Tax must be considered as part of the Corporate Sustainability Reporting Directive’s double materiality assessment, explains Aidan Lucey The aim of the EU’s Corporate Sustainability Reporting Directive (CSRD) is to drive accountability and transparency by mandating companies operating in the EU to disclose information on material sustainability topics publicly. Even if companies have reported non-financial data in the past, they will likely need to expand the nature and extent of their disclosures. For some companies, tax could be considered a material sustainability topic, given the significance of tax contributions to society and heightened investor scrutiny. This means they will need to disclose information on tax publicly, too. Therefore, companies must understand the specific tax disclosures that may be required under CSRD. CSRD and double materiality Companies within the scope of CSRD are required to make disclosures on material sustainability topics in accordance with the European Sustainability Reporting Standards (ESRS). The ESRS covers sustainability topics across environmental, social and governance pillars and prescribe specific disclosure requirements. To determine the sustainability topics to be disclosed, companies must carry out a double materiality assessment. This involves assessing a company’s impact on the environment and society (“impact materiality”) and an assessment of how sustainability topics may affect the future performance of the company (“financial materiality”). If a sustainability topic is material to a company, but is not addressed by the ESRS, the company must still disclose information about it to enable readers to understand its sustainability-related impacts, risks and opportunities. Tax as a material topic Interestingly, the European Financial Reporting Advisory Group (EFRAG), which developed the CSRD standards, explicitly calls out tax as one of the topics on which organisations could make disclosures. In determining what sustainability topics are material for a business and its stakeholders, companies must consider many factors. While materiality considerations will differ for every organisation based on their specific sustainability and stakeholder profile, a range of factors could make tax a material consideration. These are outlined below. Social impact Tax is not just a cost of doing business, it is also a social responsibility. The taxes paid by an organisation, including those that it collects on behalf of governments, can represent its biggest monetary contribution to society. Those taxes fund public services, green infrastructure and community projects. Consequently, tax can be seen as a powerful indicator of a company’s societal impact. To assess this impact, stakeholders are demanding a greater level of tax transparency. They want to understand a company’s approach to tax, how tax matters are governed, and how much taxes are paid. Investors Tax is being factored into investor considerations when assessing the sustainability of a business. An organisation’s approach to tax can pose significant risks that affect investment returns in the medium and long term. To address these concerns, investors are taking steps to influence companies to make more comprehensive tax disclosures that will allow them to evaluate not only financial aspects but also governance and reputational risks associated with their approach to tax. Some investors have released codes of conduct encouraging transparency on tax from investee companies. Others have filed shareholder motions mandating tax disclosures under GRI 207, a specific tax standard released by the Global Reporting Initiative (GRI) to enable companies to disclose tax as part of their sustainability reporting. Tax disclosures under the CSRD can provide companies with an opportunity to build trust with investors, customers and society. Even where a company concludes that tax is not a material topic in its own right—possibly because other sustainability topics are viewed as higher priorities—tax disclosures could be considered under an existing ESRS. Tax disclosures required Where an organisation deems tax a material topic, EFRAG has indicated that GRI 207 could be used as the basis for its tax disclosures. GRI 207 consists of four categories of disclosures: Disclosure 207-1: Approach to tax. This requires an organisation to disclose details on its tax strategy, who oversees it, and how it aligns with its broader sustainability strategy. Disclosure 207-2: Tax governance, control, and risk management. This requires the disclosure of information about an organisation’s tax governance structure and how tax risks are identified, managed and monitored. Disclosure 207-3: Stakeholder engagement and management of concerns related to tax. This disclosure considers how an organisation engages with its stakeholders on tax matters. Disclosure 207-4: Country-by-country reporting. This disclosure requires an organisation to report on quantitative data, including its revenue, tax, and business activities on a country-by-country basis. A double materiality assessment is an essential step towards CSRD compliance. Full engagement between tax departments and sustainability teams will ensure that tax impacts, risks and opportunities are identified and considered in the double materiality assessment. Aidan Lucey is Tax Leader for CSRD at PwC Ireland

