Ian Drennan, CEO of the Corporate Enforcement Authority, outlines the State agency’s plans and priorities for 2024 and beyond Collaboration between State regulators, statutory bodies and professional membership organisations, such as Chartered Accountants Ireland, is set to deepen as Government efforts to crack down on white collar crime and corporate corruption continue in the years ahead. “There is very significant work ongoing at State level seeking to further enhance Ireland’s capacity to tackle economic crime,” Ian Drennan, Chief Executive of the Corporate Enforcement Authority (CEA), explains. “The Advisory Council against Economic Crime and Corruption is developing a national strategy and the CEA is heavily involved in the formulation of that draft strategy for consideration by Government.” Dealing with economic crime into the future and ensuring that Ireland is “at the vanguard” of the highest standards in business regulation will require a significant level of State collaboration with the private sector and bodies such as Chartered Accountants Ireland, Drennan says. Corporate Enforcement Authority The CEA was established in July 2022 with the commencement of the Companies (Corporate Enforcement Authority) Act 2021, replacing the Office of the Director of Corporate Enforcement. Leo Varadkar, who was then Tánaiste and Minister for Enterprise, Trade and Employment, said the new agency would have “real teeth” with the autonomy and resources needed to thoroughly investigate suspected wrongdoing, such as fraudulent trading and more complex company law breaches. The Act invested the CEA with the autonomy to appoint its own staff and structure itself to meet evolving demands in the future.  The CEA’s budget has been increased by 30 percent and its approved civilian staff complement by 14 additional officers. The Government has also increased the number of members of An Garda Síochána seconded to the CEA from seven to 16.  “This increased level of resourcing gives us capacity to deal with a greater caseload of suspected non-compliance with company law, be it civil or criminal in nature,” Drennan says. “The investigations that we conduct can be document-heavy and complex, with indications of wrongdoing regularly involving suspected serious offences under company law as well as crossing over into other codes of legislation, such as theft, fraud and money laundering,” Drennan explains. “One of the strengths of the CEA is its multi-disciplinary structure. In addition to having at our disposal both accounting and legal professionals, the Gardaí embedded within the organisation bring with them the full suite of powers that they enjoy as sworn police officers.  “This means that, when we are conducting investigations, they can apply to the District Court for warrants under other codes of legislation where the need arises. As a consequence of this organisational capability, it is commonplace for us at this stage to submit files to the Office of the Director of Public Prosecutions with recommendations for charges under both company law and other legislation.” Scope and remit The CEA’s remit spans investigation, prosecution and supervision of the corporate insolvency process as well as advocacy.  “While we investigate potential breaches of company law, that is only one side of the equation. We also place great importance on promoting compliance with company law, which we seek to do by providing accessible guidance to company directors and through our outreach activities,” Drennan explains.  The “vast majority” of companies will never have any kind of direct engagement with the CEA, he adds. “Most company directors are trying to do the right thing; we know that. They have a raft of challenges to deal with at the moment – high interest rates, inflation, rising energy costs and tight labour markets. “They must manage a wide range of legal and regulatory obligations, ranging from tax and health and safety to company law. In our experience, most company directors try to meet those obligations on an ongoing basis and to a high standard.” It is important that the CEA acts in a proportionate and resource-efficient manner and that the enforcement action chosen is commensurate with the underlying issues, Drennan adds.  “Where appropriate, we try to resolve issues of non-compliance on an administrative basis and without recourse to statutory powers. In other instances, that approach will not be appropriate and a more formal, or robust, approach will be warranted,” he says. The CEA also provides guidance to assist company directors in discharging their responsibilities under company law in what Drennan terms a “relatively non-technical and easy-to-understand forum”. “Prevention is better than cure and, in that context, the CEA’s website hosts a range of information and guidance materials that seek to assist company directors in understanding their duties and obligations and shareholders, creditors and the wider public in understanding their rights,” he says. “It is much more cost-effective from our perspective to assist people in complying with the law in the first instance.” Company law amendments Drennan welcomes the recent publication of the General Scheme of the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill 2024 by Minister of State for Trade Promotion, Digital and Company Regulation, Dara Calleary, TD. Announcing its publication on 15 March, Calleary said the Act would introduce “practical, pro-enterprise” reforms in support of a competitive economy while also maintaining a robust company law framework.  