Revenue abandon Lenihan’s Professionals’ Tax Plan

March 25, 2011

Revenue have today abandoned Brian Lenihan’s plans to tax employees on professional subscriptions and membership fees.

In an eBrief unveiled this evening,  Revenue confirm that most professional subscriptions will continue to be exempt from tax under Benefit in Kind rules.

This reverses the former Finance Minister’s announcement in last December’s Budget, that the existing Benefit in Kind exemption on these fees would be scrapped from January 2011. This would have meant that where an employer paid a professional membership or subscription fee on behalf of an employee, the employee would have faced a tax, PRSI and USC charge on the amount paid.

Today, Revenue confirm that the exemption will still apply

  • Where the employee is required by law to be a member of a professional body, in order to carry out their work. This includes architects who (under the Building Control Act 2007) must be registered with the Royal Institute of the Architects of Ireland; and Health care professionals who are obliged by the  Health and Social Care professionals Act 2005, to be registered with the Health and Social Care Professionals Council.
  • Where the employer requires the employee to hold a practising certificate or licence, eg accountants  working in professional practices.
  • In certain other situations, where the employee is a member of a professional body which is relevant to their occupation.  This will cover accountants, engineers and others working in professional capacities in industry.

Revenue stress that the BIK exemption applies only where the professional subscription is relevant to the employee’s work. They cite practical examples to show that the exemption will not apply to a qualified architect who works as a HR manager, or a trained solicitor working as a media presenter.

The Revenue eBrief on this subject outlines 11 practical examples which illustrate how these rules will work in practice. Revenue also stress that Benefit in Kind PAYE, PRSI and USC must be charged on all cases not covered by the exemption.

I think this is a very positive move on Revenue’s part. The original plans to scrap this BIK relief were badly thought out, and a very poor appreciation of the much-vaunted ‘knowledge economy’.  It is nice to see Revenue taking action to restore this relief in most cases.

That said, I wonder would  such a u-turn have been politically possible if Mr. Lenihan was still Minister for Finance. Maybe it is time for his successor Michael Noonan to work alongside  Revenue in reversing some of the anti-business and anti-employment measures introduced in recent Budgets – several of which have proved in the meantime to be counter -productive.

CRO Returns – Time Runs Out for Bogus Auditors

March 23, 2011

Last January, an investigation by Irish Independent’s Emmet Oliver highlighed the problem of bogus auditors, where individuals were illegally signing audit reports and certifying company accounts – although these people were neither qualified, regulated nor insured to do so.

The Companies Registration Office (CRO) have now moved to close the loophole that allowed this problem to arise.

From 1 April next, a new format of the CRO Form B1 annual return will be introduced. This will require the auditor’s official Auditor Registration Number (ARN) to be quoted on all such returns when audited accounts are being filed with the annual return.

This new requirement will not affect the vast majority of Irish SME companies, who can avail of audit exemption. Where a company claims the exemption, they will not have to enter an ARN on their annual return.

However it will affect all companies which either forfeit their annual exemption, (e.g. by filing late returns), or for which an annual audit is manatory.

The official Public Register of Auditors is now online. This lists each audit firm’s ARN, together with contact details etc.

Corporation Tax: Radio debates worth listening to

March 16, 2011

If you’re interested in the current debate over EU attitudes to the 12.5%  Irish Corporation Tax rate, two radio discussions on the topic within the past 24 hours are certainly worth a listen.

Today FMMatt Cooper’s The Last Word on Today FM featured a debate between Brian Keegan, Tax Director of Chartered Accountants Ireland, and The Irish Times’ Fintan O’Toole on the wisdom of Ireland’s 12.5% rate (pretty obvious if you ask me, although Fintan doesn’t seem to agree).

The discussion is online until next Tuesday on the TodayFM Archive (Go to  ‘The Last Word section, then ‘Part 2’, approx 41.40 minutes in, ending at 53.00 minutes).

newstalkMeanwhile this morning Tax Lawyer Suzanne Kelly discussed the new EU CCCTB consolidated tax base proposals on the Breakfast Show on Newstalk 106-108, with presenters Shane Coleman and Ivan Yates.

This is also archived online on the Newstalk Media Player (part 2 of the show, starts at 7.20 minutes, ends at 12.20 minutes).

Irish Corporation Tax – Setting the Record Straight

March 15, 2011

The 12.5% Irish Corporation Tax rate has recently attracted plenty of criticism at EU level.  In response, Chartered Accountants Ireland have today strongly defended the 12.5% rate and debunked some of the common arguments used against it.

Their case is outlined in a newly-published position paper ‘Europe and Corporation Tax – Setting the Record Straight’.

Chartered Accountants Ireland

The report compares the Irish Corporation Tax system with the corresponding systems in France and Germany, and finds that there are vastly different approaches in each country on how Corporation Tax rates are arrived at, what relief is available for capital investment, and how dividends are treated.

For example, France operates a headline Corporation Tax rate of 33.3%, yet there is a special rate of 15% for companies earning below €38,000 and various other exemptions.

In addition, the allowances for capital investment for French companies are vastly more generous than the capital allowances available in Ireland.

In France, these amount to €6.60 for each €100 invested in machinery, equipment etc, while the equivalent allowance in Ireland is a mere €1.65 per €100 invested.

And the French tax system allows for 40% of company dividends received by an individual to be disregarded for income tax purposes. In Ireland, dividends payable to individuals are fully taxable.

The report concludes that there is no direct correlation between Corporation Tax rates in individual countries and the sums raised from Corporation Tax in each country.

For example, Ireland raises 2.9% of GDP from Corporation Tax in 2008, while France  (with a higher ‘headline’ rate) raised 2.8%, and Germany (with a higher rate still) raised 1.1%.

The report  puts forward a number of ideas to address unfair tax competition within the EU Single Market and attacks the current EU Common Consolidated Corporate Tax Base proposals.

Well done to Chartered Accountants Ireland for commissioning and publishing this important, and most welcome, report.

UK Tax Amnesty for tax-dodging Plumbers

March 14, 2011

Interesting news from the UK, where HM Revenue & Customs (HMRC) have recently launched a tax amnesty programme for plumbers and others with tax arrears.

The HMRC’s ‘Plumbers Tax Safe Plan’  is aimed at people working within the plumbing, heating and gas trade industry who have undisclosed tax liabilities and who now want to bring their tax affairs up to date.

The plan offers the following benefits for participants:

• a 10%  penalty cap on tax arrears (20% in cases of deliberate evasion);

• the opportunity to pay the tax arrears in instalments; and

• a 6-year time limit on arrears.

Even though the plan is  primarily aimed at plumbers, it is actually open to all taxpayers with undisclosed income or tax liabilities. The HMRC website includes a guide to the plan, and a guidance pack including application forms.

I wonder how long it will take for the Irish Revenue to follow the example of their UK counterparts?