Transfer Ireland (KTI) and R&D Tax Credits. Indeed, the KTI is highlighted within the GII 2020 report for developing a successful model to assist businesses in handling their intellectual property (IP) within complex situations.Opportunities to maximise innovationInnovation and R&D are very much complementary. The precursor to innovation is commonly R&D, of which Ireland is ranked in the top twenty globally. Our high ranking is a result of extensive FDI from large multinationals in the pharma and tech space, in addition to strong investment in highly skilled researchers. Companies based in Ireland can maximise the benefit from their R&D activity through the R&D Tax Credit, a valuable tax based incentive of 25% credit on qualifying R&D expenditure in the science and technology areas. Although not specifically captured in the GII report, SMEs are a key stakeholder in our economy, and represent 54% of the R&D Tax Credit claimed in Revenue’s latest report. Introduced in Finance Act 2019, SMEs may claim an R&D Tax Credit of 30% on qualifying R&D expenditure. (These measures are subject to a commencement order.)Within the rankings, Ireland’s strength in knowledge and technology outputs is marked by ranking first in both knowledge impact and knowledge diffusion. IP generation is a key indicator that feeds into these metrics and is commonly born from R&D activity. In generating IP from qualifying R&D activity, a company can claim the Knowledge Development Box (KDB) incentive, which provides a 6.25% corporate tax rate for income generated from commercialising certain IP. However, in general, the KDB is underutilised, with only a small number of companies availing of it. This does not reflect Ireland’s high ranking in knowledge and technology outputs, and companies may be missing an opportunity to claim the KDB.The path from an innovative idea to profitable exploitation can be extremely challenging. Industry sectors such as semiconductors, biopharma/pharma, and medical devices require significant investment in physical infrastructure, as well as highly skilled personnel before an idea can be realised. It can also take a long time to move through the stage gates of development, especially in highly regulated industries. For example, it takes on average 10 years to develop a new drug. For SMEs, there is the dreaded ‘valley of death’ in the development cycle, a critical period where the probability of failure is highest and attracting funding can be hard to come by. RD&I Grants can be leveraged from the IDA and EI to support companies during this phase.What does the future look like?In the current environment, many companies are focused on short- to medium-term sustainability and, in some cases, survival. This will be reflected in the cadence of innovative activity. For example, the pharmaceuticals and biotech sector will likely experience growth in R&D because of the renewed focus on health. In the medical devices sector, there may be a shift in developments towards respiratory applications and remote diagnostics. Generally, companies will seek to diversify their supply chains to de-risk future unpredictable events. Moreover, accelerated development of Industry 4.0 (the Fourth Industrial Revolution) is likely to enable remote or autonomous control capabilities.When considering the future, we learn from events in the past. Historically, business R&D expenditure moved in parallel with GDP, slowing during economic downturns. Although this may not be the case across all sectors (pharma, med-tech and ICT being the exceptions), there is an expected contraction in expenditure on innovation, and as business innovation expenditure declines, government may strive to counteract that effect through expenditure boosts to innovation, via mechanisms such as the R&D Tax Credit, KDB and RD&I Grants.Ken Hardy is a Partner and Eoin McCarthy is a Scientific Consultant in KPMG.

Sep 25, 2020
Tax

In our top Irish story this week, the surcharge suspension stands for the 23 September deadline and the income tax pay and file deadline is extended. My Tax Journey features Cian O’Sullivan. In the UK, tell us your views on the self-assessment deadline. While in international tax, President of the European Commission touched on taxation measures in her 2020 State of Union address.     IrelandRevenue announced the corporation tax surcharge suspension stands for 23 September deadline and the income tax pay and file deadline is extended to 10 December;Cian O’Sullivan, Tax Director with Purcell McQuillan and Dublin Senior Footballer, features in this month’s My Tax Journey;UK Tell us your views on the UK self-assessment deadline in light of the pandemic; Read the latest on the job retention scheme; andInternationalTaxation measures were discussed during the 2020 State of the Union address – “Carbon must have its price – because nature cannot pay the price anymore”. 

Sep 25, 2020