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Representatives from the Institute, under the auspices of the CCAB-I, met with the Minister for Finance, Michael McGrath T.D and his team earlier this week to discuss CCAB-I’s pre-Budget 2024 submission. The need to simplify the tax system and reduce the administrative burden on businesses was discussed, as were the complexities experienced by small businesses, in particular, when availing of several of the business tax reliefs. The importance of long-term investment in critical infrastructure, not least housing, in order to maintain Ireland’s position as a competitive place to do businesses and also to retain and attract talent was also highlighted.  

In Irish news, Revenue has published guidance on EU reporting obligations for platform operators and we bring you news that Revenue is to make contact with certain entities that have not filed corporation tax returns. In UK news, HMRC is launching a form over the summer which can be used to obtain details of overlap relief for basis period reform, and the Government will be reporting annually on tax simplification, both of which are previous recommendations of Chartered Accountants Ireland. In International news, the European Commission publishes a progress report on Pillar One.  Ireland Revenue has published a new guidance on how new EU reporting obligations for platform operators will operate in Ireland. Revenue has informed us that it intends to issue Level 1 compliance intervention notices to taxpayers who registered for Corporation Tax and have not filed Corporation Tax returns for years up to and including 2021. UK Read in our miscellaneous HMRC updates about HMRC launching a form over the summer which can be used to obtain details of overlap relief for basis period reform. The Government will be reporting annually on tax simplification. International The European Commission recently published a progress report on Pillar One. 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.          

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Following its recent consultation on the proposed amendments to FRS 101 and FRS 102 relating to the OECD's Pillar Two model rules, the FRC has now issued amendments to FRS 101 and FRS 102. The amendments introduce a temporary exception to accounting for deferred taxes arising from the implementation of the Pillar Two model rules, alongside targeted disclosure requirements. The temporary exception is effective immediately and the disclosure requirements are effective for accounting periods beginning on or after 1 January 2023, with early application permitted. A small number of FRS 102 preparers are likely to be impacted by the Pillar Two model rules and the changes are based on a similar amendment to IAS 12 issued in May by the International Accounting Standards Board.

Section 739J(3) TCA 1997 obliges investment limited partnerships (ILPs) to file a statement annually using Form ILP1. The filing deadline for Form ILP1 in respect of the year of assessment 2022 is extended to 14 September 2023. A new version of the Form ILP1 is now available on the Collective investment vehicles webpage, in the Related Forms panel of the Revenue website and should be used for filings in respect of the year of assessment 2022. As noted on page 1 of the Form ILP1, filing should be completed electronically and returned to Revenue via MyEnquiries to largecasesdiv@revenue.ie. The Form ILP1 has been updated by the addition of the following panels: Name of Signatory in plain text; Net Asset Value of the ILP at the end of year of assessment; General Overview of business activities carried out by the ILP in the year of assessment; Details of any Material Transactions carried out by the ILP in the year of assessment; Details of any transactions entered into with persons connected with any partner in the ILP in the year of assessment; Disclosure of Assets held by ILP at end of year of assessment (which includes disclosure of asset type, location, and value); and Detailed guidance notes attached to the updated Form ILP1 to assist completion of the statement, including practical examples illustrating level of detail required.

Revenue has amended Chapter 27 of the Pensions Manual which deals with the taxation of retirement lump sums to provide further information on the tax and filing obligations for excess lump sums. Instructions are included as to when Revenue Payroll Notifications and the Form 790AA should be submitted, and the details required.

Revenue has updated its Tax and Duty Manual titled “Guide to Exchange of Information under Council Directive 2011/16/EU, Ireland’s Double Taxation Agreements and Tax Information Exchange Agreements and the OECD/Council of Europe Convention on Mutual Administrative Assistance in Tax Matters”. The updated manual now includes an appendix with details of the exchange agreements Revenue has in place under various Automatic Exchange of Information frameworks.

Revenue has published a new Tax and Duty Manual to provide general guidance on how new EU reporting obligations for platform operators will operate in Ireland. The Council Directive 2011/16/EU (DAC) which provides for the automatic exchange of information between the tax administrations of EU Member States was amended by Council Directive (EU) 2021/514 (DAC7) in 2021 to extend the scope of the existing DAC provisions. With effect from 1 January 2023, DAC7 obliges certain platform operators to collect and automatically report information on certain sellers using their platform to earn consideration. It is intended that the information obtained will assist Member States in addressing the tax challenges posed by the platform economy.

Revenue has published an updated Tax and Duty Manual on EU sanctions in response to the situation in Ukraine to include updated legislative references (paragraph 2), details of the 11th sanctions package (paragraph 4), and advice on the circumvention of sanctions (paragraph 6).

