Until now, the credit amounted to 25% of the qualifying expenditure on “incremental” research and development during the accounting period. For 2012, the credit, up to a maximum of €100,000, will be allowed against all expenditure. Above €100,000 the incremental basis will still apply. The credit is in addition to the 12.5% corporation tax relief, thus bringing the total tax relief on expenditure up to €100,000 to 37.5%.

Where there are insufficient profits in the current year to absorb the expenditure, the credit may be offset against the prior year’s liability. Any excess which is still unutilised may be carried forward indefinitely against future profits. Alternatively, the unused credit may be repaid over a period of three years.

Where expenditure is sub-contracted outside the company to an unrelated third party, the credit is currently restricted to 10% of total costs, or 5% if sub-contracted to a third-level institution. The Budget proposes to increase this to the greater of 10%/5% respectively, or €100,000. This will assist SMEs in particular, as they are less likely than large companies to have in-house R&D expertise.

It is also proposed to introduce a scheme to facilitate making tax-free payments to company employees. Details are not yet available.

The Finance Bill will contain the proposed legislation to give effect to the measures announced in the Budget. Commentators have suggested that, while the above changes are welcome, we are still behind other countries in our incentives for research based activities. It is suggested that the €100,000 cap should be removed altogether, so that the 2003 base expenditure no longer has to be exceeded before expenditure (in excess of €100,000) qualifies.

 Research and development expenditure may seem irrelevant to most entrepreneurs, but the definition includes “systematic, experimental or investigative activities directed at producing new or improved materials, products, devices, process systems or services” can qualify for the tax credit.

It may be worthwhile for company directors to review their activities in the light of this legislation, as the benefits may be considerable. Long & Company will be happy to have an initial meeting to discuss whether your company’s activities include eligible research or development costs, on an obligation-free basis.

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1. Finance Act 2010
2. CGT and CAT Planning
3. Pensions and Saving Tax

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1. Unannounced Revenue Visits
2. Pensions and Saving Tax
3. Retirement Annuity Relief

The household charge is not an allowable expense against rental income.

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2. Expenses for Self Employed and Employees
3. Share Schemes – An Overview

http://www.revenue.ie/en/practitioner/tax-briefing/2011/no-052011.html

If you have any queries regarding the above please let us know.

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Under the new system all contacts between principals and Revenue will be conducted through an on-line process. Principals will need to be registered for the Revenue Online Service (ROS) before the new scheme is introduced. Revenue will however accept paper RCT35 forms for periods up to 31 December 2011.

Under the new scheme the standard rate of RCT will be 20% however there are cases in which a rate of 0% or 35% may be applied.

As more information becomes available we will keep you updated.

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• Debts owing to Revenue amounted to €2.1 billion at end-March 2011;
• Tax debt write-offs increased by 72% in 2009, compared with 2008 and a further increase of 35% was recorded in 2010;
• The largest amount written off in a single case was €3.8 million.
• Most write-offs resulted from business failure or insolvency

CAT filing deadline 30th September

As previously noted, the pay and file date for CAT returns is this Friday, 30th September. Our experienced staff are available to help, even at this late stage!

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2. Tax update 5th October 2009
3. Revenue Chairman comments on “shadow economy”

In her opening statement before the Public Accounts Committee last Thursday, Revenue Chairman Josephine Feehily spoke about the shadow economy. She commented that the shadow economy grows in times of recession “as people look for ways to replace lost income or profits”. In 2010 Revenue “placed great emphasis on tacking cash economy risks by a combination of risk analysis, intelligence collation, assurance checks and outdoor operations including audit and investigation” this emphasis is continuing in 2011 and while focussing on specific sectors, Revenue has already this year:

• made over 4,700 cold calls or site visits and nearly 3,200 assurance checks;
• completed over 1,200 audits in the construction sector with a combined yield of €37 million;
• closed 1,400 audits with a yield of €50 million in the wholesale, retail, restaurants and pubs trades combined;
• selected over 21,000 PAYE cases for intervention, yielding over €13 million and disallowed credits valued at nearly 25 million.

