Increased Cost of Business Grant 2024

Budget 2024 provided €257M for an Increased Cost of Business (ICOB) grant.

Eligible businesses will receive a once-off grant payment based on the value of the 2023 commercial rates bill for the property a business occupies. It is not a commercial rates waiver and businesses should continue to pay their commercial rates bill as normal.

The main eligibility criteria are:

  • A business must be a commercially trading business currently operating from a property that is commercially rateable.
  • A business must have been trading on 1st February 2024 and must intend to continue trading for at least three months from the date information is submitted.
  • The business rates account must be up to date but businesses in performing payment plans may be deemed to be compliant.
  • A business must be tax compliant and hold a valid Tax Registration number.

The grant is based on the value of the commercial rates bill received by an eligible business in 2023:

  • If the 2023 bill is less than €10,000 the grant will be paid at 50% of the bill for 2023.
  • If the 2023 bill is between €10,000 and €30,000 the grant will be €5,000.
  • Businesses occupying a rateable property with a 2023 bill greater than €30,000 are not eligible.

To register for the grant businesses can use the ICOB portal  mycoco.ie/icob

The deadline for businesses to confirm eligibility and upload verification details is 1st May 2024.

Tax on Social Media Influencers

The Revenue Commissioners have issued letters to 142 social media influencers under a “Level 1 Compliance Intervention.

They are warning that gifts, free goods and services, virtual currency or token payments needed to be properly accounted for and tax rules applied.

The Revenue position is that the taxation of influencers should follow the fundamental principles of taxation. Therefore, the extent to which an influencer is carrying on a trade and how that trade is taxed will always depend on the particular facts and circumstances of each case.

Revenue is preparing detailed guidance on this issue.

UK Non Domicile Status Changes

Ireland is now a more attractive alternative for people looking to keep non-domicile status as the UK Chancellor of the Exchequer Jeremy Hunt said in his recent budget speech that the non-domicile status in the UK after more than two centuries would be abolished from April 2025 to be replaced by a new tax system based on where people live. 

To date where conditions are met this status has enabled UK resident individuals whose permanent home is outside the UK to benefit from the ‘remittance basis’, effectively exempting their foreign income and gains from UK taxation unless actually remitted to the UK.

The Chancellor’s changes means: 

  • Everyone will pay UK tax on their foreign income and gains after living in the country for 4 years by scrapping the “remittance basis” rule that only taxes money brought into the UK;
  • New arrivals will benefit from 100% UK tax relief on foreign income and gains for their first 4 years;
  • A temporary 50% cut in the personal foreign income subject to tax in 2025-26 for non-doms who will lose access to the remittance basis;
  • Inheritance tax will also move to a residence-based regime.

It is anticipated that internationally mobile wealthy individuals will now relocate to Ireland.

CRO Involuntary Strike Off and Directors Disqualification

The CRO has currently put all involuntary strike offs on hold. However it is intended to recommence them in due course.

A director has a legal duty to dispose of a company properly as not doing so is a statutory offence.

The CRO can strike a company off if:

  • The company has failed to file an annual return – even if only for one year. 
  • The company has failed to file Form 11F with Revenue. 
  • It has reasonable cause to believe a company does not have an EEA-resident director, a S137 Bond in place or a continuous economic link with the State.  
  • The company is being wound up and the Registrar has reasonable cause to believe no liquidator has been appointed.  
  • It has reasonable cause to believe the company’s affairs are fully wound up and the liquidator has not made the required returns for a period of six consecutive months. 
  • No one is recorded in the CRO as acting as a current director of the company. 

If struck off a company ceases to exist; its limited liability protection is lost and its assets become the property of the State. 

Directors of a company that has been involuntarily struck off can face disqualification as the Corporate Enforcement Authority (CEA) can make an application to the High Court to issue an order to disqualify one or all the directors. 

Disqualification means a person is disqualified from being appointed or acting as a director or other officer, statutory auditor, receiver, liquidator or examiner or being in any way, whether directly or indirectly, concerned or taking part in the promotion, formation or management of any company.

