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Last feed update: Sunday October 22nd, 2017 05:06:12 PM

IAASB’s Group Audits Task Force updates audit project

Friday October 20th, 2017 02:28:55 PM
The International Auditing and Assurance Standards Board (IAASB)’s Group Audits Task Force has issued an update of the group audit project. The project update outlines the issues under consideration in the revised International Standard on Auditing (ISA) 600, Special Considerations‒Audits of Group Financial Statements, and other projects that address additional international standards. This includes: ISA 220, Quality Control for an Audit of Financial Statements, and International Standard on Quality Control (ISQC) 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements.  ISA 600 deals with special considerations that apply in audits of group financial statements (group audits). Many of the requirements of ISA 600 are, therefore, drafted in the context of requirements in other standards. As noted in Enhancing Audit Quality: Project Proposal for the Revision of the IAASB’S International Standards Relating to Quality Control and Group Audits (project proposal), the IAASB recognizes that there is a strong linkage between the IAASB’s work to clarify and strengthen ISA 600 and the projects to revise other standards, in particular ISQC 1, ISA 220, and ISA 315 (Revised). The project update also reports some foundational issues to be dealt with in the ISA 600 revisions need to be first considered and addressed in these other projects, i.e., such that the Group Audits Task Force can appropriately build on the revised requirements and application material in making necessary revisions to ISA 600. Finally, the Group Audits Task Force is working cooperatively with the task forces responsible for the revisions of ISQC 1, ISA 220, and ISA 315 (Revised) and providing input as proposed revisions to these standards progress. This interaction with the other task forces will enable the Group Audits Task Force to be well positioned to reflect the revisions to these other standards in the context of ISA 600, and provide the additional context of the special considerations relevant to their application to group audits.

Extending working lives could increase OECD GDP by $2 trillion, says PwC

Friday October 20th, 2017 01:57:15 PM
OECD countries could add around $2 trillion to their total gross domestic product (GDP) in the long run if the employment rate for workers aged over 55 was equal to best-performing EU country Sweden, according to PwC economists.  The PwC Golden Age Index is a weighted average of indicators – including employment, earnings and training – that reflect the labour market impact of workers aged over 55 in 34 OECD countries, including Ireland.  “Between 2015 and 2035, the number of people aged 55 and above in high-income (OECD) countries will grow by almost 50% to around 538 million. It’s good news that we are living longer, but rapid population ageing is putting significant financial pressure on healthcare and pension systems. To offset these higher costs, we think older workers should be encouraged and enabled to remain working for longer. This would increase GDP, consumer spending power and tax revenues,” said John Hawksworth, PwC Chief Economist, commenting on the report. The potential long-term GDP boost varies significantly across countries, from around 1% in Korea and 2% in Japan, 5.4% in Ireland  to around 16% in Greece. Other countries lagging behind in the index could also experience large gains, such as Belgium (13%) and Slovenia (12%). Given its size, the US has the largest potential absolute gain of around $0.5 trillion, around 3% of GDP.  “The clear positive correlation between country scores on our Young Workers and Golden Age Indices suggests that the employment of older workers does not crowd out younger workers. And our research also indicates that the flexible working policies offered by the best-performing countries in the Golden Age Index also incentivise women to remain in work for longer,” commented John Hawksworth.    You can read of the PwC Golden Age Index here.

Professional job vacancies up 9% in September

Friday October 20th, 2017 01:41:35 PM
The number of professional job vacancies in Ireland increased by 9% in September compared to the same month a year ago, and were up 2% sequentially since August, according to the Morgan McKinley Ireland Monthly Employment Monitor. There was a 13% increase in the number of professionals seeking jobs in Ireland in September compared to the same month a year ago.    Karen O’Flaherty, Chief Operating Officer, Morgan McKinley Ireland, “The professional jobs market rebounded strongly throughout September with higher levels of recruitment activity which were balanced by an equivalent level of mobility within the professional workforce. “We are seeing continuing buoyancy in the sciences, aligned to growth in the food industry; financial services, aligned to Brexit, particularly in the fields of risk and compliance management; and data compliance, aligned to the advent of GDPR where there is major demand for Data Process Officers and Project Managers. ICT remains a powerhouse of the Irish economy driven by high demand for engineering, cloud computing and digital talent. " You can read more about the Morgan McKinley Ireland Monthly Employment Monitor on the Morgan McKinley website.

BEPS project driving major changes to international tax rules

Friday October 20th, 2017 01:30:51 PM
Governments have dismantled, or are in the process of amending, nearly 100 preferential tax regimes as part of the OECD/G20 BEPS standards to improve the international tax framework, according to a progress report. The report provides details on the outcome of peer reviews undertaken of 164 preferential tax regimes identified amongst the more than 100 jurisdictions participating in the OECD Inclusive Framework on BEPS. The OECD/G20 BEPS Project delivers solutions for governments to close the gaps in existing international rules that allow corporate profits to “disappear” or be artificially shifted to low or no tax environments, where companies have little or no economic activity. Revenue losses from BEPS are conservatively estimated at USD 100-240 billion annually, or the equivalent of 4-10% of global corporate income tax revenues. The BEPS Action 5 standard covers tax incentives (“preferential tax regimes”) that apply to mobile business income, such as financial and services income and income from intellectual property, which multinationals can shift with relative ease. To avoid a race to the bottom and negative spillover effects on other jurisdictions' tax bases, all 102 members of the BEPS Inclusive Framework have committed to ensuring that any regimes offered meet the criteria that have been agreed as part of BEPS Action 5. Crucially, this includes a requirement that taxpayers benefiting from a regime must themselves undertake the core business activity, ensuring the alignment of taxation with genuine business substance. The Action 5 Progress Report on Preferential Tax Regimes includes the review of 164 preferential tax regimes offered by Inclusive Framework members against the Action 5 standard. Of the 164 regimes reviewed in the last twelve months 99 require action and for 93 of these 99 regimes, the required changes have already been completed or initiated by Inclusive Framework members. 56 regimes do not pose a BEPS risk and nine regimes are still under review, due to extenuating circumstances such as the impact of the recent hurricanes on certain Caribbean jurisdictions. "Harmful tax practices are a particularly aggressive way through which jurisdictions can encourage the erosion of other jurisdictions' tax bases," said Martin Kreienbaum, Chair of the Inclusive Framework on BEPS. "It is critical that they be addressed, to protect the level playing field and prevent a race to the bottom. The Inclusive Framework's peer reviews are resulting in real changes to these tax incentives, making it harder for multinationals to artificially shift their profits around the world for a tax advantage." Inclusive Framework members have agreed an timeline, whereby jurisdictions whose regimes have harmful features are expected to adjust their regimes as soon as possible and generally no later than October 2018. You can read the full report on the OECD website.

