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The Next Financial Year: Supporting Business Through Recovery

The Next Financial Year is the Institute’s annual position paper representing the aspirations and concerns of our 30,000-strong membership through a smart and realistic set of proposals that, on adoption, would work hard for businesses all around the island of Ireland.

Last year, The Next Financial Year considered life after the pandemic and how to create a better business environment to restore economies and employment. In 2021, as we emerge from the Covid-19 restrictions, we have brought this up to date by drawing on members’ experience of handling the crisis and proposing to government approaches that could be applied in the ‘new normal’ circumstances. What have we learned in the past year about what would make life easier for businesses? The emphasis is again on small and medium enterprises and their crucial role in the recovery.

Many of the ideas and proposals that we submitted last year have been adopted by governments in both jurisdictions. As a result of the unprecedented economic disruption of the pandemic, we know that there will be greater government involvement in economies this coming year. Chartered Accountants have a unique role to play in the recovery, but also have a unique insight into what needs to be done by business as it engages with government and the statutory authorities. Through this publication, and the invaluable perspectives of our members and stakeholders who contributed to it, we are calling for interventions that drive efficiency and sustainability and contribute to a better, more supportive environment for business.

In this 2021 edition of The Next Financial Year, we prioritise the interaction between business and government in the areas of sustainability, digital transformation and business compliance. We emphasise opportunities for efficiency rather than merely seeking handouts or additional supports. There is a marked similarity in the challenges faced both North and South on our island.

read the full position paper

Summary of proposals

For the next financial year, to support businesses as they emerge from the unprecedented economic challenges of the Covid-19 pandemic, our key proposals include:

Ireland

  • The facility for directors and company secretaries to use verifiable electronic signatures throughout the company compliance system.
  • Making permanent the Companies Act provisions allowing general meetings and creditors’ meetings to be held virtually.
  • Removing the audit requirement penalty for small and micro companies late in filing annual returns and replacing this with a system of fines.
  • A cost/benefit analysis to consider the reduced interest rate of 3% on unpaid tax debt available under the Tax Debt Warehousing Scheme being applied on a permanent and general basis.
  • A new ‘super-deduction’ capital allowance regime for a limited period (two years), providing companies a 130% capital allowance deduction for investments in plant and machinery.
  • A temporary legislative remedy to allow proprietary directors to claim a full credit for PAYE tax already in the Tax Debt Warehousing Scheme.
  • Reforming tax rules to align with remote working practices and fairly reflect the costs for businesses and employees of working from home.
  • The commercial rates waiver for businesses whose trade is impacted by the public health restrictions should continue until at least the end of 2021.
  • Considering lower capital tax rates (CGT and CAT) to drive a surge in business and personal transactions.
  • A consistent long-term strategy for the State Pension, including eligible age increases, which should be communicated 10 years in advance.
  • Allocating all revenues from increasing carbon taxes to climate action initiatives.
  • An enhanced R&D Tax Credit to fast track the development of technology making renewable energy cheaper and more readily available.

Northern Ireland

  • The Northern Ireland Executive should revisit the potential to set a regional corporation tax rate and assess the potential to set other rates of taxation locally.
  • Continuing HMRC-administered Covid-19 supports for businesses as they reopen – extending the Coronavirus Job Retention Scheme and the Self-Employed Income Support Scheme to the end of 2021.
  • The automatic deferral of self-assessment tax debt for amounts up to £30,000 should also be available for 2020/2021 and extended to other taxes to allow self-employed businesses breathing space to focus on survival as they reopen.
  • The reduced VAT rate of 5% for the hospitality sector should remain until at least 31 March 2022, when it should then move to an interim level of 12.5% for at least six months.
  • Developing fairer and more accessible tax rules for remote workers, including a re-evaluation of ‘normal place of work’ for tax purposes and the rules for tax deductible expenses of employment.
  • Doubling the cash basis threshold for unincorporated property businesses from £150,000 to £300,000 for 2020/2021 and 2021/2022.
  • A new HMRC advisory service (‘helpline’) should be set up for insolvency practitioners seeking clarity on whether HMRC will accept voluntary arrangements or Part 26A restructuring plans.
  • Fully relaunching and improving the service levels of HMRC’s Agent Dedicated Line.
  • HMRC’s approach to tax debt management through bespoke schemes and agreed Time to Pay should continue to be empathetic to businesses struggling with public health restrictions.
  • Maintaining the current rates of capital gains tax.
  • Reviewing Business Asset Disposal Relief, including an evaluation of the impact of the reduced lifetime limit (£1m from £10m) on entrepreneurial behaviour.
  • Tailoring R&D Tax Relief to facilitate the economic recovery of SMEs by expanding the categories of qualifying expenditure and accelerating the payment of the tax credit to claimants.

Key contacts

Brian Keegan
Director, Advocacy and Voice
Tel: +353 1 637 7347
brian.keegan@charteredaccountants.ie

Michael Diviney
Executive Head of Thought Leadership
Tel: +353 1 637 7379
michael.diviney@charteredaccountants.ie

Norah Collender
Professional Tax Leader
Tel: +353 1 637 7206
norah.collender@charteredaccountants.ie

Leontia Doran
Taxation Specialist (Northern Ireland)
Tel: +353 1 523 3914
leontia.doran@charteredaccountants.ie

Cróna Clohisey
Public Policy Leader
Tel: +353 1 529 3964
crona.clohisey@charteredaccountants.ie

Dee Moran
Professional Accountancy Leader
Tel: +353 1 637 7344
dee.moran@charteredaccountants.ie

Níall Fitzgerald
Head of Ethics and Governance
Tel: +353 1 637 7382
niall.fitzgerald@charteredaccountants.ie

 

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