Amendments proposed in the Bill include allowing companies and industrial and provident societies to hold virtual general meetings when the current COVID-related interim legislation expires at the end of the year. It also proposes removing the automatic loss of the audit exemption in respect of the first instance of late filing with the Companies Registration Office by small and micro companies. Drennan particularly welcomes proposals to create new offences regarding the obstruction and intimidation of CEA officials.  “These proposals send out the very clear signal that obstructing or threatening a CEA officer will not be tolerated and that anyone who does so risks facing a lengthy term of imprisonment,” he says. “Balance is important. Company law is crucial, but it must support business as well as safeguarding responsible ways of doing business. “Company directors can forget to file an annual return; they can forget to hold an AGM. These oversights can be rectified relatively easily.   “Their interaction with us in these instances could amount to just one or two letters to close the whole thing out. Generally speaking, the more co-operation we get, the more positive our disposition; the more people are willing to work with us, the less painful the exercise will be.” Beyond correspondence, the “next level up” in the CEA’s enforcement activity tends to involve civil enforcement, Drennan explains. “Our remit extends to the close to 300,000 businesses registered in Ireland. We deal with everything from ‘mom and pop’ operations, SMEs, charities and not-for-profits, all the way up to companies whose securities are publicly listed,” he says. Civil enforcement can involve director restrictions and disqualifications, as well as court applications for the purpose of seeking orders compelling companies, directors and other relevant parties, such as liquidators, to comply with their statutory obligations as regards restrictions and disqualifications. “We receive approximately 700 liquidators’ reports every year, so the process that flows from those reports, which includes scrutinising director behaviour and offering undertakings, accounts for a sizeable portion of our work,” Drennan says.  “Where directors choose to accept undertakings, they can avoid going to the High Court with the time and financial outlay that tends to involve. “Beyond this, the most invasive work we do involves investigations into serious suspected wrongdoing.”  This work tends to be complex, protracted in nature and frequently involves litigation, Drennan says.  The CEA has significant enforcement powers, including scope to issue directions, to enter and search premises under warrant, to arrest (a power conferred upon CEA officers who are also members of An Garda Síochána), and to bring summary criminal prosecutions in the CEA’s own name as well as to refer files to the DPP. “This is the part of our work that might involve a knock on the door at 6am but this is not, thankfully, required in the vast majority of cases we deal with,” Drennan says. Complaints, reports and referrals The CEA receives hundreds of complaints from members of the public each year as well as statutory reports from auditors and liquidators and statutory referrals from other State bodies, such as the CRO, the Revenue Commissioners, An Garda Síochána and the Central Bank of Ireland. “We also open investigations on our own initiative – as a result of media reports or our own analyses, for example,” says Drennan. Emerging trends The number of liquidator reports the CEA is responding to has risen markedly in 2024.  “They dropped during COVID because of businesses being closed and debt warehousing. Now, they are returning to pre-COVID levels, which in turn is driving up the numbers of restrictions and disqualifications,” says Drennan.   “At the same time, the Companies Registration Office has recommenced the involuntary strike-off of non-compliant companies deferred during COVID.   “A subset of these entities fall within our enforcement remit where directors have simply ‘walked away’ from insolvent companies owing debts rather than putting them into liquidation. “Those directors face the likelihood of being disqualified from acting as company directors, as that is not an appropriate or responsible manner in which to behave.” Looking to the future, Drennan concludes: “Our vision for the future is to continue to build the CEA’s presence, to continue to enhance operational capability, and to assist the vast majority of directors who are trying to do the right things by continuing to provide high quality, and accessible, information and guidance resources.  “By doing this and working with other stakeholders in the public and private sectors, the objective is to enhance Ireland’s reputation as a safe and well-regulated economy in which to do business and create employment.”