Brexit at the half way mark

Friday October 20th, 2017 01:22:07 PM
At the Brexit half way mark, should we prepare for the worst or hope for the best? We are now at a point nearly equi-distant from the holding of the Brexit referendum in June 2016 and the actual Brexit date in March 2019 and, rather worryingly, negotiations on the UK’s future relationship with the EU (or on transitional arrangements after 2019) have not begun and will not commence for at least another two months, after EU leaders determined last week that “sufficient progress” has not been made in the first stage of the talks covering the Brexit bill, the Irish border and EU citizens’ rights. Businesses trading with the UK are, at this half way mark, still unsure when trading systems will change and what form of relationship the UK and the EU will have after Brexit.  State institutions are in no different a position.   On the more pessimistic side of the argument, Revenue recently published a draft working paper on Brexit entitled ‘Brexit and the consequences for Irish customs’.  Dated on September 2016, the draft paper represents a candid and realistic overview of Brexit challenges from the point of view of Revenue at that time.   On the infrastructure front, Revenue expect to require additional customs inspection facilities at Dublin and Rosslare ports to deal with roll on/roll off traffic.  On road traffic travelling across the Irish border, Revenue had cause to state: “While some form of common travel area may exist post Brexit, a completely open border is not possible from a customs perspective’ and: ‘it is probably somewhat naïve to believe that a new and entirely unique arrangement can be negotiated and applied to the IE/UK land frontier.” The number of border checkpoints required was estimated at between four and eight, spread over the length of the 500km border. On top of physical checkpoints, the report also foresaw the need for “a visible regime of mobile patrols and checkpoints’ for the remaining ‘multitude of unapproved routes to deter and detect abuse.” It is important to note that Revenue’s working paper does not, at this time, represent the official view of the organisation. It is hoped by all sides in the political debate (Ireland, UK and EU) that it will not be necessary to have any customs border infrastructure in place at all post-Brexit. Some hope that the UK will remain (despite what the UK government is saying) in a form of customs union obviating a need for customs infrastructure.  Others hope that, post-Brexit, the Irish Border will be subject to special arrangements not seen along other external EU borders because of the security/peace process considerations peculiar to the Irish border region. Most Brexit advisory firms are counselling Irish businesses to prepare for the worst, and hope for the best. While it might not be palatable to hear about border posts and mobile patrols along the border, it is reassuring that these matters are being considered in earnest. Eoin O’Shea is a practising barrister, specialising in tax and commercial law.   

In conversation with... Ciara McMullin

Friday October 20th, 2017 11:22:23 AM
What is a basic overview of the European Commission’s plans? The European Commission has outlined the measures to be implemented in preparation for a single European VAT area. These build upon the changes already proposed to the VAT system, in particular the 2016 VAT Action Plan and the digital economy proposals, and propose the following: The Cornerstones - a series of fundamental principles for a definitive VAT regime.  Four Quick Fixes - on a short-term basis with a view to improving the day-to-day functioning of the current VAT system, while a definitive regime is agreed and implemented. Certified Taxable Person - a concept similar to the Authorised Economic Operator (AEO) status already in operation for customs purposes, to be granted by national tax authorities but mutually recognised by all Member States, allowing a reliable taxpayer to benefit from certain simplifications and time-saving mechanisms.  What are the proposed changes to the VAT system? The cornerstones of the proposed VAT system are: Tackling fraud by introducing the principle of taxation at destination for intra-EU cross-border supplies. (Initially, this will be implemented for goods, then services.)  Greater consistency and the confirmation that, as a general rule, the vendor is liable for charging and collecting the VAT of the Member State of destination. (This is already in place for e-services.) Create a one stop shop by extending the current single online portal for e-services, allowing businesses to look after the cross-border VAT obligations in their own country in their own language. The deduction of input VAT outside a business’ home country will also be allowed and Member States will remit the VAT to each other directly. Less red tape by the simplification of VAT invoicing rules, allowing sellers to prepare invoices further to the rules in operation in their own country. Companies will also no longer have to prepare a list of cross-border transactions for their tax authority (VIES/ESL/recapitulative statement). Abuse of the current VAT system for business-to-business intra-EU trade has resulted in so-called missing trader fraud or carousel fraud.   In preparation for a definitive VAT regime, four quick fixes are proposed. The first three are simplifications available to certified taxable persons only in the areas of “call-off stock arrangements”, chain transaction situations identifying the supply with which the intra-Community transport of goods should be linked, and proof of transport of goods between Member States needed for the application of the zero rate to intra-Community supplies. The fourth will provide clarification that, in addition to the proof of transport, the VAT number of the commercial partners recorded in the electronic EU VAT-number verification system (VIES) is required for the cross-border VAT exemption to be applied under the current rules.  What are the benefits and possible downfalls of the proposed plans? The proposed plans, if adopted, will have a significant impact on all stakeholders. Extension of the one stop shop should make it simpler for companies with intra-EU trade to manage their VAT compliance obligations, but these measures will place significant cost and resource burdens on businesses, e.g. significant investment will be required in IT and infrastructure costs, training of staff etc.     Timing will also be a challenge, as the Member States will have to agree on the practicalities of collecting and remitting VAT. With modernising the VAT system as the objective, perhaps the European Commission should have taken the opportunity to include the concept of real-time collection of VAT or even embraced the use of blockchain technology. How will the proposed system help fight fraud? Currently, goods are moved cross-border between Member States free from VAT with the tax only becoming due when in the hands of the ultimate purchaser or consumer. However, the implementation of a single, robust European VAT area where cross-border trade is treated similar to domestic transactions should reduce opportunities for supply chain intermediaries to ultimately reclaim VAT they never paid. Carousel fraudsters should no longer be able to exploit the inbuilt weaknesses of the system to the same extent. When could we see this implemented?  With a view to facilitating a smooth transition and allowing time for fiscal authorities and businesses to ready themselves for the rebooting of the VAT system, a two-step approach has been put forward. The technical provisions and formal proposal required to operate a definitive VAT system, envisaged to take effect by 2022, will be published in 2018.  However, the current plan foresees that transitional measures (the four quick fixes and the concept of certified taxable person) will be operational by 2019, pending timely passage through the European Parliament and unanimous agreement of the Council of Ministers.  Ciara McMullin ACA is a Senior Manager in Deloitte Ireland’s Indirect Tax department and is based in the Galway office.

