Thought Leadership News

The experience of working remotely, of having our contact with colleagues and customers mediated through technology, has highlighted the need to think about the positive role humour can play in closing the gap between people, in creating a feeling of togetherness and inclusion, where people can bring their whole selves to work. In their book Humour, Seriously: Why Humour is a Superpower at Work and in Life, Jennifer Aaker and Naomi Bagdonas argue that organisations and teams perform better if they allow room for laughter.  Teams that can laugh together demonstrate better communication and problem-solving skills. And laughter, if used appropriately, is a valuable tool for leaders.  Aaker and Bagdonas report their research finding that employees who regard their bosses as having any sense of humour rate them as 23% more motivating.  This kind of edge can make a big difference, given the influence this relationship can have on people’s happiness.  According to Tera Allas and Bill Schaninger, writing in the McKinsey Quarterly, relationships with immediate management is the top factor in employees’ job satisfaction, which in turn is the second most important determinant of employees’ overall satisfaction with their lives.  Having a boss with a positive, inclusive sense of humour can be a life-changer. As any good salesperson will tell you, humour can be a highly effective way of defusing tension in a high-stakes situation, when pitching for business or presenting to a client.  If it lands well and works, humour can break down barriers, connecting people and building relationships. But, of course, there are risks: the joke may fall flat, the story fail.  Humour by its very nature is a gamble. It involves risk, a leap of faith (particularly when attempted on a Zoom call!). Cultures of countries and organisations differ, and some people may be uncomfortable with the use of humour in serious situations, including work.  Humour may even be seen as subversive, out of place, gauche, unprofessional. Clearly, to be effective, the use of humour should not be offensive or hurtful in any way and it should accommodate diversity.  While a sense of humour can be quite a personal taste, at work its flavour should always be appropriate, conscious of difference, tapping into things that are universally funny, starting with shared experience. For leaders of teams and organisations, though there are definite benefits to the use of humour, there are also heightened risks.  All managers will want to avoid being seen as another David Brent, the frustrated all-round entertainer of The Office.  Aaker and Bagdonas point to the importance of leaders being aware of their own style of humour, which can range from the edgy to the self-deprecating.  One leader can tease without offending, another can reveal vulnerability without losing respect. It’s a fine balance, but humour at work is worth the risk, and the risk can be mitigated. Self-awareness is the key: balancing the natural spontaneity of laughter with a sense of its appropriateness and effect on others, observing rules such as ‘never punch down’ or ‘carry a bag of good stories’.  Be aware of your style, be sensitive, inclusive and recognise difference. Humour is one thing that AI and the robots will never replace.  For the individual, laughter is a tonic, a stress buster.  For teams of people, shared laugher is a powerfully inclusive experience.  It engenders trust, collaboration and creativity.  And the world knows we could all do with a laugh. Michael Diviney is Executive Head of Thought Leadership, Chartered Accountants Ireland

  Originally posted on Business Post 6 June 2021. Vat is to all intents and purposes invisible, although for many of us it eats into our disposable income to a much greater extent even than income tax.  On a day when they announced business supports to the value of hundreds of millions of euro, it must have been profoundly irritating for government ministers to see the relatively minor increases in local property tax grab the lion’s share of the headlines. The employer wage subsidy scheme alone has cost the state almost €4 billion to date, and is now being extended to the end of this year. In comparison, LPT has never raised more than around €500 million a year and, even with the projected changes, is unlikely to raise significantly more than that in the future. Yet it is the LPT change that gets the attention. Another tax hike announced last week isn’t getting nearly the same coverage. The Revenue Commissioners have announced that, with effect from July 1 next, they will apply the full rigours of the EU Vat regime to online purchases from non-EU countries. Unlike the revamp of LPT, the change has been met with a national shrug of the shoulders. Like customs duties, excise and carbon taxes, Vat is to all intents and purposes invisible, although for many of us it eats into our disposable income to a much greater extent even than income tax. It adds to the cost of our purchases as consumers, and there is no way to avoid or circumvent it. A Vat rate of 23 per cent applies to many of the goods which make life more enjoyable – cars, most clothes, cosmetics, electronic gadgets of all sorts and white goods. Any consumer buying these types of goods online from outside the EU is not charged Vat if the individual item costs less than €22. From July 1, that practice will cease including for some items which attract lower Vat rates. This may not seem like a big change in the overall scheme of things because the €22 threshold is fairly low. Nevertheless, removing the exemption reinforces the notion that you're always better off dealing with an EU business. Any possible tax saving by shopping online further afield is removed, but the bonus of better regulation and consumer protection when dealing with an EU based supplier remains. Aside from reducing paperwork, it makes little sense to have any form of preference for non-EU suppliers over domestic or EU suppliers, particularly as we exit from the pandemic. Irish business needs every competitive advantage it can secure. Will there be any pushback to this change? Given the increasingly febrile nature of the relationship between Britain and the rest of the EU, this move could well be seen as another gesture by the EU against a post-Brexit Britain by applying Vat charges to Irish consumers buying from British websites. Unfortunately, a fundamental dishonesty, similar to that seen in the 2016 Brexit campaign, is creeping back into the post-Brexit discourse. Edwin Poots, the new DUP leader, has already claimed that the EU is seeking to punish Britain in its application of the Northern Ireland protocol. That view is overly simplistic because it reflects only the commercial disruption created but not the commercial advantages conferred by the protocol. The EU’s ambassador to Britain last week retorted that Brexit, not the protocol, created the problem but that too is overly simplistic. Having managed to control the Brexit negotiation process for so long, the EU allowed itself to be bounced into enforcing impractical arrangements on Christmas Eve last year. The single market would not have been particularly compromised by allowing a further period of trial on new controls and procedures on imports and exports between Britain and the North beyond the Brexit guillotine date of January 1 last. The irony is that this Vat change doesn’t change the treatment of consumer purchases from the North because the North was part of, and remains part of, the EU Vat system for goods. Nor is Britain being singled out by the change, because it applies to purchases from any non-EU country. This is what you would expect, as the EU policy was devised when Britain was still at the table in Brussels. Both the Vat changes and the LPT changes announced last week underline that when it comes to taxes we generally respond primarily by reference to what we last experienced. Consumer reaction to a Vat change is usually a shrug of the shoulders, because the prices of consumer items go up and down all the time and consumers will be indifferent to the Brexit implications. Similarly, our reaction to the LPT change is being informed by the lower amount, or the zero amount, we paid last year. It doesn’t seem to matter that the LPT system as it currently operates works from an out-of-date property register, nor that some measures to raise taxes are inevitable because of the costs of extending the pandemic supports to citizens and businesses. We shouldn’t be surprised if the government is frustrated by the response to the Economic Recovery Plan. Taxation is always a stone in the political shoe. Dr Brian Keegan is Director of Public Policy at Chartered Accountants Ireland