In Irish news, the recently announced amendments to the film tax credit take effect, a report published by the Parliamentary Budget Office highlights the risks that could impact Ireland’s corporation tax take and employees can now access their ERR data. In UK news, this week we take a further look at HMRC’s Raising Standards in Tax Advice consultation, and we bring you the key tax changes which take effect when the new tax year starts on 6 April.  Ireland The Minister for Finance, Michael McGrath TD, has signed commencement orders that increase the film tax credit project cap to €125 million and extend the tax credit until the end of 2028. The Parliamentary Budget Office has published a report highlighting the risks that could impact Ireland’s corporation tax take. Employee access to ERR data is now available.   UK We want to hear from you about HMRC’s Raising Standards in Tax Advice consultation for a hybrid regulatory model of joint HMRC and industry enforcement. Read the key tax changes which take effect when the new tax year starts on 6 April.   Keep up to date with all the latest Irish, UK, and international tax developments through Chartered Accountants Ireland’s Tax Newsletter. Subscribe to the Tax News by updating your preferences in MyAccount. You can also read this week’s EU exit corner here.  

Following European Commission approval, the Minister for Finance, Michael McGrath TD, has signed commencement orders for two amendments to the film tax credit. The first commencement order provides for an increase in the cap on eligible expenditure from €70 million to €125 million, as announced in Budget 2024. The second commencement order provides for the extension of the credit from its current end date of 31 December 2024 to 31 December 2028, as announced in Budget 2023.  Welcoming the amendments, Minister McGrath stated:  “The increase in the cap on eligible expenditure related to the cost of production of certain films to €125 million signals the Government’s intention to support the industry in capitalising on its success in recent years and to make Ireland a global leader in the area of high quality audio-visual production.  In addition, the extension of the relief provides certainty to the film industry that this important incentive for the sector will be available for a further four years.  I look forward to continued growth and employment opportunities for the Irish film sector in the years ahead.” 

The Parliamentary Budget Office (PBO) has published a report which provides an analysis of corporation tax revenue growth. The report highlights the risks affecting corporation tax, including concentration risk, volatility risk and the implications of international tax reforms. It also discusses tax windfalls, transfer pricing, and places Ireland’s corporation tax yield in an international context.  The report notes that corporation tax revenue is heavily reliant on the foreign direct investment (FDI) sector. Changes in the business operations or tax strategies of those that contribute the most would have significant impact on Ireland’s fiscal health.  Failure to adequately address Ireland’s infrastructural capacity constraints in relation to housing, utilities and transport could impact FDI. The report recommends strategic policy decisions to enhance Ireland’s competitiveness in non-tax areas such as infrastructure to mitigate the systemic risks associated with our corporation tax receipts. 

Revenue has confirmed that the concessional tax treatment for Ukrainian citizens working remotely in Ireland for Ukrainian employers will continue to apply for the tax year 2024, subject to qualifying conditions. The concessional treatment will cease with effect from 1 January 2025. From this date, the Irish-based employee and the Ukrainian employer will be required to comply with the Irish tax requirements arising from the exercise of the duties of the Ukrainian employment in Ireland.   Revenue's concessional treatment applies solely to the employment income paid by a Ukrainian employer to their Irish-based Ukrainian employees performing the duties of their employment remotely from Ireland and who are working in the State as a result of the war in their country. The concession provides that in relation to Ukrainian employment income:  Irish-based employees of Ukrainian employers are not liable to Irish income tax and USC on Ukrainian employment income that is attributable to the performance of those employment duties in the State, and  The Ukrainian employers are not required to operate PAYE on such employment income.  Revenue also disregards the presence of these employees in Ireland for corporation tax purposes in respect of any company resident in Ukraine, where the employee, director, service provider or agent would be present in Ukraine but for the war there.  Any individual or relevant entity that avails of these concessional treatments should continue to retain evidence to support compliance with the qualifying conditions. 

Revenue has advised the Institute that employees can now view enhanced reporting requirement (ERR) submissions in their name via MyAccount from the PAYE Services section under the heading Expenses/Benefits. 

We have compiled the latest updates to various HMRC VAT publications, briefs and guidance. Readers should note that there are also numerous updates to VAT guidance and rules due to the UK’s departure from the EU. Who should register for VAT (VAT Notice 700/1); How VAT affects charities (VAT Notice 701/1); Change your VAT registration details; Buildings and construction (VAT Notice 708); Insolvency (VAT Notice 700/56); Group and divisional registration (VAT Notice 700/2); Claim a VAT refund for a new home or charity building if you're a DIY housebuilder; Claim a VAT refund for a conversion if you're a DIY housebuilder; Local authorities and similar bodies (VAT Notice 749); Claim a VAT refund as an organisation not registered for VAT; Insolvency (VAT Notice 700/56); Who should register for VAT (VAT Notice 700/1); Health professionals and pharmaceutical products (VAT Notice 701/57); Registering groups, divisions and joint ventures for VAT; How to fill in and submit your VAT Return (VAT Notice 700/12); Send details to support your VAT repayment claim; Check if you can register for the VAT Import One Stop Shop Scheme; Submit your Import One Stop Shop VAT Return; Register for the VAT Import One Stop Shop Scheme; Insolvency (VAT Notice 700/56); Refunds of UK VAT for non-UK businesses (VAT Notice 723A); Pay the VAT due on your One Stop Shop VAT Return; Burial, cremation and commemoration of the dead (VAT Notice 701/32); Revenue and Customs Brief 1 (2024): Live web streaming of funeral services; and Women's sanitary products (VAT Notice 701/18).  