Data visualisation: a key skill for Chartered Accountants

Friday October 20th, 2017 09:56:52 AM
Chartered Accountants are known for having high levels of competence in Excel and but rarely have a matching skill level in PowerPoint. Accountants don’t regard the presentation of their data as a mission critical skill even though the goal of our data analysation is to communicate information clearly and efficiently to executives and clients. Instead, it’s often seen as something to be used to humour executives during big meetings.  When we asked accountants to rate their skills out of five, they consistently rate their Excel skills at four (with a suggestion that modesty featured as a constraint) and their PowerPoint competence at two (with a suggestion that this might be more than PowerPoint deserved).   We rate our Excel acumen so highly because we are experts only at what we do, and we practice the same Excel actions a lot. The sporting adage of “use it or lose it” is particularly apt for technology where reflex keyboard actions and habit all but blind us to changes in the environment.  Excel can change but most of us are too busy to notice and just carry on doing what we always did the way we always did it. Keeping yourself abreast of current updates in Excel is just as important to your job as the output that you get from the programme. The PowerPoint and data visualisation requirement is very different.  As referred to earlier, skills here are lower and discussions with accountants indicate that this is largely down to two misconceptions:  one, that with advances in Excel dashboard functions and general flexibility, PowerPoint will diminish in importance as a tool for presentations of financial information; and two, that data presentation skills are not really core for accountants.   Both are seriously wide of the mark. First, Microsoft explicitly places PowerPoint front and centre in their plans to develop tools (including Excel and Power BI) to improve the way data is converted to information and shared.  Second, Chartered Accountants have a vital role in helping line managers acquire the information they need to make financially informed decisions and therefore a duty to make sure that the information is clearly understood.  Data visualisation enables decision makers to see analytics presented simply, helping them grasp difficult concepts or identify new patterns in the data. Presenting numbers and financial statements in traditional formats that are comfortable for accountants but obscure to others is lamentable, especially when less than a dozen easily acquired techniques can transform the way people react to and benefit from presentations.  Building on your skills in Excel and transferring those skills into more advanced data visualisation programmes like PowerPoint can really help you to add value to your organisation and advance your career.   Jack Foley is a director in FaB Practice Ltd and a trainer in digital visualisation with Professional Training. Damien will be delivering the course Data visualisation with Excel and PowerPoint for accountants on 30 November 201.

Brexit Bites, 20 October 2017

Friday October 20th, 2017 09:03:18 AM
EU leaders have gathered in Brussels where they will decide whether the Brexit negotiations can move on to the subject of trade.  In other news, we look at why the financial settlement is causing such debate and we also examine a paper released by Revenue showing the trade and tax links between Ireland and the UK. All eyes on Brussels EU leaders have gathered in Brussels for a crucial EU Summit and are assessing the progress made so far in the Brexit negotiations.   A decision will be made at the end of two days of meetings as to whether the talks can move on to trade.  The EU has made it clear that this can only happen if there is sufficient progress made on the financial settlement, citizens’ rights and Northern Ireland. It’s been reported that the UK Prime Minister Theresa May made a plea to the EU 27 to allow talks to move on to trade at a dinner last night.  She asked that the EU and UK work together to achieve a good deal for their respective citizens. The German Chancellor Angela Merkel struck a positive tone regarding the talks reportedly saying that she doesn’t believe there is any reason that talks would not be successful.  She urged both sides to be clear about the details of the future relationship. The EU 27 are expected to start talking internally about trade later today, once Theresa May departs the summit. Taoiseach Leo Varadkar, who is attending the Summit said he was encouraged that the other EU Member States understood the particular issues Brexit brings for Ireland and Ireland has their support. It’s come down to money Five rounds of negotiations have completed and its stalemate. The EU have categorically said that talks cannot progress until the divorce bill, among other matters have been clarified.  The UK Prime Minister said in her speech in Florence that "the UK will honour commitments we have made during the period of our membership". So what’s the issue? The problem could very well lie in the way the EU funds future projects. The Reste à Liquider (RAL) is the term given to the EU’s unfunded future liabilities.  The way the RAL works is that rather than seek funds from member states upfront, the EU commits to expenditure on infrastructure and other projects on the assumption that Member States will continue to fund it.  For example the EU might agree to fund a €200 million project over two years but might only receive the money from other EU Members States over a six year period. Therefore there is a gap between income and liabilities and sometimes this difference can be significant. It’s reported that it currently stands at over €230 billion.   So with projects completed now and funded later, what happens if the UK leaves EU during this time lapse?  And this is the very problem the EU has. When Theresa May says the UK will honour commitments but offers no practical detail, the EU is left wondering whether the UK will honour all of its commitments. Article 50 doesn’t say anything about financial settlements once a country has departed the EU so we are in unchartered legal waters. Some Brexit supporters see any payment as being a form of goodwill rather than an obligation. The EU sees it differently and therein lies the quandary. Revenue analysis of the Ireland/UK links Revenue has published a paper “Ireland and UK - Tax and Customs link” which examines the customs implications of trade flows between Ireland and the UK and the tax contributions of Irish based businesses that have links to the UK.    The analysis looks at trade flows by road, sea and air and concludes that, as expected, there are widespread linkages between the Irish and UK economies.  While ties to Northern Ireland are found to be more limited, they are more concentrated in the agri-food sector.  The report says that while Brexit will not eliminate these trade flows and the Exchequer will still benefit, there will be a change or a decrease in the trade patterns.   The report looks at the tax paid by businesses in border counties and finds that PAYE and VAT make up the largest contributions, with the biggest employers operating in the agri-food, retail and construction sectors.  The report also notes the importance of multinational companies for Irish tax receipts. In terms of trade, 86 percent of excisable products such as alcohol, tobacco and oils come into Ireland from the UK under the EU duty suspended regime. This is significant. Brexit Shorts In an open letter, Theresa May tells EU Citizens that they can stay after Brexit Ministers look set to delay debate on the European Withdrawal Bill OECD report says reversing Brexit would benefit the UK economy Read all of our Brexit updates on the dedicated Brexit section of our website.        

