The Minister for Finance, Michael McGrath, has published the terms of reference for the Department of Finance to conduct a review of Ireland’s funds sector. Ireland is a global centre of excellence for asset management and funds servicing with the latest figures showing regulated and unregulated funds in Ireland having approximately €4.6 trillion in assets under management. Nationally, the funds sector employs some 17,000 people across 180 companies. The multi-disciplinary Review Team will be led by the Department of Finance, with support from state bodies, including Revenue and the Central Bank of Ireland. It is to produce a report titled ‘Funds Sector 2030: A Framework for Open, Resilient & Developing Markets.’ and will conclude its work in summer 2024. The team will look at a range of issues, which include examining the regimes for Section 110 entities, Real Estate Investment Trusts (REITs) and Irish Real Estate Funds (IREFs). It will also examine international contexts, effects on employment and the economy and the wider taxation regime for funds, life assurance policies and other related investment products. Commenting on today’s publication Minister McGrath said: “The establishment of a Review Team to develop a ‘Funds Sector 2030’ report is a proactive step and will cover a wide range of issues from competitiveness to taxation to financial stability. Ireland is a global centre of excellence for the asset management and funds servicing and over many years this has been a driver of economic and employment growth. I am confident that a new framework will support long-term growth in this area and maintain a sustainable and resilient funds sector here. This review also fulfils recommendations from the Commission on Taxation and Welfare and will ensure that our domestic funds framework is up-to-date and takes account of the significant developments in the funds sector in recent years.” Further information is available here.

The Minister for Finance, Michael McGrath TD, has published an assessment by his Department on the fiscal response to the cost of living challenge. The aim of the analysis is to outline the key objectives of the Government’s strategy and to document and quantify the fiscal response. The Government’s policy response to a sharp rise in the cost of living has been designed to assist those least equipped to respond while also aiming to avoid adding to inflationary pressures. The fiscal response has been timely, progressive and has primarily consisted of temporary supports, which are less likely to exacerbate inflationary pressures. Commenting on the analysis set out in the report, Minister McGrath said: “Government has responded decisively and effectively to the cost of living challenge, most recently with a suite of supports amounting to €1.3 billion announced in mid-February. A total of €12 billion – 4½ per cent of national income – has now been provided in direct relief to absorb some of the impact and ease the burden of inflation on households and businesses. Our response to the cost of living challenge is, by necessity, different to our response to the pandemic. Inappropriate or excessive fiscal interventions by Government would add fuel to inflation and result in fiscal policy itself becoming part of the problem. In designing its response, Government has also been conscious of rising borrowing costs – the cost of 10-year money is now in excess of 2½ per cent compared with essentially 0 per cent during the pandemic. Government has also been conscious of the need to calibrate the policy response in a manner that does not compromise the necessary transition to carbon-neutrality. Against this background, Government has, I believe, struck the right balance between supporting households and firms, while not jeopardising key fiscal and climate sustainability objectives. As we address the challenges of today, Government must also be conscious of the future. In the longer-term, alongside the need to meet the costs associated with demographic changes and finance the green and digital transitions, a future decline in tax receipts from the corporate sector is possible. This means that it is more important than ever that the public finances are kept on a sustainable trajectory so that we ensure we are in the strongest possible position to meet future economic challenges as they arise.” Further information is available here.

Revenue has published statistics on Local Property Tax (LPT) for the first quarter of 2023. LPT collected to date amounts to €314 million, with a payment compliance rate of 90 percent indicating that the majority of property owners have met their payment obligations. Payment arrangements for 2023 LPT liabilities are in place on over 1.7 million properties including 350,000 Annual Debit instructions debited on 21 March. 2022 was the first year that newly liable properties came within the charge to LPT on an annual basis. Owners of properties built during 2022 were required to submit an LPT return and set up a payment arrangement for 2023. Commenting on the importance of property owners making sure that they pay their LPT liability or set up a payment method without delay, Ms. Katie Clair, Head of Revenue’s LPT Branch, said: ‘’All residential property owners were required to set up their 2023 payment method by 10 January at the latest and the vast majority did exactly that. However, some property owners haven’t yet paid or set up a payment arrangement and they now leave themselves open to collection and enforcement action by Revenue. We have issued 150,000 letters to property owners who haven’t yet paid or set up a payment method to pay or make an arrangement to pay. Property owners who fail to do so may be subject to a range of collection and enforcement actions by Revenue including mandatory Deduction at Source (DAS) from salary or pension, withholding of tax clearance certification, the application of surcharges on income tax, corporation tax and capital gains tax returns or offsetting of other tax refunds against LPT arrears. I urge all property owners who haven’t made arrangements to pay their LPT to take immediate action and use this opportunity to ensure they are fully compliant with their LPT obligations. The easiest way to set up your LPT payment method is online. You can access the LPT online portal on revenue.ie. However, if property owners need assistance in completing their LPT Return or have any queries regarding their LPT obligations, they can contact the LPT Helpline at 01 738 36 26.”