A person is automatically disqualified by the court, if that person is convicted on indictment of:

  • any offence under the Companies Act or
  • any offence involving fraud or dishonesty.

A person disqualified by the court is subject to a disqualification order for a period of 5 years or other period as specified by the court. The court is obliged to send details of the disqualification order to the CRO so that the details supplied are included in the public register of disqualified persons.

The CEA can also apply to the court seeking the disqualification of any person if found:

  • guilty of two or more offences in relation to accounting records offences
  • guilty of persistent defaults under the Companies Act
  • guilty of fraudulent or reckless trading while an officer of a company.

The above does not constitute legal advice.

Tax Debt Warehousing Changes

The Minister for Finance recently announced significant changes to the Tax Debt Warehousing scheme with a reduction in the interest rate applying to warehoused tax debt to 0%.

A business will get a refund of interest it has already paid of 3% on warehoused debt.

Revenue confirmed a flexible approach relating to warehoused debt. This will include the possibility to extend the duration of payment arrangements beyond the typical three to five-year duration on a case-by-case basis, and that an initial down payment may not always be required.

Currently €1.72 billion remains outstanding from 57,500 tax payers.

These changes will support otherwise viable businesses to continue to trade while having the opportunity to reduce their warehoused liabilities in a structured and manageable way.

Businesses availing of the Tax Debt Warehousing scheme need to engage with Revenue prior to 1 May 2024. They must also file their current tax returns on time and meet their current tax liabilities as they fall due.

A Scam Warning

Fraudsters recently used deepfake video technology to fool an employee at a multinational company in Hong Kong into believing he was dealing with the Chief Financial Officer (CFO).

It cost the company a cool HK$200m (€24m).

The fake CFO mentioned that secret transactions needed to be completed. However while on the video call the employee was joined by what looked and sounded like his colleagues so his legitimate concerns were alleviated.

But the only real person on the video call was the employee. The CFO and colleagues videos were created using publicly available video conferences with audio dubbing.

The fraudsters also used WhatsApp and email messages to communicate with the employee to add legitimacy to their instructions.

The employee eventually agreed to send 15 payments worth HK$200m to five local bank accounts.

The fraud was discovered six days later only after the employee was in touch with head office. 

Deepfake video technology uses artificial intelligence (AI) tools to create highly convincing fake videos and audio recordings and can enable one person’s image to be swapped for another.

You have been warned!

Close Relative Loans

From January 2024 a mandatory filing obligation is imposed on the recipients of certain loans from close relatives.

It applies to existing loans and new loans made since January 2024.

A Capital Acquisition Tax return must be filed by a person who is deemed to have taken a gift in respect of the use and enjoyment of a specified loan made by a close relative.

It is deemed that a person has received the benefit on 31 December each year so the return must be filed no later than 31 October the following year.

The earliest return filing date is 31 October 2025.

Generally a close relative is related to the loan recipient as:

  • a parent
  • the civil partner of a parent
  • a lineal ancestor
  • a lineal descendant
  • a brother or sister
  • a brother or sister of a parent
  • a brother or sister of the civil partner of a parent.

Look through provisions will be applied to loans made by or to private companies to determine if the loan is ultimately being made to a recipient by a close relative.

The holding of any shares in a private company is sufficient for the look through provisions to apply.

A loan is any loan, advance or form of credit and need not be in writing.

All specified loans must be aggregated from various close relatives to determine if the threshold amount of €335,000 has been exceeded. If interest has been paid on any of the loans they need not be included.

The recipient must file a return if:

  • he/she is deemed to have taken an annual gift in accordance with Section 40(2) CATCA 2003
  • no interest has been paid on the loan within 6 months of the end of the relevant period in which the gift is deemed to have been taken and
  • the balance outstanding on the specified loan(s) exceeds €335,000 on at least 1 day.