Finance Bill 2017 published

Friday October 20th, 2017 08:33:36 AM
Finance Bill 2017 was published yesterday reflecting measures announced in Budget 2018 along with a number of additional tax and anti-avoidance measures. The Bill, which runs to 78 sections, details some of the provisions announced on Budget Day such as the increase in the rate of stamp duty on non-residential property and also provides details of transitional arrangements where binding contracts were entered into prior to 11 October 2017.   A stamp duty refund scheme in relation to land purchased for the development of housing is promised at Committee Stage.  In a move to protect the position where family farms are transferred, consanguinity relief is being extended for another three years at a fixed rate of 1 percent and the 67 years age restriction for the relief has been removed.  The Bill also legislates for the taxation of mergers and divisions under Companies Act 2014 as well as interest deductions for structures containing holding companies.  For more detail on the Bill, check out Tax eNews on Monday coming.

Five things you need to know about tax, 20 October 2017

Friday October 20th, 2017 08:32:43 AM
In addition to the publication of Finance Bill 2017, highlights this week include guidance on 46G returns, the latest Talking Points schedule and OECD releases information on Country by Country Reporting status.         Ireland Revenue has updated its guidance manual on the 46G return to include additional categories of services and activities that must be reported on the return.  The October issue of tax.point is now available.  In the feature articles section, Greg McAnenly and Sasha Kerins write on tax digitisation and what it means for the tax profession and Sherena Deveney reviews the changing tax landscape for the non-domiciled individual.  Summaries of recent Tax Appeal Commission determinations, tax developments and upcoming tax deadlines also feature.    UK Check out the latest Talking Points schedule for some diary dates September’s Digital Update for business and agents is available   International The OECD has released the full list of automatic exchange relationships that are now in place, together with an update on the implementation of the domestic legal framework for Country by Country Reporting in jurisdictions.

Technical roundup 20 October

Wednesday October 18th, 2017 11:37:01 AM
Developments of interest this week are outlined. ROI   The Central Bank of Ireland have issued their Quarterly Bulletin No. 4 2017 which includes a forecast for Irish GDP growth and an assessment of the Irish and euro area economies. The CRO have issued their regular gazette.  UK   The Financial Reporting Lab has published its quarterly newsletter. This edition gives some insight into the ongoing project on Risk and Viability, an update on Digital and highlights some of the other activity that the Lab has been involved in. Europe The European Securities and Markets Authority (ESMA) has launched the second phase of its Financial Instrument Reference Database (FIRDS). ESMA hosted its first conference, entitled The State of European Financial Markets, earlier in the week at the Westin Grand Paris.   International Earlier this year the International In­te­grated Reporting Council (IIRC) launched a two-month con­sul­ta­tion to gauge busi­nesses' views on the im­ple­men­ta­tion of the framework, to inform on further de­vel­op­ment. The results of that con­sul­ta­tion are now available. The IASB has published proposed amendments to IAS 8 regarding accounting policies and accounting estimates.          

ECOFIN agrees new rules for tax dispute resolutions

Monday October 16th, 2017 10:46:25 AM
EU finance ministers, at the recent ECOFIN Council meeting in Luxembourg, agreed to adopt a new directive for tax dispute resolutions arising from the interpretation of tax treaties. The directive will also cover issues relating to double taxation where two or more countries claim the right to tax the same income or profits of a company or person. According to the Commission, there are currently around 900 double taxation disputes in progress in the EU, estimated to be worth €10.5 billion. The new rules aim to meet the needs of businesses and citizens by removing double taxation according to the Commission. 

OECD releases details of CbC Reporting status and tax administrations exchange relationships

Monday October 16th, 2017 10:45:12 AM
Country-by-Country Reporting (CbC Reporting) was recently activated under the Multilateral Competent Authority Agreement (MCAA) on the exchange of CbC reports.  The OECD says that over one thousand automatic exchange relationships have now been established among jurisdictions, including those between EU Member States under EU Council Directive 2016/881/EU. The OECD expects that more jurisdictions will nominate partners with which they will undertake the automatic exchange of CbC Reporting under the CbC MCAA in the coming weeks. The United States has signed 27 bilateral competent authority agreements for the exchange of CbC Reports under Double Tax Conventions or Tax Information Exchange Agreements, with more under negotiation according to the OECD.  The full list of automatic exchange relationships that are now in place is available, together with an update on the implementation of the domestic legal framework for CbC Reporting in jurisdictions.