In this week’s Sustainability/ESG bulletin, read about Chartered Accountants Ireland’s response to the public consultation on the Climate Action Plan 2024. Also covered is the new national climate engagement plan, the new public procurement strategy, nature capital and nature positive businesses news, a new All-Ireland Climate Action Pilot Programme for SMEs, and the usual articles and upcoming events.      IRELAND Chartered Accountants Ireland responds to public consultation on Climate Action Plan 2024 The Institute has responded to the Department of the Environment, Climate and Communications’ Public Consultation on Climate Action Plan 2024. In our response we addressed the key challenges and risks to delivering the measures and actions set out in the Plan. We also identified additional supporting actions that could be taken in 2024, such as communication and awareness-raising, training and education, and targeted financial supports for businesses to help them with their transition to a net-zero society and economy. Read our response in full here. Climate engagement and public procurement. The Department of the Environment, Climate and Communications has launched a new Climate and Engagement Campaign to support and encourage action on climate and community resilience. The campaign – a first of its kind globally – will work with groups to amplify the climate action already taking place and to provide support to groups where needed, including making available flexible micro-funding totalling €1 million over 2024 and 2025. The Government will also work with a range of climate communications experts to develop special training, toolkits and advice for groups – including business and professional groups – who want to do more to make their place better and more climate resilient. The news comes as the Climate Action Plans launched  for all 31 Local Authorities, collectively including almost 4,000 actions to be completed in each local authority area over the next five years. Separately, the Government of Ireland has released a new Green Public Procurement Strategy and Action Plan 2024-2027. Green public procurement has been identified as one of the important areas of the economy that can play a key role in helping Ireland to become more resource-efficient. Ireland’s power generation and industrial emissions decrease in 2023 The Environmental Protection Agency (EPA) has released preliminary analysis of greenhouse gas emissions in 2023 from the Emissions Trading System (ETS) sector, which shows a decrease of 17 percent, compared to a decrease of approximately 15.5 percent across Europe, according to data published by the EU Commission. The decrease was due to a combination of factors, including an increase in imports of electricity, the use of renewable electricity and renewable fuels as well as a decrease in cement production. In contrast, greenhouse gas emissions from aviation increased by more than nine percent  compared to 2022, which reflects continued growth in this sector.   Future Ireland Fund and Infrastructure, Climate and Nature Fund Bill 2024 publishes (From our colleagues in the Tax Team) The Future Ireland Fund and Infrastructure, Climate and Nature Fund Bill 2024 has been published, its purpose being to provide for the establishment of two new funds to support future expenditure by the State as the economy is likely to face increased pressures associated with climate change, digitalisation, and an ageing population. Described as ‘a gamechanger’ in addressing monetary gaps up to 2030, and a way of ‘firewalling’ major climate investment projects well into the next decade, the Fund is due to reach €14 billion by 2030. Of this, the climate and nature component is worth over €3 billion per year. The goal is to ensure that the State would have resources to support capital expenditure for projects between 2026-2030 in the event of a future downturn. Read more commentary from Chartered Accountants Ireland here. Nature capital in boards and business The global non-profit platform Capitals Coalition is inviting businesses to participate on a new business decision template for boards. The template aims to ensure that information on all forms of capital is considered in board’s decision-making processes. Separately, in Ireland, Business For Biodiversity Ireland (BFBI) has developed a Roadmap to A Nature Positive Roadmap for Business. Aligned to prevailing methodologies and broken down into easy-to-manage steps, the Roadmap provides ­– among other things – steps on how to identify topics material to your business when it comes to new and existing reporting regulations. It is available to business members of BFBI, alongside other useful and free resources. NORTHERN IRELAND & UK Business in the Community Ireland (BITCI)  and its sister organisation in Northern Ireland (BITCNI) have launched an All-Ireland Climate Action Pilot Programme for SMEs to build organisational capacity and change in companies which work with SMEs in their supply chains.  Scope 3 emissions remain the most challenging area for meaningful decarbonisation, and SMEs play a key role in transition to a low carbon economy. Starting in April, this pilot programme will help companies better understand the challenges and opportunities of upskilling SMEs to address Climate Action in Ireland, and will help improve Scope 3 data emissions reporting. GLOBAL Towards a More Sustainable Future: Advancing the Centrality of Ethics The International Ethics Standards Board for Accountants (IESBA) has announced the publication of its Strategy and Work Plan for 2024-2027, titled Towards a More Sustainable Future: Advancing the Centrality of Ethics. The Work Plan sets out the IESBA's vision and strategic goals and actions, underpinning its ambition to put the International Code of Ethics for Professional Accountants (including International Independence Standards) at the heart of business and organisations. Technical Round-Up (From our colleagues in Professional Accounting) ISSB has issued an update on the jurisdictional progress made in adopting the IFRS Sustainability Disclosure Standards. It also issued its March 2024 