The Minister for Finance, Michael McGrath and Minister for the Environment, Climate and Communications, Eamon Ryan announced a zero rate of VAT for the supply and installation of solar panels for private dwellings from 1 May 2023. The Department of Finance has estimated that the measure will cost €19 million annually. Speaking after the Government meeting, Minister for Finance Michael McGrath stated: “The Government has agreed to reduce the VAT rate on the supply and installation of solar panels to zero for private dwellings from 1 May 2023. This will result in a significant reduction in the installation cost for households and I believe will encourage more people to avail of this innovative technology. This measure underlines the Government’s commitment to help households to save money on their energy bills and reduce their carbon footprint and contribute positively to our national climate change targets. I have received approval for the measure to come into effect from the start of next month to prevent any dislocation in supply ahead of its introduction.”

Revenue has updates its Tax and Duty Manual regarding employer provided vehicles.  The main changes relate to the Finance Bill 2023 measures. The updated manual provides confirmation that employers can, if they are in a position to do so, apply the new method of calculation of BIK prior to enactment of the legislation. Furthermore, employers should apply any necessary adjustments to the BIK calculations in respect of prior 2023 pay periods by way of a current period adjustment and not amend prior period payroll submissions. The examples have been updated to apply the new rules effective from 1 January 2023, to include the additional Finance Bill 2023 measures.   Further information is contained in eBrief no.093/23.

Revenue has updated its Tax and Duty Manual regarding the Form P11D. Although employer contributions to a PRSA is no longer a taxable benefit, the employer's obligation to report the amounts of PRSA contributions on the payroll submission to Revenue remains. However, from 1 January 2023, details of PRSA contributions are not required to be included on the Form P11D.   

Revenue has amended its Tax and Duty Manual regarding the Receipts Tracker in myAccount and ROS. The amendments include updated screenshots of log in screens for myAccount and ROS.

Revenue has amended its Tax and Duty Manual containing information and services for customers with disabilities. Contact details for Access Officers numbers have been replaced with a single email address and telephone number for all queries.

Revenue has updated its Tax and Duty Manual which deals with enhanced stock relief of 100 percent for young trained farmers to reflect amendments in Finance Act 2022. The availability of the relief has been extended to 30 June 2023 and the requirement that the farmer be the holder of a trained farmer qualification within the meaning of section 654A to avail of the relief was introduced. A trained farmer qualification is defined in section 654A as being a qualification set out in the Table to that section. Or any other qualification that Teagasc certifies as corresponding to a qualification set out in the Table and deemed by the Qualifications and Quality Assurance Authority of Ireland to be of a level equivalent to such qualifications listed in the Table.

Revenue has updated its Tax and Duty Manual with information in relation to the process for claiming second stage relief on Employment Investment Incentive (EII) investments made between 1 January 2019 and 8 October 2019.

The Financial Reporting Council has released FRED 83-Draft amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland – International tax reform – Pillar Two model rules. This FRED proposes to introduce a temporary exception to the accounting for deferred taxes arising from the implementation of the Pillar Two model rules, alongside targeted disclosure requirements. A small amount of FRS 102 preparers are likely to be impacted by the Pillar Two model rules and FRED 83 is based on a similar proposal issued by the IASB relating to IAS 12. The shorter than normal consultation period remains open until 24 May, with the FRC planning to finalise any resulting amendments in summer 2023.