  Originally posted on Business Post 30 May 2021. There are important tax implications for employers as they prepare for the winding-down of the pandemic supports.   ‘The caveats associated with the withdrawal of government pandemic supports should not diminish the air of excitement about the prospect of the return to normal business.’ Almost every sector of the economy has benefited from a tax system which, more than a year ago, was thrown into reverse to distribute financial support during the pandemic closures. While there is much talk about the “new normal”, elements of the old normal are going to return. The Revenue Commissioners will soon cease adhering to the belief that it is better to give than to receive. There are of course many issues that businesses which are reopening have to deal with – stocking, premises, staffing, health and safety, debtors, creditors and banking arrangements. As well as these, there are consequences as the government pandemic supports come to an end. Pandemic supports have created three categories to think about. Employees who had to be laid off entirely were more than likely receiving Pandemic Unemployment Payments (PUP) of up to €350 a week. It is up to the employee to notify the Department of Social Protection that they have returned to the workforce. Employers need to be aware that the employee’s tax credits could have been restricted earlier in the year to account for income tax due on the PUP, and the employee might not get into their hand as much as they expected after PAYE. Employees who were on the Temporary Wage Subsidy Scheme (TWSS), which was the first wage subsidy from April of last year, may also have less after-tax income than they expect. This is because of the way the TWSS operated – not all the tax due was gathered through payroll. Workers have an opportunity to spread whatever back taxes from 2020 are due out over the next four years. There is also an option for an employer, should they wish, to settle their employees’ tax liability without further tax consequences either for themselves or the employee. This option runs out in September 2021. In the third category, employees who are on the Employment Wage Subsidy Scheme (EWSS) will not have a back tax issue. EWSS replaced the TWSS and has operated since last September. The scheme allows employers and new firms where turnover has fallen by 30 per cent to get a flat-rate subsidy per week based on the number of qualifying employees on the payroll, including seasonal staff and new employees. Eligibility for the EWSS may continue for the next few weeks even though a business is reopening, provided the reduced turnover criterion for the business remains valid. There are signals that, for some sectors at least, the EWSS could be extended beyond the June 30, 2021 deadline. If the experience in Britain, which is reopening a few weeks ahead of us, is anything to go by, many of the businesses commencing or extending trading again will experience a surge in demand, and a parallel need to enhance conditions or provide more flexible arrangements to attract or retain staff. The tax system remains notoriously inflexible when it comes to staff arrangements. It is almost impossible to broker arrangements whereby current or former employees can be treated as self-employed contractors for part or all of the time they work. It is possible to provide equipment to staff if they can work from home, but the reimbursement of working from home expenses without operating PAYE is limited to €3.20 per day. The consequences of getting employment status or expenses reimbursement wrong almost always land on the doorstep of the employer. One of the better pandemic relief measures for businesses was the strategy of allowing them not to pay over Vat, PAYE and direct taxes as they fell due, but defer them into a “debt warehouse”. Businesses which were affected by the first lockdown last year and which entered the debt warehousing scheme will find that interest will start to be charged on the unpaid tax at a rate of 3 per cent from September 1 next. There is room in the law as currently drafted to extend that September 2021 deadline to December 2022, which would be a great help. For now, if that tax is owing, businesses should budget for interest charges from September next. There is a particular wrinkle on tax debt warehousing for proprietary directors. Even though the PAYE on the income of proprietary directors may have been warehoused by the company, the director will not receive credit for warehoused PAYE on their own tax returns and will have to make a separate application for tax debt warehousing in their personal capacity. The Covid Restrictions Support Scheme (CRSS) was offered to businesses which had to prohibit or restrict customers from entering the business premises. CRSS is worthwhile, with a maximum weekly payment of up to €5,000. There is an arrangement called the restart week, which means that a business can claim double “restart week” payments for a period of two weeks on reopening. While CRSS does not need to be refunded directly, CRSS claims can add to tax liabilities in future years. There was also a waiver of commercial rates for businesses which were forced to close over the lockdown. That waiver expires at the end of June. The caveats associated with the withdrawal of government pandemic supports should not diminish the air of excitement about the prospect of the return to normal business. Last Friday’s announcements concerning the hospitality, travel and events sectors signal what is permissible, even though they are not a guarantee of what is possible. In the rush to get back to normal, it is worth remembering that the state is as anxious for businesses to reopen as the businesses themselves are. The pandemic supports can’t be paid for ever. Dr Brian Keegan is Director of Public Policy at Chartered Accountants Ireland