update and podcast. FRC has announced the launch of its first market study to examine the UK market for sustainability assurance services. GRI has published three new guidance documents covering Double Materiality, Due Diligence and the CSRD to support global policymakers Did you know: Chartered Accountants Ireland has a new sustainable member benefit? Chartered Accountants Ireland has new member benefit. Riley is an Irish, female-founded period care company that aims to drive change by providing everyone with sustainable, toxin-free period care. For more information on our new partner offers, log into your member account or subscribe to the Member Benefits bi-monthly newsletter to keep up with these and all the other offers. Articles Here’s how professional service providers can step up for climate action (Financial Times – Sustainable Views) subscription needed Climate change measures will be tougher than many wish to believe (Irish Examiner) Stemming the tide of greenwashing lies - Sustainability credentials are big business in 2024, but not all are genuine. Dee Moran looks at ongoing EU efforts to curb greenwashing (Accountancy Ireland) The seven traits of a successful sustainability leader - Catherine Duggan, Director of Sustainability at Grant Thornton, writes about how navigating the complexities of sustainability leadership demands a multifaceted approach (Accountancy Ireland – Briefly) Upcoming events ICAEW, Sustainability for Business Gain insights on integrating sustainability into business operations, going beyond just carbon to consider the broader impacts and dependencies on people and planet. 23 April, 08:15 - 12:00, In person. Chartered Accountants Hall, One Moorgate Place, London, EC2R 6EA, UK   Accountancy Europe and others How can company boards lead the sustainability transition? The event will also draw on the recent Accountancy Europe, ecoDa and ECIIA publication ESG Governance: questions boards should ask to lead the sustainability transition which sets out practical questions that boards should consider in their efforts on ESG, sustainability transition planning, delivery on sustainability objectives and limiting greenwashing risks. 10 April, 10:30-12:00 CET, Virtual   Chartered Accountants Ireland ESG Masterclass: Take your sustainability knowledge to the next level (ROI/NI) Masterclass designed for all professional accountants working in business or practice, wishing to consolidate their knowledge and understanding of the sustainability regulatory, reporting and assurance landscape. 18 April, 08:30 – 13.00, Virtual   Dublin Chamber, Sustainability Academy – Sustainability ESG 101 In today's world, consumers and investors are placing a growing emphasis on environmental, social, and governance (ESG) practices. Our introductory Sustainability/ESG 101 course equips business professionals across all sectors with the foundational knowledge they need to navigate this evolving landscape. 19 Apr 2024, 09:30 AM - 12:00, Webinar   Chartered Accountants Ireland, Ulster Society Sustainability Reporting & the Public Sector The Chartered Accountants Ireland Ulster Society is hosting a free in-person event Sustainability in the Public Sector, where we will delve into the crucial realm of Sustainability Accounting and Reporting (SAR) across the island of Ireland.  Speakers include Dr. Elaine Stewart & Professor, Ciaran Connolly, Queen’s Business School and Gareth Martin, Deloitte.In person, Chartered Accountants Ireland, 32-38 Linenhall Street, Belfast BT2 8BG, 12.30pm - 2pm. Lunch from 12.30pm with presentations from 1pm, followed by Q&A   ICAS Sustainability Summit This event, hosted in association with Accounting for Sustainability (A4S), will bring together sustainability experts and forward-thinking business leaders to explore how we can accelerate the vital business changes needed to save our planet. A specialist line-up of speakers and panellists will delve into the future of sustainable business, the role of technology in the climate transition and the evolving sustainability reporting landscape. The summit also marks the launch of ICAS’ sustainability business network – a collaborative community where professionals can share and benefit from sustainability-related insights. In person, Edinburgh, 25 April 2024.   iQuest & Business Post, ESG Summit 2024  In person, Dublin (Croke Park), April 30th ICAEW, Preparing your business for the green workforce, (time to be confirmed) This webinar will provide an overview of the latest trends on green skills in the UK economy and the key steps businesses are to take to develop an inclusive green talent pipeline. The speakers will feature case studies of UK businesses that have implemented green skills development initiatives and key recommendations. 21 May, Virtual   National Sustainability Summit 2024 In person (RDS, Dublin), May 28-29   1Business World, 2024 Global Natural Capital Conference Virtual, June 3-4, 2024,   EPA Circular Economy Conference 2024 Online and inperson (Aviva Stadium, Dublin), 25 September,   Network for Chartered Accountants working on ESG projects Are you a Chartered Accountant working in ESG or working on ESG-related projects? Would you like an opportunity to engage with other Chartered Accountants working in this space to share insights, challenges and opportunities? Chartered Accountants Ireland now has a network to allow members working in sustainability/ESG to meet and discuss all matters of interest re ESG and accounting. Next meeting: Wednesday, 24 April, 14:00-15.30 Teams If you would like to attend, please email sustainability@charteredaccountants.ie   You can find information, guidance and supports to understand sustainability and meet the challenges it presents in our online Sustainability Centre.