Welcome to this week’s Technical Roundup.  In developments this week, the Corporate & Insolvency Bar Association is hosting its inaugural annual conference on Friday, 31 March with a drinks reception and dinner taking place after the conference; the European Securities and Markets Authority (ESMA) has sent a letter to the European Parliament and Council raising concerns with proposed changes to the insider list regime in the Markets Abuse Regulation. Read more on these and other developments that may be of interest to members below. Audit and Assurance The FRC has issued guidance for audit firms on eligibility criteria in the context of the firm’s system of quality management and the performance of engagements. ISQM (UK) 1 and ISQM (UK) 2 have been reissued with updated footnotes to reflect this guidance. Insolvency The Revenue Commissioners has recently updated Revenue eBrief No. 69/23 on Examinership Caseworking Guidelines. The updates have been made to reflect recent changes to the Companies (Miscellaneous Provisions) (COVID-19) Act 2020 and the European Union (Preventative Restructuring) Regulations 2022. From 17 April 2023, new creditor winding up petitions may be issued in Northern Ireland for the first time since restrictions were imposed in March 2020.  The following new conditions, which did not exist prior to the pandemic, must now be met – (a) the petition must be in the new standard form; (b) the debt must be based on a Court Judgment; and (c) the statutory demand must be made after 13 March 2023. The Corporate & Insolvency Bar Association is hosting its inaugural annual conference on Friday, 31 March. There will be a drinks reception and dinner taking place after the conference. The conference schedule and booking details are available here. Financial Reporting The International Accounting Standards Board (IASB) has released its March 2023 IFRS for SMEs Accounting Standard Update. The IFRS Interpretations Committee has also released its March 2023 update. The IASB has published an exposure draft proposing amendments to the classification and measurement requirements in IFRS 9 Financial Instruments. The proposed amendments respond to feedback received from a post-implementation review of the classification and measurement requirements in IFRS 9, which concluded in December 2022. The comment period will remain open until 19 July 2023. The IASB has added a project to its work plan to explore whether and how companies can provide better information about climate-related risks in their financial statements. The International Sustainability Standards Board (ISSB) has released its March 2023 update and podcast. The UK Endorsement Board (UKEB) has published a report ‘Accounting for Intangibles: UK Stakeholders’ Views’. It sets out stakeholder views on the accounting for intangibles under international Accounting Standards within the context of the wider economic impact of intangibles in the UK. Sustainability Correspondence in September 2022 from the Financial Conduct Authority (FCA) to benchmark administrators in the UK highlighted the risk of poor disclosures for ESG benchmarks. The FCA said that high quality ESG benchmarks are important to support trust in the market for ESG products and the transition to a net zero economy. The FCA has completed a preliminary review on ESG benchmarks which found that the overall quality of ESG-related disclosures made by benchmark administrators was poor and it has sent a further letter to administrators outlining the issues identified. These include not enough detail on the ESG factors considered in benchmark methodologies and not fully implementing ESG disclosure requirements.  You can read the follow-on correspondence which details the issues here. The FCA has also indicated that it supports regulation of ESG ratings and is  working closely with Government on this. Anti-Money laundering/Sanctions The UK FIU writes that it has updated and redesigned it's 'Requesting A Defence Under POCA and TACT' guidance document, available on the National Crime Agency (NCA) website. This document is intended to inform of the approach when reporters, through submitting a SAR, seek a defence (or ‘consent’) from the NCA to a principal money laundering offence or terrorist financing offence. The UK’s Office of Financial Sanctions Implementation (“OFSI”) recently updated its guidance on monetary penalties and enforcement (the “Guidance”) to set out its enforcement approach in cases involving ownership and control by designated persons. You can read more here. Other Areas of Interest The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has sent a letter to the European Parliament and Council raising concerns with proposed changes to the insider list regime in the Markets Abuse Regulation. The Department for Communities has  launched a public consultation on a prospective Scheme of Delegation for decisions of the Charity Commission for Northern Ireland.  This consultation is accordance with the Charities Act (Northern Ireland) 2022, which allows that the Department may make a Scheme of Delegation to permit some of the Commission’s decision-making functions to be delegated to staff, as they are in other jurisdictions. Enterprise Ireland is running a series of webinars focusing on competitiveness. They are running from now until October and will cover a range of issues critical to competitiveness including supply chain management, raising finance and digital adoption. There are also three in-person workshops focused on attracting and retaining talent. Click here for more details in Enterprise Ireland press release and here for full details of the webinar series and workshops . The Central Bank (CBI) spoke at a recent event about its 2023 regulatory and supervisory priorities which include continuing to remain vigilant in assessing and managing the financial and operational resilience of firms and enhancing the Bank’s regulatory and supervisory approaches to mitigate risks from the changing financial system .It also referred to continuing vigilance of the financial system, supervising firms’ compliance with anti-money laundering and countering terrorist financing  obligations, detecting and sanctioning market abuse, and enforcing financial sanctions working closely with An Garda Síochána and other relevant bodies in all these areas. CBI recently published its Innovation Hub 2022 update. Established in 2018 it writes; the Innovation Hub gives firms operating in the fintech sector a way to engage with CBI outside of existing formal regulator/firm engagement processes. The crypto/ blockchain sector accounted for 33% of enquiries received last year. You can access the 2022 Innovation Update here. For further technical information and updates please visit the Technical Hub on the Institute website.