Brexit Bites, 16 October 2017

Monday October 16th, 2017 10:44:00 AM
With the talks in Brussels now in deadlock over the financial bill, the much anticipated trade talks look to be delayed until at least December. In other developments, Revenue has released a report showing the trade and tax links between Ireland and the UK, while the UK publishes trade and customs papers outlining the contingencies should talks fail. Brexit talks hit a hard wall Following the end of the fifth round of negotiations, the EU’s chief negotiator Michel Barnier has said that not enough progress has been made to move to the next stage of trade talks because there is “deadlock” over the financial bill. Mr Barnier used a post talks press conference to say that given the UK did not clarify its commitments on the thorny issue of the divorce settlement, no meaningful negotiation could take place.  As a result, the EU’s chief negotiator is unable to propose to the European Council that discussions should begin on the future EU/UK trading relationship next week as originally planned.  It would seem that the concern expressed by the European Parliament last week about the state of the Brexit negotiations was well founded. In addition to the divorce bill, the EU was also seeking advancements in the first phase of talks on citizens’ rights and Ireland.  On citizens’ rights Mr Barnier said that there remained differences of opinion on reuniting families and exporting social benefits post Brexit. On Ireland, some progress was reported on the Common Travel Area, but there is more work to do “in in order to build a full picture of the challenges to North-South cooperation resulting from the UK, and therefore Northern Ireland, leaving the EU legal framework.” It’s reported that Ms May will be in Brussels today to talk with Michel Barnier and head of the European Commission Jean-Claude Juncker in a bid to break the deadlock amid rumours that her party will block her leaving the EU without a deal. EU leaders will meet this week at the European summit in what was originally planned to be the start of the trade talks. The UK has been anxious to move on to trade talks for weeks now. However it did agree the negotiations timetable in June and despite the UK arguing that negotiations on the future trade arrangements are vital to settling the financial bill, the EU’s position has not changed. The UK needs to clarify its intentions in respect of paying the divorce bill before any future trading relationship can be discussed. It’s hoped that this can be done by December. Because at the moment the UK will leave the EU in March 2019, giving them little over a year to agree a future relationship with its biggest trading partner.  Revenue analysis of the Ireland/UK links Revenue has published a paper “Ireland and UK - Tax and Customs link” which examines the customs implications of trade flows between Ireland and the UK and the tax contributions of Irish based businesses that have links to the UK.    The analysis looks at trade flows by road, sea and air and concludes that, as expected, there are widespread linkages between the Irish and UK economies.  While ties to Northern Ireland are found to be more limited, they are more concentrated in the agri-food sector.  The report says that while Brexit will not eliminate these trade flows and the Exchequer will still benefit, there will be a change or a decrease in the trade patterns.   The report looks at the tax paid by businesses in border counties and finds that PAYE and VAT make up the largest contributions, with the biggest employers operating in the agri-food, retail and construction sectors.  The report notes that multinational companies are critical to the Irish exchequer and that 25 “foreign owned affiliates” employ over 306,000 people in Ireland. 27 percent of these are UK owned.  On the other side Irish owned foreign affiliates employ over 300,000 globally and 28 percent of these are in the UK. The report says that “Given the globalised nature of these businesses, their potential exposure to changes following Brexit could have implications for the Irish tax receipts.” In terms of trade, 86 percent of excisable products such as alcohol, tobacco and oils come into Ireland from the UK under the EU duty suspended regime. This is significant. This report follows a leaked report last week which was written by Revenue and explored the significant costs of Brexit for Ireland as well as examining ideas on an all-island trade policy for agri-food.  According to Revenue the report was prepared in September 2016 (before Article 50 was triggered) and was an “early technical consideration of possible administrative implications post Brexit.”  We covered this story in last week’s Brexit Bites and you can read more on our website. UK begins contingency planning The UK government has published Trade and Customs white papers outlining contingency plans on how it would cope with trade and customs arrangements should the Brexit talks fail to reach a trade deal. Given the talks are now in deadlock and the clock is ticking, the possibility of a cliff edge or hard Brexit might just be on the rise again.   In terms of customs, the UK has put forward three objectives in creating a new customs agreement; first and foremost is ensuring that trade between the UK and EU is as frictionless as possible. Secondly the UK wants to avoid a hard border between Northern Ireland and Ireland and lastly the UK wants to establish an independent international trade policy. Regardless of whether a deal is reached, the UK will present a customs bill to parliament later this year which will set out how customs should be charged and collected. This is seen as critical as the UK needs to have some form of customs legislation in place on Brexit day, 29 March 2019 to facilitate trade. Delving into the detail, in the event that customs checks are required at the border, the UK are preparing for EU goods to have to pass through roll-on roll-off ports in the UK post Brexit. The paper says that legislation would be passed to ensure that consignments could be pre-notified to HMRC and that checks would be done to ensure that businesses are complaint with customs obligations.  To avoid holding vehicles at ports for lengthy periods, traders would need to show goods to HMRC but that this would be done “as inland as possible” because of the space constraints at the majority of UK ports. For trade between Northern Ireland and Ireland, the paper suggests a cross-border trade exemption for small traders given that in 2015 over 80 percent of trade was carried out by small traders. This exemption would allow small businesses to continue to move goods across the land border with no new customer requirements.  Simplified customs procedures such as reduced declarations and periodic payments of customs duties are being examined for other frequent “trusted traders”. The trade white paper sets out the principles of future UK trade policy which includes how the UK will operate under World Trade Organisation rules, how the UK will boost trade in a transparent and inclusive manner with other countries and mentions supporting poverty reduction in developing countries. Much of the detail illustrates how the UK intends to put trade frameworks in place should talks fail but frustratingly for businesses, the paper does not and cannot address the burning question for traders on the make-up of the future trading relationship with the EU. Brexit Shorts 300 changes reportedly demanded to the UK Brexit Bill on EU Withdrawal Given the deadlock, reports are emerging that the EU is preparing for post Brexit trade without discussing the matter with the UK UK Chancellor reportedly calls for response from the EU on the UK’s transitional deal offer Theresa May refuses to say how she would vote if there was a second EU exit referendum A surge in Britons seeking citizenship in another EU country is reported Read all of our Brexit updates on the dedicated Brexit section of our website.