The Section does not specify any minimum amount of interest to be paid and not just accrued. Interest should be paid in each relevant period, and not just on a once off basis, for a loan not to be reported in respect of that period.

Research & Development (R&D) Tax Credit Benefits

Budget 2024 brings changes that could significantly benefit an enterprise, particularly with Research and Development (R&D) tax credits.

Increasing R&D Tax Credits

One of the standout measures announced in Budget 2024 is the increase in the R&D tax credit from 25% to 30%. This move is poised to make the R&D regime more attractive for businesses. Now is the perfect time to explore the possibilities this enhanced credit could unlock for your business.

Doubling the Initial-Year Payment

For businesses contemplating R&D activities, the doubling of the initial-year payment threshold from €25,000 to €50,000 is a welcome change. Statistics from 2021 reveal that 65% of claimants were benefiting from R&D tax credits up to €100,000. This alteration promises a significant cash flow advantage, offering a potential boost for businesses embarking on innovative ventures.

Pre-Notification Requirement

Budget 2024 introduces a pre-notification requirement for R&D tax credit claims to streamline the claims process. If a business is considering its first claim or has experienced more than a three-year gap since the last claim, a written notification to Revenue is now mandatory. Key details such as company information, R&D activities description, employee numbers and R&D expenditure must be provided. Drawing parallels with a similar system in the UK, the operational details and potential consequences for non-compliance in the Irish regime are yet to be fully revealed.

Seize the Opportunity

The Irish R&D tax credit regime, now in its 20th year, continues to be a cornerstone of Ireland’s corporate tax landscape. Budget 2024’s amendments build on positive changes from the previous year, transforming the R&D tax credit regime into a fully payable credit system. These changes present a prime opportunity for businesses to thrive in the R&D landscape.

With a team of experienced professionals, we specialise in navigating the intricacies of R&D and other tax regulations to ensure a business maximises the benefits available. Our expertise extends to understanding the nuances of Budget 2024 and translating them into actionable insights for your specific circumstances.

Contact us today if assistance is needed – 021 4310266 or pm@parfreymurphy.ie

Good Habits – Your Worth It

The author Octavia Butler when asked how she was so prolific replied:

“First, forget inspiration. Habit is more dependable. It will sustain you whether you are inspired or not.”

Habits are a powerful driver of behaviour.

If you successfully get into good habits you automatically do the right thing. So how can we improve our all-important habits? 

There are three critical steps – PRIORITISE, DIARISE, SOCIALISE:

  1. PRIORITISE – Prioritise what you want to change. What new things do you want to do more of? What existing things do you want to do less of? Be crystal clear on what you want to stop/start.
  1. DIARISE – Schedule time in your diary/calendar, to start/stop these things. For example, if you want to get in the habit of preparing better for meetings, schedule time every week to prepare for next week’s meetings. And when the diary reminds you to do it, do it! Do not press “snooze”. Do not press “delete”.  Just do it at the scheduled time.
  1. SOCIALISE – Of course, it’s all-too-easy to press snooze/delete. So use someone as your accountability partner and tell them about the changes you want to make. And ask them to check-in with you every week, to make sure you did the new thing, at the scheduled time. And better still if you do it for each other.

When you do all three of these – and you and your Accountability Partner stick with it – your habits will change.

This could be life changing so try it.

Many thanks to Andy Bounds for his assistance.

Car Pools Tax Benefit

If employees use an employer provided vehicle in a car pool, they do not have to pay income tax, PRSI and USC.

A car pool exists where:

  • a car is available and used by more than one employee
  • the car must not be regularly used by one employee who prevents others from using it
  • private use of the car by the employee is minimal
  • the car is not regularly kept overnight at or near the employee’s home.

Goodbye January

As miserable January comes to an end let’s cheer ourselves up.

Man gets pulled over at 3 a.m.

Cop asks, “Where are you heading?”

Man says, “I’m heading to a major lecture on alcohol abuse and its effects on the human body.”

The curious cop says, “Really? Who is giving that lecture at 3 a.m. on a Saturday night?”

