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Offshore Disclosure Notification

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It can often be difficult to remain abreast of changes to procedures in the financial sector if your business is not operating within this sector. Unfortunately it is essential to be aware of any changes which may affect your business operations.

The Finance Bill 2016 introduced a number of changes relating to Qualifying Disclosures made to the Revenue Commissioners regarding existing offshore assets as well as offshore income and gains. In recent days the Revenue Commissioners have been issuing correspondence regarding these changes in order to keep businesses informed ahead of the changes being put into place, so it is important to read all information carefully to ensure you understand these changes.

These new changes will be in effect from May 1st 2017 and will relate to disclosure which includes any of the below outside of the Republic of Ireland.

  • Income or gains arising or accruing outside of the Republic of Ireland.
  • Relevant accounts – applies to both bank accounts and share accounts.
  • Relevant property.

These changes mean that any disclosures made to the Revenue Commissioners from May 1st 2017 onwards relating to offshore assets, income or gains will not be afforded any mitigation of penalties, meaning that the penalty will be 100% of the underpaid tax. Disclosures made before this date will benefit from the usual mitigation of penalties imposed by Revenue. This can often significantly reduce the amount payable. As such, waiting until after this date can result in a significantly higher payment being due and we would advise against waiting in order to reduce this risk.

Should you have any concerns, queries or require further information on these or any other business and financial matters please don’t hesitate to contact us we are always available to help.

 

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

NO MORE LOOPING THE LOOPHOLES

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As we have discussed previously, this year’s Finance Bill includes another massive clamp down on possible tax evasion by allowing the Revenue greater access to previously confidential information. In addition to this, there will now be greater measures in place to address current loopholes in Capital Gains Tax. These loopholes can result in major discrepancies which make it difficult to assess taxation in general and the consistent avoidance of payment creates larger financial issues.

 

Section 34 of this year’s Finance Bill is designed to tighten the definition of shares deriving their value from specified Irish assets for non-residents. The current loophole allows avoidance of Capital Gains Tax when cash is transferred to a company prior to disposal of shares. This means that when the time comes for shares to be disposed of, their value is derived mainly from cash rather than assets. In cases where the greater value lies in shares than assets, the company can avoid paying this tax.

 

Section 35 of the bill also limits the avoidance of paying Capital Gains Tax as it closes an existing loophole which allows for non-payment of this tax where a non-complete clause has been signed. Similarly, in section 36 of the bill, a provision has been made which prevents avoidance of the tax through transferring property to non-resident companies.

Another loophole which has previously resulted in the avoidance of paying Capital Gains Tax is a provision which defers the tax if companies are sold within a larger group. The new bill includes a section which puts an end to the misuse of this particular provision (section 38 of the Finance Bill).

 

These measures are designed to counter avoidance of this tax and others, and as our technology advances we are sure to see further measures put in place in future Finance Bills as the Government ramps up its efforts to counter tax evasion. Since the onset of the financial crisis, there has been a consistent effort to put an end to tax evasion, occasionally to the detriment of other seemingly more crucial issues such as the housing crisis. It is hoped that creating preventative measures such as these will be enough to stem the flow of current tax evasion and prevent future efforts at avoidance, rather than creating further loopholes which will need to be closed off. This will, in turn allow the financial focus to shift elsewhere.

 

If you are concerned about your status in paying Capital Gains Tax, or indeed any form of taxation and require some professional advice regarding your financial matters please don’t hesitate to drop us a line here at DCA Accountants