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 Officer Borders bulletins are also available. Miscellaneous updated guidance etc. Recently updated guidance, and publications relevant to EU exit are set out below:- Data Element 2/3: Documents and Other Reference Codes (Union) of the Customs Declaration Service; Data Element 2/3 Documents and Other Reference Codes (National) of the Customs Declaration Service (CDS); Data Element 2/3: Document and Other Reference Codes: Licence Types — Imports and Exports of the Customs Declaration Service (CDS); Moving parcels from Great Britain to Northern Ireland under the Windsor Framework from 30 September 2024; Check last dates for deferment period adjustments in the Customs Declaration Service; and Simplified Customs Declaration Process: notification of non monetary amendment.

Revenue has updated the Tax and Duty Manual regarding the payment and receipt of interest and royalties without deduction of income tax. The updated manual reflects the introduction of the outbound payments defensive measures and provides additional guidance.  The updates are as follows:  in respect of the application of interest withholding tax to interest paid to Irish partnerships and foreign tax transparent entities (section 5.3), and  on payments of interest to tax transparent entities where members of those entities may avail of the rate of withholding tax provided for under the terms of a double taxation agreement (section 9.1.1). 

This week we bring you news about VAT reciprocity with Italy and HMRC has provided an update on specified supplies registration for VAT. HMRC has also published details of VAT services being removed later this month from its legacy Online Service for Agents and the latest Agent Update is also available. VAT reciprocity with Italy Following successful negotiations of a bespoke reciprocal agreement with the Italian Government, UK businesses not established in Italy will be able to claim refunds of VAT paid on goods and services in Italy relating to their business activities. UK businesses can claim these VAT refunds under the EU’s 13th Directive process. Tax representatives will not be able to make these claims. The agreement will have retrospective effect from 1 January 2021. Claims submitted on or after this date to the Italian Revenue Agency (Agenzia delle Entrate) will be considered valid. All claims for VAT refunds must meet the eligibility criteria and application requirements set out by the Italian tax authorities to be paid. For details on how to claim a VAT refund, visit the Agenzia della Entrate website. Update on specified supplies registration HMRC was recently made aware of problems encountered when attempting to register for VAT due to making specified supplies. Specified supplies are supplies of certain financial services which would usually be exempt but can be treated as taxable if certain criteria are met. This gives rise to the option of voluntarily registering for VAT to recover input tax incurred on such supplies. Given that these supplies are part of a group that are usually exempt, the rules behind our registration service are programmed to reject applications that include a SIC code relating to these supplies. The consequence of this is that applications are being rejected when a person applies to voluntarily register under para 10 sch1 VATA 1994 due to making specified supplies. HMRC has listened to these concerns and, as of February 2024 updated the rules behind the VAT registration service (“VRS”) so that when a person applying under these circumstances enters the words ‘SPECIFIED SUPPLIES’ in the ‘Business Descriptions’ free text box when applying, the application will not be rejected. Section 2.7 of VAT Notice 700/1 has also been updated to this effect and HMRC is now considering the most appropriate place to include an update in VRS itself to best support those applying. Removal of services from HMRC’s legacy Online Service for Agents   From 16 April 2024, HMRC will remove some functionality from agents’ legacy VAT services. From that date agents will no longer be able to use the Online Service for Agents to submit a VAT return, set up or amend a direct debit or change VAT registration details on behalf of a client. This does not impact services within the Agent Services Account. From 16 May 2024 the remainder of legacy VAT services (the view account and view submitted returns functions) will also be withdrawn. More information is set out below “Why is this happening?  We are in the process of decommissioning our outdated legacy computer system.  Our customers were moved to a new IT platform when we introduced Making Tax Digital for VAT. Agents and a small number of customers still have access to the legacy VAT services. Amendments made in the legacy system do not automatically update customer records on the new platform. This can lead to a delay in updating records.  How this affects agents  Agents must use the ASA to transact on behalf of their VAT clients and should no longer use the legacy Online Service for Agents. You will be unable to create/amend Direct Debits on behalf of your client using the legacy Online Service for Agents. Your client will need to self-serve through their VAT Online Account, this ensures that banking regulations are adhered to. The VAT C9 form is available for use if more than one signature is required on a Direct Debit Instruction (DDI).   Please be aware that amendments you make to client details via the Online Service for Agents until closure will not be automatically reflected in your clients’ records. This includes DDI amendments, which could result in delayed payment to HMRC and prevent repayments reaching your client on time. Please refrain from using this service to advise us of any changes with immediate effect.  Use your ASA to advise HMRC of changes to your clients VAT account, view their account, view submitted returns, print a VAT certificate, cancel a VAT registration, and print VAT returns on behalf of your client.  If you are not yet authorised to represent your client via the ASA, you will need to complete a Digital handshake. For information on how to do this please visit the following link: https://www.gov.uk/guidance/how-to-use-the-digital-handshake-to-get-authorised-as-a-tax-agent.  How this affects clients  The majority of clients will be unaffected by this change, they will be automatically logged into the new IT service when they access their VAT online account via their Business Tax Account.   The small number of clients who still have access to the legacy IT service will not be able to submit a VAT return, set up or amend a direct debit or change VAT registration details. Clients affected will be directed to the new service by relevant guidance.   VAT returns should be made through MTD compatible software unless we have granted an exemption.  Clients must have a Government Gateway user ID and password to access the latest VAT online account.  For assistance in gaining access Government Gateway, please follow this link: https://www.gov.uk/log-in-register-hmrc-online-services/problems-signing-in.”  Agent Update 118 Agent Update: issue 118 is available now. Get the latest guidance and information including:- Construction Industry Scheme (CIS) changes from 6‌‌‌ April‌‌‌ 2024; National Insurance contributions rates changes reminder; The Investment Zone direct tax offer; The VAT margin scheme – your clients may need to act before 30 April 2024; and GOV‌‌‌.UK One Login – a new way to access HMRC’s online services for some customers.