What will tomorrow bring for the role of the Chartered Accountant and what changes are already taking hold today? Accountancy Ireland talks to four members of ACA Professionals about their experiences and expectations The role of the accountant is evolving and with it the expectations and perceptions of younger generations building careers in the profession. Here, four members of the Institute’s ACA Professionals Committee tell us about their hopes and aspirations for the future and career experiences today. Brendan Brophy I grew up in Perth, Australia, and studied business and accounting at Edith Cowan University, later obtaining a master’s in finance from University College Dublin. I qualified as a Chartered Accountant in 2016 and have since worked in both accounting and taxation. I am currently Senior Cost Accountant with Square and Chair of the ACA Professionals Committee of Chartered Accountants Ireland. I started my university journey in 2010 with a general interest in business, carrying a nascent curiosity about companies and their financial workings. My exact career direction was unknown until I encountered my first accounting lecture, however. That introduction to the foundational principles of accounting really resonated. It was during my first year at university that I had the privilege of attending a presentation by Chartered Accountants Australia. The session explored the prestigious career path offered by the ACA qualification, highlighting its value as an international career passport. Continuous learning The journey to becoming a Chartered Accountant, while enjoyable, has also posed distinct challenges. It requires extensive commitment to ongoing study and capacity to get to grips with deep knowledge across all facets of the discipline. What has surprised me most hasn’t been the rigour of the qualification process, but the ongoing need for continuous learning and adaptation post-qualification. The field of accounting is continuously evolving across standards, business practices, regulatory frameworks and technology. Expertise considered cutting-edge five years ago may no longer suffice today, so staying ahead of the curve is not merely an option, but a necessity for Chartered Accountants. Right now, technology is one of the most significant drivers of change in our field, redefining the boundaries of what’s possible. Advances in technology are outpacing existing regulatory frameworks, presenting both challenges and opportunities,and requiring us to anticipate and adapt to changes rather than respond to them retrospectively. Prime examples include artificial intelligence and cryptocurrency. The imperative for accountants today is to have a proactive mindset, enabling us to foresee emerging trends and incorporate them into our practices. Agents of change Becoming a Chartered Accountant is not just about mastering the intricacies of finance and accounting; it is about earning a pivotal seat at the decision-making table within any organisation. This privileged position allows Chartered Accountants to influence key business decisions directly, facilitating change that extends beyond the confines of a single company to impact the broader industry and regulatory environment. The role we play in guiding financial strategy, ethical standards and sustainable practices enables us to be agents of change, influencing economic outcomes and contributing to the shaping of regulatory frameworks that govern our profession and the business world at large. Anne Carter I studied business and accountancy at Galway-Mayo Institute of Technology and went on to qualify as a Chartered Accountant with DHKN in Galway in 2017. In between, I worked in retail banking, travelled to Australia and New Zealand on a Working Holiday Visa and moved to London for two years, where I earned a diploma in sound engineering. My journey to becoming a Chartered Accountant was triggered by my curiosity to understand the nuts and bolts of how businesses operate, and by my interest in maths and accounting from a young age. The opportunities for professional development associated with the ACA qualification really attracted me; the scope for continued learning and career advancement. The qualification opens doors. I saw it as a pathway to hone my skills, gain valuable experience and continue to develop. During my training contract with DHKN, I worked across audit, accounts preparation, income tax and corporation tax and, after qualifying, I moved to Dublin to join the internal audit function at GameStop. I have been with CRH plc now since 2018 and currently work on our Strategic Projects Team. Potential of technology I think technology has a lot of potential to allow our profession to develop broader skillsets and move more into advisory work, strategic decision-making and the actual interpretation of financial data. Artificial intelligence, automation and data analytics are all transforming the way accountants work and the services we provide. This will only increase over the next decade as more of the time-consuming or manual tasks we do today become automated. My career advice to younger members and students is to be open to change and to exploring different areas or opportunity within the field of accounting – adopt a growth mindset, set career goals, take ownership of your professional development and seek out advice and feedback from managers and peers. Claire Doyle I grew up in a small village called Leitrim in Co. Down and studied accounting at Queen’s University Belfast. I am also currently studying for a post-graduate diploma in sustainable financial technology and innovation at Maynooth University. I qualified as a Chartered Accountant in 2019 with KPMG in Belfast and I am currently International Tax Manager with PTC Therapeutics at its international headquarters in Dublin. At 17, I really struggled to understand what I should do for my career. My mother was a teacher, my father had set up his own business and my older brothers either worked, or were pursuing careers, in construction. Having watched them having to emigrate during the recession, I knew I wanted to pursue a qualification that would deliver high-quality jobs, global reach and allow me to carve my own path. Turning point During my second year at university, tragedy struck our family when we lost my brother Ryan in Australia. This really became the turning point in my life and the direction of my career. In the following months, I decided to apply for a year-long work placement with KPMG in Dublin so I would have the experience to know that becoming a Chartered Accountant was definitely the right path for me. It was a real eye-opener and ultimately brought me one step closer to starting my training contract with KPMG in Belfast. After my training contract ended, I decided to move into industry and take up a position that would allow me to gain more practical in-depth experience in the life science sector. Childcare reform Right now, I think childcare reform is needed across the island of Ireland to support working parents and reduce the financial burden and stress associated with finding a place for children and keeping parents in the workforce. Key to the retention of working parents in our profession and others is ensuring that there are adequate provisions in place to allow for reduced working hours. If a working parent decides to reduce their hours, I don’t believe this should mean that they have to condense five days of work into four. Transformative role I believe that accounting as a profession has the power to promote financial transparency, accountability and sustainability. Chartered Accountants are seen as trusted advisors. We can help our companies to understand their impact and reporting obligations across the three pillars of environmental, social and governance (ESG) and educate them on important matters, such as the UN’s Sustainable Development Goals (SDGs). Our ability to influence policy and advocate on behalf of the public is vitally important to supporting the Government in determining realistic targets in support of Ireland’s Climate Action Plan. The Institute’s collaboration with Chartered Accountants Worldwide allows us to amplify our impact and drive progress towards the achievement of the SDGs. Sinéad Nolan I studied both business and accounting and finance at undergraduate level and then did a master’s in accounting at Maynooth University. I qualified as a Chartered Accountant in 2017 with RSM Farrell Grant Sparks, which merged with Grant Thornton during my training contract. I then worked with the National Transport Authority as a Rural Transport Finance and Governance Accountant for one year before joining AXA Insurance in the role of Financial Accountant and, for a time, worked on the planning and analysis team and on secondment to the strategy team. I knew from an early age that I wanted to become a Chartered Accountant. I gained invaluable experience during Transition Year through work experience with O’Brien & Co. in Rathmines. I will be forever grateful for the accounting experience Tom O’Brien gave me back then at just 16 years of age. From day one at college, it was communicated to us how highly regarded the Chartered Accountant qualification is. The international recognition and respect the ACA qualification is held in really appealed to me. The work opportunities that come with it are endless. Welcome change ESG and, in particular, sustainability are becoming more important, especially among younger generations starting their career. Chartered Accountants and companies today are actively working to achieve their sustainability goals. I believe Chartered Accountants can bring about powerful change, especially with regards to sustainability, by encouraging social responsibility and the adoption of sustainable practices among entities of all sizes. I also see positive change with regards to gender equality in our profession and beyond, which is very welcome, and I believe we will see more women in senior positions in the future. I am lucky enough to see this in action at AXA Ireland, where there is a culture that fosters inclusion and a better working world for women.