Finance Bill

Monday October 16th, 2017 10:38:46 AM
Finance Bill 2017 is expected to be published this Thursday 19 October.  The Bill will provide further details on the measures announced in Budget 2017 and we expect it will include new measures not announced in the budget.  We will report on the Finance Bill in Chartered Tax News next Monday.  In the meantime, you can read our coverage of last week’s Budget in our Budget 2018 Special.

Budget 2018 podcast

Monday October 16th, 2017 10:38:23 AM
In the Accountancy Ireland Budget 2018 podcast, Colin Smith, Tax Partner in PwC, Paul Dillion, Chartered Accountants Ireland Council member and Taxation Partner with Duignan Carthy O’Neill, and Norah Collender, Tax Technical Manager at Chartered Accountants Ireland, discuss Budget 2018.

Digital Support for Business & Agents – September Update

Monday October 16th, 2017 10:38:13 AM
The latest update features Talking Points, what’s happening with the Agent Forum and Agent Toolkits. “Talking Points The team continue to run a weekly program of Talking Points meetings, providing two opportunities to attend where possible. A variety of subjects were covered in August, including a look at changes to Inheritance Tax, the new Trusts Registration Service, the submission of SA returns affected by exclusions and an update on HMRC’s API strategy and delivery. There were over 5000 agent participations in live Talking Points meetings during August. The monthly ‘re-cap’ email, including links to recent Talking Points recordings, was issued on 24th August to all of those that are subscribed to our weekly invitations, providing them with an opportunity to catch up. October’s programme includes: Income from Property – minimising the risk for individuals. Dealing specifically with expenses and deductions, allowances and reliefs. Corporation Tax - Demystifying Certificates of Residence for Limited Companies Pension Scheme Registration: How to correctly complete the APSS146 Income Tax Repayment form & SA970 Tax Return We will also be working in partnership with the Intellectual Property Office again to provide an introduction to Trade Marks. Our forward-look schedule, publicising Talking Points currently arranged between now and the end of November, will be published on Gov.uk by the end of September. We will of course accommodate other meetings in the programme where we can to meet demand and communicate those opportunities by email. We expect our SA programme of Talking Points to begin in early December and will be looking to provide several opportunities between then and the end of January. Online Agent Forum The Digital Support for Businesses and Agents (DSBA) Agent Team staffed by 2.5 FTE Issues Resolution Managers (IRMs), moderate and run the forum. We are additionally bring in extra cover from our Agent Account Managers (AAMs) team to ensure we maintain response service levels, when going to Lines of Business for issues resolution. As at mid-September 2017 the Forum has 140+ Agent subscribers (up 40 since last progress report) and 47 HMRC staff. It has attracted over 4.2k views (up 2k), 330(up 40) posted messages on 53+ current topics; which are moderated daily with appropriate responses given, as determined by subject matter, related traffic generated and referrals provided by line of business. We continue to work closely with the Issues Overview Group (IOG), supported by PR representatives, in jointly determining what the ‘widespread’ issues are classification of their priorities for early resolution. Agent Toolkits Agent Toolkits continue undergoing a ‘refresh’ programme to update their content in accordance with current to compliance practices and taxpayer obligations. The existing product portfolio is being expanded to cover subjects hitherto not considered, following customer insight findings and research. This channel is also being considered for migration onto a new digital platform. Significant promotion activity, including the next issue of Agent Update (AU62), has been successfully undertaken, in raising the Toolkit brand profile, within the Agent community, together with making them easier for agents to access via the GOV.UK website.” END OF HMRC UPDATE

Filing a 46G?

Monday October 16th, 2017 10:38:02 AM
The 46G return is a return of information about certain payments made by traders and other persons carrying on a business activity.  Revenue has updated its manual on the 46G return to include additional categories of services and activities that must be reported on the return.  This manual may be of assistance if you are filing 46G returns.  New categories of services and activities to be reported include; childcare, fitness, health and safety, landscaping and marketing analysis.  This Revenue manual on the 46G return has replaced Revenue guidance in the IT16 leaflet.  

In the media, 16 October 2017

Monday October 16th, 2017 10:37:41 AM
In his regular column in the Sunday Business Post, Brian Keegan, Director of Public Policy and Taxation, writes about Budget 2018 and suspects that given the different vested interests, the worst people to ask about tax are tax payers.  In a piece in the Irish Examiner today, Brian discusses the 0.1 percent increase in the employers PRSI contribution as part of the Budgetary measures to fund education and says employers are the easy target. The Institute featured in the media with analysis and comment following the announcement of Budget 2018. Institute President, Shauna Greely commented on the income tax changes and Brexit provisions contained in the Budget on RTE and her remarks were also picked up by a leading international tax journal, Tax Notes International.  Institute Public Policy and Tax Director Brian Keegan discussed the contents of the Budget on RTE Radio One and Matt Cooper’s show (at 3:00) on Today FM.  Brian also wrote about the stamp duty changes in the Irish Examiner.  Our analysis of Budget 2018 was reported in the  Irish Examiner and Daily Mail (Ireland).  In the Irish Independent, Tax Technical Manager, Norah Collender, had called for CAT thresholds to be increased in the Budget. 