She referred to lower tax yields, higher tax debt, and liquidity issues facing businesses in the current economic environment and acknowledged Revenue’s responsibilities which include making repayments quickly and working with viable businesses that need time to pay.

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This position has been filled

An immediate vacancy has arisen for a chartered accountant in Iraq.

The placement will be for a period of between one and two months.

The successful candidate will ideally have construction industry experience, as the assignment
involves the research and finalisation of a construction industry contractor’s account.

Court proceedings may arise, depending on the outcome, so prior forensic experience would be a
distinct advantage. Candidates need to be pro-active in finalising this assignment quickly and
accurately.

Applicants should be aware that Iraq is still classified as a Category 1 Conflict Zone.

The assignment is based at an international oil company camp in the Burgesia desert in Southern
Iraq. Temperatures here can approach 50 degrees centigrade during the day.

Candidates are expected to work long hours – 9 to 12 hours per day, seven days per week, for the
duration of the assignment.

Compensation is generous, return air fares will be provided, as are meals and accomodation.

Depending on the residence status of the successful candidate, payment will be subject to Irish
taxation.

If interested, please send your cv to Declan Long (Declan@longaccounts.ie).

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The filing date for returns to Revenue in respect of 2010/2011 is 30th September 2011 – a matter of days away. Gifts and inheritances received during the year ended 31st August 2011 must be declared by 30th September if interest on late payment is to be avoided. Failure to file on time will also result in a surcharge if CAT is payable. It is quite likely that CAT and CGT rates will be increased in the December Budget, so proper planning in relation to capital transactions may save tax. Please contact Sinead Murphy ACA AITI if you have any questions concerning this or other tax
matters.

Civil Partnerships and Cohabitants

Reliefs in the form of exemptions from tax for registered civil partners were introduced in the Finance (No 3) Act this year, to take effect from 1st January 2011. The existing favourable tax treatment of spouses has been replicated for registered civil partners. Transfers between cohabitants under a redress order are benefit from tax exemptions.

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2. Tax update 5th October 2009

The 15 Parts deal exclusively with the private company limited by shares. The remaining Parts, yet to be published, will deal with PLCs, designated activity companies, guarantee companies, unlimited companies, investment companies, unregistered companies and external companies. The main features of the new model private company and reforms provided for in the first 15 Parts published include:

• It will be limited by shares; private companies limited by guarantee will be subject to the legal regime which will be prescribed for designated activity companies;
• It will have the same contractual capacity as a natural person – private companies will not have an objects clause and so will not be subject to the doctrine of ultra vires;
• It may have only one director (currently private companies must have two directors); accountability in governance will be increased as there will be no need for passive directors;
• It will not be permitted to list debt securities;
• It will have a one-document constitution – the memorandum and articles will be replaced by one document;
• The same internal obligations will apply to all private companies, unless their constitution provides otherwise;
• All private companies will be permitted to have “written” AGMs – where the members consent, the need for an annual physical meeting can be dispensed with;
• The Bill codifies directors’ duties as they have been developed by the Courts over the last 150 years, making the law more transparent and accessible;
• One Summary Approval Procedure will enable regulated activities to be carried out (transactions with directors, loan acceptance, mergers etc);
• Offences created by the Bill are categorised on a scale of 1 to 4, 1 being the most serious;
• Directors’ compliance statements will be more proportionate and reasonable;
• SME thresholds will be increased;  Reporting of offenses by auditors will only be required for category 1 and 2 offences, not categories 3 and 4;
• The accounts of small groups of companies will be audit-exempt;
• Company liquidators will have to be qualified accountants or solicitors

The process of company law reform commenced over ten years ago and is long overdue. Publication of the first 15 Parts is a welcome step in the process and we look forward to seeing the consolidated legislation next year.

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2. Share Schemes – An Overview
3. Finance Act 2010