Are you a finance professional with governance responsibilities looking to boost your career prospects and become a leader in governance too? If so, you may be interested in the Fast Track Programme offered by the Chartered Governance Institute UK & Ireland (CGIUKI), the leading professional membership body for governance, with over 130 years of experience. The Fast Track route to our Qualifying Programme is a shortcut to achieving chartered status as a governance professional, opening up a range of exciting and rewarding career opportunities. The programme is designed for professionals who already have relevant experience and qualifications in the accountancy field. Instead of completing the full seven modules of the Qualifying Programme, eligible professionals only need to complete two modules and pass the exams to become chartered members of CGIUKI. “By qualifying in governance you get to see how a company runs from behind the scenes – from the top down to the bottom up.” Francesca Goddard, Joined CGIUKI in 2017 Why qualify to become a Chartered Member of CGIUKI? Becoming a Chartered member of CGIUKI, in addition to your status in the accountancy field, has many benefits, such as: Accelerated career advancement: You can obtain chartered status within a year* and stand out from the crowd – governance expertise will enhance your professional profile.  Dynamic and exciting career path: You can access diverse roles in various sectors, from board-level positions to strategic advisory roles, and make a positive impact on the organisations you work with. Boardroom-ready: You will be recognised as a qualified governance expert, commanding respect, and leading to greater earning power. “I joined CGIUKI  to progress my career in governance.” George Mills, Joined CGI in 2020 By joining CGIUKI, you will also become part of a second professional body, adding another string to your bow. You will gain access to our expert guidance on governance, as well as our events, webinars, and publications.  What if I don't want to study for exams? If you are not interested in gaining chartered status in governance, but still want to join our governance community to access our resources and expertise, you can apply for Affiliated Membership, a non-chartered route that does not require any exams or CPD. Affiliated Members enjoy a range of benefits, such as access to our guidance notes, technical briefings, and events/webinars. Affiliated Membership may be suitable for those who are responsible for governance to some extent in their roles, but do not want to pursue Chartered status. How can I find out more? If you are curious about the Fast-Track Programme or Affiliated Membership, click here for more information. Our website also features testimonials from our members. We are happy to book a consultation with you to answer any questions you may have and guide you through the application process.  Don't miss this opportunity to fast track your career and join the leading professional body for governance. Contact us today and discover how CGIUKI can help you achieve new heights.  “The Fast-Track course has been so beneficial. Learning about the structure of Governance has been invaluable.” Shami Nathoo, CGI Fast Track Student Find out more about the Fast-Track Programme or Affiliated Membership at cgi.org.uk. *Two postgraduate-level modules with exams offered June and November each year This article is sponsored by CGIUKI

In Irish news, the Minister for Finance publishes the first feedback statement on a participation exemption for foreign dividends and Revenue publishes updated guidance for phased payment arrangements (PPAs) and for certain amendments to the CAT Manual. In UK news, we take a look at the third and final tax agent regulation option in HMRC’s Raising Standards in Tax Advice consultation, regulation by a separate statutory government body, and also provide an update on a recent meeting with HMRC to discuss the 30 April 2024 deadline for the end of the second-hand car VAT margin scheme in Northern Ireland. Ireland Minister for Finance, Michael McGrath TD, has published a first feedback statement on the development of a participation exemption in Irish corporation tax for foreign dividends. Following recent amendments to the Debt Warehouse Scheme, Revenue has updated the guidelines for Phased Payment Arrangements (PPA). Revenue has updated the CAT Manual following amendments introduced in Finance (No.2) Act 2023 including an individual’s obligation to file a CAT return when they are in receipt of certain interest-free loans. UK In the third article in this series, option 3 of the tax agent regulation consultation, regulation by a separate statutory government body, is examined in more detail. Read our update from a recent meeting with HMRC which discussed the 30 April 2024 deadline for the end of the second-hand car VAT margin scheme in Northern Ireland.   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.  