Talking Points – upcoming sessions

Monday October 16th, 2017 10:37:20 AM
Take a look at forthcoming online HMRC events. Registration is quick and easy, but please do so at least five minutes before a digital meeting is due to start. Paying HMRC – what’s changing? The methods by which HMRC will accept payments is changing. The Post Office Transcash service will be withdrawn in December 2017. Join the meeting to find out about all the alternative electronic payment methods that are available. Tuesday 17 October - midday to 1ns_ Register now Pension Scheme Registration: how to correctly complete the APSS146 income tax repayment form & SA970 tax return. This session will explain the correct completion of these forms and the common errors made. Monday 23 October - midday to 1ns_ Register now Intellectual Property Office (IPO): a basic introduction to trade marks In this meeting the IPO will give a brief overview on intellectual property, focusing on trade marks. It will provide guidance on how to search for trade-marks, UK filing, international routes and costs. Friday 27 October - 11am to midday: Register now Company tax returns online - get it right first time and avoid the most common errors This will cover the common reasons for rejection of company tax returns and how to avoid late filing penalties. Thursday 2 November - midday to 1ns_ Register now If you have any questions for HMRC’s subject experts more than 24 hours prior to the meeting, please send them to team.agentengagement@hmrc.gsi.gov.uk, including the title of the meeting in the ‘Subject’ line of your email. Any questions that arise after this time should be submitted during the live meeting. These interactive meetings run on the ‘CITRIX’ platform. The organiser will run through how to ask questions on the day.  If you have missed any of HMRC’s earlier Talking Points meetings, you can watch the recordings here.

This week’s UK tax tidbits, 16 October 2017

Monday October 16th, 2017 10:36:23 AM
Stats on non-domiciled taxpayers, updated guidance on salary sacrifice and the indexation allowance for July 2017 all feature this week. Statistics on non-domiciled taxpayers in the UK have been published. These statistics are interesting in the context of the new deemed domicile concept in the second Finance Bill of 2017. HMRC’s Orchestra Tax Relief manual has been updated with a new section on the anti-avoidance provisions of the new rules. HMRC have published update guidance on the card transaction disclosure programme Updated salary sacrifice guidance for employers has been published The indexation allowance for July 2017 together with historical data is available An updated list of upcoming tax tribunal appeal hearings, including details of previous cases has been published Some interesting statistics have been published recently in the following areas:- Patent Box Reliefs Statistics, Corporate tax: Research and Development Tax Credit, Diverted Profits Tax Yield: methodological note and Transfer Pricing and Diverted Profits Tax statistics, to 2016/17

Storm Ophelia

Monday October 16th, 2017 10:35:55 AM
Chartered Accountants Ireland will operate a minimal service today in both Dublin and Belfast offices, due to Storm Ophelia.  In the interests of safety, staff and students are not expected to attend the Institute.  Where relevant classes, meetings and courses will be rescheduled.  Chartered Accountants Ireland apologises for the inconvenience caused.  However the safety of students, staff and visitors is paramount.  It is anticipated that the Institute will resume normal business on Tuesday. Further updates will be shared across our website and social media channels.  Please follow all advice given by relevant authorities, and be careful out there.

Major Award for Irish firm in the UK

Monday October 16th, 2017 10:33:50 AM
PKF-FPM Accountants, which has offices North and South of the Border won Mid-Tier Firm of the Year Award at the British Accountancy Awards last week.  The Mid-Tier Firm of the Year Award is awarded to the firm with turnover between £3m and £25m which best demonstrates adding significant value to its clients and across all service areas.  The Chairman of the Institute’s Northern Ireland Tax Committee, Paddy Harty, is a director of the firm.

Skin in the game

Monday October 16th, 2017 08:40:55 AM
Sunday Business Post, 15 October 2017 Ironically the hardest week in which to write about tax is the week of the Budget, because everything the Finance Minister said and did has already been parsed and analysed.  There is so much analysis that is just not possible for all of it to be correct.  And there is another, more fundamental, reason for some of the analysis at least to be wrong. While as usual much of the detail in the budget emerged in advance, the difference this year was that the leaks only emerged much closer to the budget speech.  That was partly a by-product of perhaps a more disciplined government approach, a consequence of the reportedly late agreement of some key aspects and the commercial sensitivity towards the most important revenue raising measure in the Budget, which was the change to commercial stamp duty rates.  Signposts Whatever about leaks of particular items, the priorities in the run-up to the Budget had been well sign-posted.  The new arrangements for the minority government under the programme for partnership government and the confidence and supply agreement with Fianna Fáil were going to take precedence, no matter what anyone TD or pressure group wanted to see.  If those arrangements were to be followed there had to be cuts in the USC rates, however modest.  There also had to be changes to the scope of the 20% income tax band.  On the other hand there was not going to be an across the board indexation of personal allowances and reliefs.  Leaving personal allowances and reliefs alone was specifically identified in the Programme for Partnership Government as a revenue raising measure over the duration of the government’s term. This rigid adherence to the pre-agreed rules goes a long way to explaining the muted response in political circles to many aspects of the Budget.  Political reaction tended to dwell on the beneficiaries of the budget, and how little they received.  There are very few elected representatives who argue the case for the individual taxpayers and businesses which keep the whole show on the road by consistently stumping up the money to pay for the Government programmes.  Yet again the self-employed, the sector which had suffered the most from the downturn, were short-changed by the meagre increase in the earned income credit.  This allowance for the self-employed continues to lag behind the PAYE allowance available to their employed counterparts in both the private and public sectors.  We really need to start taxing people by reference to what they earn, and not by reference to how they earn it.  From a tax policy perspective, this was the weakest detail in the Budget proposals, but I did not see a single politician complain. Trends Nevertheless there were two trends evident in last Tuesday’s announcement which were a departure from previous years.  This is the first budget for many years which did not narrow the tax base; in other words it did not ask fewer individuals and businesses to bear the overall burden of tax.  There are excellent social and political reasons for taking people out of the tax net entirely and I’m not suggesting that it is not right to do so.  However, the main reason our national debt is so large is because we opted to sustain relatively high spending patterns after the collapse of the tax base in 2008.  The tax base collapsed because of our overreliance on taxes from property which had made it too narrow.  Recent budgets have continued to narrow the tax base.  Taking people out of the USC charge, deferring local property tax revaluations and abandoning water charges and the broadcasting levy all resulted in fewer people paying the national bills through “general taxation”.  That pattern had to stop; Budget 2018 seems to me to have applied the brakes. Secondly, this is also the first budget for many years where we changed our corporation tax rules to secure our own corporation tax yields rather than at the behest of international organisations like the OECD and EU.  Bending to OECD and EU requirements on tax has become a mugs game.  Nothing we do to change our tax policy will satisfy the “fairer” corporation tax agenda among larger countries.  Fairer in this context does not mean collecting more tax from multinationals overall, but it means getting a bigger share of tax at the expense of other countries.  The change announced on Tuesday to the way in which royalties on intellectual property – patents, know-how and the like – are taxed is in many respects a matter of timing of tax collection.  From an exchequer point of view, it should improve the predictability of corporation tax yields. Points of view Which brings me back to the problem of budget analysis.  Everyone has a point of view.  When it comes to tax, we all have skin in the game.  We focus on the detail of what matters to us personally, or to our business or to our constituency.  The worst people to ask about tax are taxpayers, which is why much of the analysis on specific topics in the Budget must be suspect.  Only looking at “what the Budget means to me” means that general trends miss coherent analysis.  This year, I think those trends are the preserving of the tax base while holding firm on corporation tax policy to suit our Exchequer and not some other nation or bloc.  Whatever might be said about the detail, both of these trends are positive. Brian Keegan is Director of Public Policy and Taxation at Chartered Accountants Ireland