9 July 2023 – The success of future generations must be prioritised over short-term measures in Budget 2024, to ensure economic and societal progress in the decades to come. This is according to the Consultative Committee of Accountancy Bodies-Ireland (CCAB-I), the umbrella group which represents over 50,000 professional accountants, as it published its Pre-Budget Submission today.   The submission, entitled ‘Supporting Ireland’s Transition to a Sustainable future’, prioritises the long-term, highlighting that while the Irish economy has doubled in size in the past decade, we still have significant shortfalls in healthcare, housing, transport infrastructure and education. Demographics are exacerbating these shortfalls.  The submission identifies two key areas for budgetary focus;  The introduction of an intermediate 30% rate of income tax to reduce the tax burden on younger workers; and Investment in housing capacity to accommodate our young workforce and our significant FDI community. Commenting, Tax and Public Policy Lead at Chartered Accountants Ireland, Cróna Clohisey said:  “In the absence of a long-term focus, we risk an intergenerational divide becoming a chasm. The half-year Exchequer returns of €41bn published this week highlight more than ever the difficult decisions government faces in Budget 2024. This sum represents an 11% increase on the same period last year, but it is now, when the Exchequer is relatively robust, that government should limit itself to modest budgetary tax adjustments and put real spending power behind sustained investment in infrastructure, particularly housing.  “Our economic position is strong, but it is not future-proofed. There is a real divide between generations in terms of access to housing, pensions security and many other indicators. We need Ireland to be a country our young people choose to stay in and that others choose to bring their skills to, but we cannot do that without long term, strategic interventions in transport, health, and housing.”  Reforming the income tax system  Ireland’s 40% tax rate is high in comparison to other competitor countries and the CCAB-I believes that introducing a third rate of income tax of 30% would make the system more equitable. It would also enhance Ireland’s attractiveness as a place to work, particularly among younger workers.   Ms Clohisey continues: “Workers in Ireland pay income tax at a rate of 40% once they earn €40,000. This entry point is below the average wage and is significantly lower than most countries across the UK and Europe where incidentally having more than two tax rates is extremely common.” “Speaking on behalf of a mobile profession where most are in the early stages of their careers and are planning their futures, introducing an intermediate 30% rate would make the system more attractive and more equitable, lessening the tax burden on workers and putting more money in their pockets. An intermediate rate would also support Ireland’s FDI offering. The government needs to take immediate action to address the inequities that clearly exist within the system.” The submission also proposes: Income tax credits and rate bands should be index-linked to earnings to account for inflation Employers’ PRSI should not be increased The rate of CGT and CAT should be reduced from 33% to 20% The CGT annual exempt amount should be increased from €1,270 to €5,000  The Category A threshold for CAT should be increased from €335,000 to €350,000  The CAT small gift exemption should be increased from €3,000 to €5,000. Housing measures The CCAB-I believes that small private landlords are critical in boosting Ireland’s housing supply, particularly in provincial towns where demand is not sufficient to justify large-scale investment in the private rental sector.  Ms Clohisey continues: “Our members tell us that one of the biggest barriers to expansion is the lack of adequate, affordable housing that is reasonably located for their staff. We do our young people an enormous disservice by limiting their opportunities to live and work where they want to.” “The tax burden of small private landlords should be the same as that for companies at the 25% rate, rather than at the marginal rate of 52%. On the supply side, to enable property developers to manage their cash-flow, a tax debt warehousing system, like that created during the pandemic, could be developed whereby the collection of taxes such as PAYE is delayed until all housing units have been sold.” The submission also proposes: Local property tax should be allowed as a deduction against rental income Wear and tear rates for fixture and fittings should be increased from 12.5% to 25% per annum to facilitate landlords investing in the maintenance of properties Where landlords retrofit a property to improve its energy rating, 100% capital allowances should be offered in the year of work ‘Rent-A-Room’ relief should be increased to match the standardised average rent and the ‘cliff-edge’ for qualifying for relief should be removed. The Rent Tax Credit should be permanently included in legislation. ENDS Issued by Chartered Accountants Ireland on behalf of the Consultative Committee of Accountancy Bodies-Ireland (CCAB-I). Read the submission in full here.  About the Consultative Committee of Accountancy Bodies-Ireland (CCAB-I) The Consultative Committee of Accountancy Bodies-Ireland is the representative committee for the main accountancy bodies in Ireland. It comprises Chartered Accountants Ireland, the Association of Chartered Certified Accountants, the Institute of Certified Public Accountants in Ireland, and the Chartered Institute of Management Accountants which combine to represent over 50,000 professional regulated accountants in Ireland.              

Revenue has updated the Tax and Duty Manual regarding rent-a-room relief to include material on the rent tax credit (in paragraph 7.2). In addition, obsolete material on owner occupier relief under certain property-based tax incentive schemes and relief from stamp duty for first time buyers and certain owner occupiers have been deleted.