Consultative Committee of Accountancy Bodies – Ireland (CCAB-I) Introduction to members of the Insolvency Committee Welcome to another edition of the series which will introduce members of the Consultative Committee of Accountancy Bodies – Ireland (CCAB-I) Insolvency Committee over the coming months. We hope to provide information on the work of the Insolvency Committee and insights into the careers and experience of our Committee members. Today we will hear from Shane McAleer. Shane is a Director in Insolvency at Somers Murphy & Earl with over 15 years of experience of advising on a variety of formal and informal restructurings. Shane jointed the CCAB-I Insolvency Committee in 2018. Tell us about your career to date and your route to being an Insolvency Practitioner I grew up in Belfast and from a young age worked with my Dad in the family business. I learned a lot of my good and bad business habits from Dad. As my wife would say “Shane has never paid full price for anything.” Accountancy, never mind Insolvency, was far from radar growing up. Sitting in a lecture theatre in St. Malachy’s College at 17 years old deciding what University courses I should apply for on my UCAS Form was a daunting thought. For some reason Accountancy was my decision. And, I have to say I have never looked back. During a summer term in University, I did some work experience in BDO Belfast where I was given my first taste of insolvency having worked on a few liquidations. Roll forward to 2000, I joined BDO Simpson Xavier where that piece of work experience landed me in the Restructuring department where my insolvency journey began. After qualifying as a Chartered Accountant in BDO, and a short stint in BDO Sydney, I moved to Moore Stephens Caplin Meehan and then Farrell Grant Sparks, finally ending up in Somers Murphy & Earl with Derek Earl. I took over the Insolvency practice in 2019 and business has been continually growing and developing.        Are you where you expected to be in your career? I can say that I am very happy with where I am in my career today. If anything, I have learned in my 24-year career to date is, to always expect the unexpected! What was the best career advice you got along the way? In two words “Stop” and “Listen.” Throughout my career I have been lucky to have worked in several practices and in each one got the benefit of working and learning alongside some of the most experienced insolvency practitioners in the country. Based on your own experience, what advice do you have for young professionals looking to build a career in corporate insolvency? In my experience working in Corporate Insolvency, no two days are the same. If you want to challenge yourself and develop new and broader skills, then Insolvency is a path worth considering. There are many paths to working in Corporate Insolvency you should consider a professional qualification which will give you a strong knowledge and basic skills base but more importantly the ability to grow and develop professionally. In today’s market many firms are looking for enthusiastic and energetic young professionals keen on building a career in corporate insolvency. How would you define your work style, and how has this evolved over the years? I am not sure I know what my style is! I am at heart a people person. Unfortunately, in our world of insolvency I come across a lot of difficult and emotional stories which has had an impact on my approach to dealing with people. Notwithstanding the emotional side of insolvency, it is important to have a structure and plan in place of what you need to do along with a realistic period of achieving your plan. In terms of managing teams and individuals, what are your insights and views? In Insolvency, everyone must ‘roll up their sleeves.’ In any assignment, it is important that there is clear delegation to the team and each person knows what their role is and reasons for what they are doing. Promoting and encouraging personal and professional development is essential. This should be worked one with each person on an individual basis to ensure that the best path forward is agreed upon. A person’s growth will not only benefit them personally but will provide additional skills to the team. What about communication and negotiating the typical ups and downs of working life? Effective communication is always important. Do not assume that someone knows or should know something. Whether you are communicating with someone or waiting on a response from someone be clear at all times of what your point is or what you require. Has networking played an important part in your career? Your reputation is key to any future success and building a career. Effective networking with the right contacts and people allows you access to the ability to get work and refer work and developing your reputation. Networking has been an essential part of my 24-year career, I am still in contact with many friends and colleagues who I trained and worked with along my career because you just never know where the next referral will come from. What is the current position with regards to the level of insolvencies in Ireland? If only I had a crystal ball! Covid, an energy crisis, interest rate increases, increased minimum wage, increased costs and €1.7bn of warehouse debt to be repaid. The current level of insolvencies based on the current climate appear low. From chatting with other insolvency practitioners there is an expectation that there will be more insolvencies, the question is when?   Disclaimer: The views of contributors to this series of articles may differ from official Institute and Consultative Committee of Accountancy Bodies - Ireland (CCAB-I) policies and are not necessarily endorsed by the Institute of Chartered Accountants in Ireland, its Council, its committees or any other person or entity associated with the Institute. The publishers, editor, and authors accept no responsibility for any errors or omissions or any loss resulting from any person acting, or refraining from acting, because of views expressed or advertisements appearing in this publication.