In conversation with...Kimberley Rowan

Sunday October 15th, 2017 11:02:00 PM
What are the headlines of last week’s Budget? The reduction in the two middle USC rates, an increase in the ceiling at which the 2% USC rate applies and an increase to the entry point to the top rate of income tax seems to be the most widely debated Budget headline. For the average two-person income household, these changes will mean a tax saving of around €320 a year. In addition, the Earned Income Credit will be increased to €1,150, so self-employed individuals will get an additional €200 tax credit next year.  The main money spinner for Budget 2018 is the 4% increase in the stamp duty rate on commercial property. The additional income for government from this tax hike, expected to be as much as €376 million, is earmarked to pay for the income tax reductions.  The much publicised sugar sweetened drinks (SSD) tax was pledged by the Minister to be introduced from April next year. This will mean an increase in the price of certain beverages by up to 30c per litre. It is worth noting that this tax is not expected to apply to dairy products, such as chocolate milk, and certain fruit juices.  A new share-based remuneration incentive called the Key Employee Engagement Programme (KEEP) is to be introduced from 1 January. The aim is to assist unquoted SME companies to attract and retain employees.  Is there anything in the detail which Chartered Accountants should be aware of? The main revelation on Budget Day was the increase in the rate of stamp duty on commercial property from 2% to 6% with effect from midnight on Budget night. Comments from the Minister after Budget Day tell us that this increase was a key part of his maiden budget to fund income tax reductions. The increase in rate should not affect agricultural land, the Minister for Agriculture, Food and the Marine said and this was reiterated by Minister Donohoe but, as ever, we need to see the detail in the Finance Bill. Farm sales between relatives would be subject to a 1% rate where consanguinity relief is available, otherwise the 2% rate applies. Young trainee farmers will remain exempt, subject to examining the details in the Bill.  The 4% stamp duty rate increase may initially seem harsh. However, this new rate is still lower than the 9% rate which applied on such transactions up to 2008. The 2% rate was introduced in 2011 as a means to encourage a then-deteriorating property market.  Chartered Accountants with interests in intellectual property will be acutely familiar with the recommendation in the Coffey report to restrict the deduction for capital allowances for intangible assets (and any related interest expense) to 80% of the relevant income arising from the intangible asset. This measure featured in the Budget. A tax deduction for capital expenditure incurred on the acquisition of specified intangible assets (SIA) such as patents/registered designs, trademarks/brand names and know-how, is provided for under section 291A TCA 1997. The relief is seen as an essential part of our FDI offering. Like the stamp duty rate increase, this measure took effect from midnight on Budget night.  Chartered Accountants have an opportunity to have their say on Ireland’s international tax strategy as the Minister launched a public consultation running until 30 January 2018. This consultation is in response to the recommendation in the Seamus Coffey report on Ireland’s corporate tax regime.  What would you describe as the most positive and least positive aspects of the Budget from our members’ perspective? The changes to the USC rates and income threshold, and the income tax rate band moving from €33,800 to €34,550, for single individuals are positive as this cohort faced a sharp income tax hike on moving from the 20% rate band to the 40% rate band. The changes will alleviate the disincentive to work overtime or take on additional jobs as more euros can be earned before half is taken in income tax, USC and PRSI.  While financial assistance for the SME and Agri-food sectors are positive, there needs to be a change to VAT import rules to deal with upfront VAT costs under the current system which will take effect when the UK leaves the EU. Brexit concerns for Irish businesses which trade in UK imports were not adequately addressed. It is also disappointing that much needed enhancements to the CGT relief for entrepreneurs did not feature in the Budget. Do you expect any significant new measures in the Finance Bill? The Bill usually includes new measures not previously announced, particularly in the area of Revenue powers and anti-avoidance. I expect we will see something in this area. I also expect to see legislation for the new PAYE system, PAYE Modernisation, and stamp duty legislation to pick up on changes needed arising from the Companies Act 2014.  Kimberley Rowan is a Tax Manager at Chartered Accountants Ireland.






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