Man says, “My wife.”

Selling a Business Mistakes and Solutions

Selling a business is one of the biggest decisions a business owner will face. And without proper advance planning they could find themselves unable to exit when they wish to or without the means to fund the kind of retirement they deserve.

Planning the sale of a business and developing an exit strategy are critical processes that require careful consideration and strategic thinking. Here are common mistakes that business owners often make:

  1. Lack of Planning:
    – Mistake: Failing to plan for the sale and exit well in advance.
    – Solution: Begin the planning process early to maximize value and minimise risks.

  2. Overvaluation:
    – Mistake: Overestimating the value of the business.
    – Solution: Conduct a realistic valuation and seek professional advice.

  3. Poor Financial Documentation:
    – Mistake: Inadequate financial records and documentation.
    – Solution: Ensure accurate and transparent financial reporting.

  4. Ignoring Market Conditions:
    – Mistake: Neglecting to consider current market conditions.
    – Solution: Mistake

  5. Overreliance on One Buyer:
    – Mistake: Relying too heavily on a single prospective buyer.
    – Solution: Diversify potential buyers to increase negotiation leverage.

  6. Neglecting Due Diligence:
    – Mistake: Failing to conduct thorough due diligence on potential buyers.
    – Solution: Investigate buyers and their ability to complete the transaction.

  7. Inadequate Succession Planning:
    – Mistake: Not planning for a smooth transition of leadership.
    – Solution: Develop a robust succession plan for key personnel.

  8. Ignoring Tax Implications:
    – Mistake: Overlooking tax consequences of the sale.
    – Solution: Consult with tax professionals to optimise tax outcomes.

  9. Incomplete Legal Preparation:
    – Mistake: Ignoring legal aspects of the sale.
    – Solution: Work with legal experts to address contracts, liabilities and other legal matters.

  10. Poor Communication:
    – Mistake: Failing to communicate the sale appropriately to employees, customers and suppliers.
    – Solution: Develop a communication plan to manage stakeholders’ expectations.

  11. Incomplete Understanding of Buyer Motivations:
    – Mistake: Not understanding the motivations of potential buyers.
    – Solution: Tailor your approach based on the buyer’s goals and expectations.

  12. Ignoring Employee Concerns:
    – Mistake: Neglecting the impact of the sale on employees.
    – Solution: Address employee concerns and provide reassurance during the transition.

  13. Inadequate Non-Disclosure Agreements (NDAs):
    – Mistake: Failing to use strong NDAs during the sale process.
    – Solution: Protect sensitive information with well-crafted NDAs.

  14. Excessive Dependence on the Owner:
    – Mistake: The business is too dependent on the owner’s involvement.
    – Solution: Implement measures to reduce dependence on the owner for day-to-day operations.

  15. Unrealistic Timeline:
    – Mistake: Expecting a quick sale without considering the complexities involved.
    – Solution: Set a realistic timeline and be prepared for unexpected delays.

  16. Incomplete Asset Protection:
    – Mistake: Neglecting to protect key assets during the sale.
    – Solution: Safeguard intellectual property, customer relationships and other critical assets.

  17. Lack of Contingency Planning:
    – Mistake: Failing to plan for unexpected events during the sale.
    – Solution: Develop contingency plans to address unforeseen challenges.

  18. Insufficient Focus on Value Drivers:
    – Mistake: Not emphasizing the business’s value drivers during the sale.
    – Solution: Highlight factors that enhance the business’s attractiveness to potential buyers.

  19. Failure to Address Liabilities:
    – Mistake: Ignoring existing and potential liabilities.
    – Solution: Conduct a thorough review of liabilities and address them proactively.

  20. Poor Negotiation Skills:
    – Mistake: Lack of effective negotiation skills during the sale.
    – Solution: Invest in negotiation training or hire professionals to handle negotiations.

Business owners can benefit from learning from these common mistakes and proactively addressing them to increase the likelihood of a successful and smooth business sale and exit.