Minister for Finance, Michael McGrath TD, has published a first feedback statement on the development of a participation exemption in Irish corporation tax for foreign dividends. Ireland currently differs from most EU and OECD member states who have already adopted a territorial approach in exempting foreign dividends from domestic tax.  The purpose of this feedback statement is to further progress work on the key building blocks of the participation exemption, which the government has committed to introducing in Finance Bill 2024, to come into effect from 1 January 2025. A public consultation has been launched on the ‘strawman’ proposals which closes on 8 May. Any comments can be emailed to  tax@charteredaccountants.ie.   The feedback statement has been informed by stakeholder responses to the public consultation on the introduction of a participation exemption to Irish corporation tax, including our own under the auspices of the CCAB-I, together with research work undertaken by officials in the Department of Finance and Revenue.  It includes a hypothetical example, a strawman proposal,  for how a participation exemption for foreign dividends might work in Ireland, in order that individual elements can be discussed within the context of the regime as a whole.   On publication of the feedback statement, Minister McGrath stated:  ‘‘The introduction of a participation exemption will be a very important step towards simplification of the Irish corporate tax system and reflects Ireland’s continued efforts to promote a business environment characterised by certainty and clarity. In a time of unprecedented change in international taxation, this move will give confidence and foresight to key stakeholders, maintaining Ireland’s reputation as a business-friendly destination and encouraging companies to establish and expand their operations in Ireland.  We have already introduced significant reforms in the area of Corporate Tax, with Finance (No.2) Act 2023 introducing the new 15% minimum effective corporate tax rate for in-scope companies, giving legislative effect to Pillar Two of the OECD Two-Pillar Agreement.  Against this backdrop, the introduction of a participation exemption for foreign dividends reflects Ireland’s commitment to ensuring that our corporation tax code is competitive and attractive to business investment and aligns with international best practice.  The publication of the feedback statement is a further significant step in the process and I look forward to engaging with stakeholder in relation to the strawman proposal ahead of Finance Bill 2024.”   

Over the course of the last few weeks, we have examined two of the proposals in HMRC’s long planned consultation “Raising standards in the tax advice market” which contains three potential options to regulate the UK tax agent market. This week we are seeking your feedback on option three, regulation by a separate statutory government body, in addition to approaches to strengthen the controls on access to HMRC’s services for tax practitioners. HMRC is also seeking to draft a legislative definition of a tax practitioner to support implementation and sets out the categories of who should be regulated in Chapter 8. Please share your views on this consultation by Tuesday 7 May 2024.   Regulation by a separate statutory government body   More information on this option is set out in Chapter 6. This option would see the introduction of a new independent regulator or expansion of the remit of an existing regulator to regulate tax practitioners. According to the consultation, “a single independent regulator would provide consistency across the market. Having an arm’s length body would avoid potential conflicts of interest arising from HMRC acting as a regulator and avoid a potential race to the bottom.”  The government regulator would set standards, carry out checks on tax practitioners seeking to be regulated, and ensure they meet the required criteria. This could include conducting an annual renewals process to ensure all information is up to date and correct. As is common with professional regulators, this body could have a role in supervising tax practitioners including inspections of tax practitioners on a risk-assessed basis to check they continue to meet expected standards, investigating issues and complaints, and enforcing sanctions.  This regulatory body could introduce “customer support routes” including establishing a complaints process, ensuring transparency, and supporting redress claims. The regulator could be responsible for providing support and guidance to the profession and ensuring tax practitioners receive updates on the latest changes in the tax system.  Within this model there are options about how the regulator could be set up and the role that current professional bodies could play. Current professional body members could be automatically registered with the regulator as they have already undergone a series of checks and professional bodies could retain their role as providers of qualifications and ongoing practice support for their members.  The consultation considers that establishing a new regulator in this way “would provide the opportunity to create a tailored regulatory solution for the market which is adaptable for future needs.”  However, potential problems with this model include that adding a new regulator to an already complicated regulatory landscape for tax and accountancy may cause confusion, and this is likely to be the most expensive of the potential approaches, as it would involve costs for the government and for all tax practitioners. The government sees this approach as a fallback option if the professional body lead approach is not practical or effective. Questions 8-10 specifically seek feedback on this approach.  Access to HMRC’s services for tax practitioners   This aspect of the consultation examines the first step of mandating registration with HMRC for tax practitioners who wish to interact with HMRC on behalf of their clients, and the requirements that HMRC should establish to enable registration.  Alongside the broader proposals on raising standards, the government wants to improve the way that tax practitioners register with HMRC and intends to mandate registration for all tax practitioners who wish to interact with HMRC.   Together with mandated registration, HMRC would automate and streamline the existing registration routes for tax practitioners, with the aim of providing a better service. At the point of registration, HMRC would check that the tax practitioner is compliant with requirements to register for anti-money laundering supervision and is up to date with their tax affairs. HMRC would then periodically reconfirm ongoing compliance with these requirements.   This would aim to provide assurance that registered tax practitioners continue to meet basic standards while interacting with HMRC on behalf of a client.  The government therefore intends to improve registration now, assuring that basic standards are in place for all agent services and is asking for views on the proposal to mandate registration, alongside providing an automated, streamlined way for tax practitioners to register with HMRC.   The consultation recognises that whilst this step by itself is unlikely to fundamentally raise standards in the tax advice market, it would be an essential enabler for a strengthened regulatory framework. It could also be implemented if the broader proposals for a strengthened regulatory framework are not taken forward.  Legislative definition of tax practitioner   As part of this project, the Government also intends to draft a legislative definition of a tax practitioner “as a provider of tax advice and services.” This aspect will be subject to further consultation however the definition will include the following provisions:-  it will cover the full range of business entities operating in the market, that is, individuals, firms, and sole practitioners;  the advice or assistance caught will be  given by way of business, so that friends and family are not inadvertently captured;   provided in relation to UK taxation; and  provided directly, indirectly, or at the request of someone other than the client.  The definition will also set out what is meant by advice or assistance. This will include acting on behalf of a client in their dealings with HMRC or another UK tax authority in relation to tax. Depending on the scope of the regulatory framework, it may also include advising a client in relation to tax. Questions 25 and 26 of the current consultation specifically deal with this aspect.   