The new tax year 2024/25 begins later this week on 6 April 2024 after the new financial year 2024 commenced yesterday on 1 April 2024. 5 April 2024 is also the deadline to claim certain allowances and reliefs from the previous four tax years including claims for the marriage allowance which are still in time for the tax year 2019/20. Let’s take a look at some of the key tax changes which take effect. R&D tax relief Last month, Finance Act 2024, Schedule 1 (Research and Development) (Appointed Day) Regulations 2024 was published and appointed 1 April 2024 as the day when Schedule 1 of Finance Act 2024 will come into force (i.e. applying to accounting periods beginning on or after 1 April 2024). This schedule introduces the merged R&D tax relief scheme in addition to the additional relief available for loss-making R&D-intensive SMEs via a higher rate of payable tax credit. National Insurance Contributions (“NICs”) As announced in the recent Spring Budget, from 6 April 2024, the following changes to the rates of NICs will take effect:- The main rate of Class 1 employee NICs will reduce from 10 percent to 8 percent; and NICs rates for the self-employed across the UK will reduce to 6 percent from 9 percent as a result of a combination of the 2 percent cut announced in the Spring Budget 2024 and the 1 percent cut announced at Autumn Statement 2023. From 6 April 2024, self-employed individuals with profits above £12,570 will no longer be required to pay Class 2 NICs but will continue to receive access to contributory benefits including the State Pension. Anyone with profits between £6,725 and £12,570 will continue to get access to contributory benefits including the State Pension through a National Insurance credit without paying NICs, as they do currently, and those with profits under £6,725 and others who pay Class 2 NICs voluntarily to get access to contributory benefits including the State Pension, will continue to be able to do so. HMRC would like to remind agents/taxpayers that taxpayers who are in self-assessment for reasons such as receipt of rental income or they are subject to the High Income Child Benefit Charge, and who, at a later date, become self-employed or become a partner in a partnership are still required to register with HMRC for Class 2 NICs. This will ensure that from 6 April 24, if you meet the above profit thresholds, Class 2 contributions will be treated as having been paid to protect your National Insurance record. Alternatively, if profits are under £6725 you will have the opportunity to voluntarily pay Class 2 contributions to avoid gaps in your National Insurance record. An article on this features in the most recent Agent Update. Miscellaneous The highlights from a range of other changes are set out below:- The dividend allowance will reduce to £500 from £1,000 from 5 April 2024; From the same date, the capital gains tax annual exemption will reduce from £6,000 to £3,000; From 1 April 2024, the rate of Plastic Packaging Tax increased in line with the Consumer Price Index; From 1 April 2024, both the national living and minimum wages were increased; The cash basis becomes compulsory for all unincorporated businesses from 6 April 2024; and From 2024/25, the tax year basis becomes the basis of assessment for all unincorporated businesses.

Revenue has updated the Tax and Duty Manual regarding Controlled Foreign Company (CFC) Rules. The manual has been updated to reflect the Finance (No.2) Act 2023 amendment to section 835YA TCA 1997 concerning Irish defensive measures in respect of the CFC rules. Revenue has advised that this manual will be further updated to reflect Pillar Two related consequential amendments made to the CFC rules in Finance (No. 2) Act 2023.