In recent weeks we have issued several reminders that 30 April 2024 is the deadline for the end of the VAT margin scheme for second hand vehicles moved to Northern Ireland from Great Britain prior to 1 May 2023. If these vehicles are sold after 30 April 2024, VAT will therefore be chargeable on the full selling price and not on the margin made. At the request of HMRC, Chartered Accountants Ireland gathered evidence recently from local car dealers which demonstrates that many dealers are still experiencing delays in selling these vehicles for a range of reasons, including the economic environment and delays in MOT testing. Click read more for an update on our recent meeting with HMRC on this issue. The Institute met at the end of last month at the request of HMRC with their VAT policy team to discuss and present the evidence gathered from local dealers. The Institute also explored the potential for either removal of the deadline, a type of amnesty, or another extension.  Readers are advised that HMRC is insistent that the deadline remains 30 April 2024 and that there will not be a further extension. According to HMRC, a deadline is required for “legal certainty”. Despite presenting evidence of the ongoing difficulties being experienced in selling these vehicles, it is disappointing that the cliff edge deadline of 30 April 2024 remains in place.    

The Department of Finance and the Department of Public Expenditure, NDP Delivery and Reform have published the Fiscal Monitor for March 2024. Tax revenues to the end of March were €20.1 billion, €0.3 billion ahead of last year but behind target due to decreased corporation tax receipts. The Exchequer surplus for the first quarter of 2024 of €0.3 billion compares to a deficit of €2.1 billion in the same period last year, with a surplus of €3.5 billion recorded on a 12-month rolling basis.  Notably, corporation tax receipts decreased by €0.7 billion to €1.9 billion, with indications suggesting this reflects timing issues. At €7.9 billion, income tax receipts remained solid, up 7.6 percent and reflecting continued resilience in the labour market. VAT receipts increased by 5.4 percent to €7.1 billion but were slightly behind target.  Commenting on the figures, Minister McGrath noted:  “The first quarter figures are, in many respects, a continuation of the pattern evident in the second half of last year, with steady growth in income tax and VAT receipts but with significant volatility in corporation tax revenues.  The performance of the income tax and VAT tax heads provide evidence of a domestic economy that is performing well, notwithstanding continuing international headwinds. With record employment levels, the labour market remains in robust shape. As inflation continues to fall, the vast majority of households will experience a gain in income in real terms across this year, resulting in improved living standards overall.  While it is expected that the fall in corporation tax this month relates to timing issues and is likely to be made up later in the year, it serves to remind us of the inherent unpredictability in what is a highly concentrated revenue stream.  This volatility, and the concentration of these receipts, underpin the Government’s policy of establishing longer-term savings vehicles – the Future Ireland Fund and the Infrastructure, Climate and Nature Fund – that will help future-proof our public finances.” 

Following recent amendments to the Debt Warehouse Scheme, Revenue has updated the guidelines for Phased Payment Arrangements (PPA). The updated guidance highlights the necessity for Debt Warehouse customers to either pay their liability in full or enter into a PPA prior to 1 May 2024 in order to avail of the reduced interest rate of 0 percent (sections 1 and 5).  The 'Key features of a PPA' are detailed in Section 6 for ease of reference, with all sections updated to reflect Revenue flexibility in terms of a PPA, including reduced down payments, longer repayment periods, and the option to take a payment break. 

The Defective Concrete Products Levy (DCPL) applies to the ‘first supply’ of certain concrete products on or after 1 September 2023. The levy is chargeable on the open market value of the concrete products that are within the scope of the levy, on the date of their first supply. The person who makes a first supply of a concrete product which is within scope of the DCPL is the chargeable person in respect of the levy. Revenue has updated the Tax and Duty Manual regarding the DCPL to provide for a simplification measure in certain circumstances.   For the purposes of determining the levy due in respect of a supply of ready to pour concrete where the price includes related delivery and haulage costs, the chargeable person may apply a fixed average percentage rate to calculate the portion of the cost which relates to delivery and haulage which is not subject to the levy. The percentage applied to the haulage and delivery costs may not, in general, exceed 25 percent of the overall cost.  The chargeable person must maintain evidence for the basis of the cost apportionment between the ready to pour concrete product and the related haulage and delivery costs.