Planning Your Best Exit Strategy

We have discussed in the past, the importance of having a long-term plan for your business, particularly for when you are no longer in a position to run the company yourself. The importance of an exit strategy or long-term plan can not be overstated for businesses of all sizes, particularly small and medium enterprises (SMEs). It is as always advisable to stay abreast of current issues and changes that may affect the long and short term plans you have in mind for your business and in this vein, there has been some cause for concern in recent days regarding ways that taxation could inhibit future planning.

A new report issued by PwC this week has stated that current tax rules which hit the transfer of family businesses are putting both jobs and companies at large in danger. These rules make options incredibly limited for business owners as they limit owners passing on their business to family members while they are living. Some anomalies to the system in this respect mean that the new business owner could find themselves incurring high tax costs that would potentially place additional pressures on the business and put it at risk.

PwC have given some suggestions on changes they would like implemented in the next budget to protect business owners and entrepreneurs in the event of passing their business on while still living. One such suggestion is the removal of the current cap of €3million on the value of business assets which can benefit from Retirement Relief. There is also calls for the Entrepreneurial Relief Capital Gains Tax threshold to be reduced to allow further relief to these businesses as well as increasing the lifetime limit applicable and reducing current restrictions which may exclude many. It has also been suggested that tax relief options could be made available.

Consultation with the Government for this process is ongoing and submissions will close on May 24th and there are hopes that there will be changes announced in the next Budget to combat this issue and make the family handover of businesses a smoother and more profitable process. The transition of a business is inevitably a stressful and concerning time, so any changes that can be of benefit and ensure the longevity of an existing healthy business should certainly be embraced.

Should you have any queries or concerns on any business or financial matters, please do not hesitate to contact us here at EcovisDCA where we are always happy to help you and your business.

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Revenue Commissioners New Debt Management System (DMS)

Onward, to the Future

The past number of months have been a time of increasing change for Irish businesses. From large scale changes to payroll systems to the clamping down of Revenue on all forms of tax evasion and tax fraud. These have been major changes to the ways in which Irish companies do business day-to-day and are hoped to be a solution to some long-term issues facing Irish business life, as it is hoped it will all lead to smoother business operations and less issues facing the Irish tax system.

The season of change continues onwards as it was recently announced that The Revenue Commissioners were set to release a new system for debt management, one which will be more technologically advanced than previous iterations and which will assist them in chasing down more unpaid tax, particularly in the sector of SMEs (Small and Medium Enterprises).

Revenue’s new system entitled DMS (Debt Management Services) was launched just recently and promises to utilise high-tech means to target and deal with a wider range of tax payer. Whilst this may seem like a frightening prospect for SMEs, it is in fact a positive step towards ensuring that all Irish businesses are compliant, and that smaller business need not suffer the consequences of the failures of their larger brethren. The system will be able to target businesses and individuals who may previously have been too expensive to identify and pursue.

A spokesperson for Revenue has stated of the new DMS system that it will:

“Deliver significant increased capacity to manage and support compliance and tackle non-compliance” and will “enable Revenue to review customers with lower turnarounds on a more regular basis”.

So, whilst this means that SME’s will of course naturally fall under the Revenue microscope more often than previous, it is a step in the right direction for the future of business in Ireland, as it is set to join the Payroll Modernisation system in making it easier and more transparent for businesses to submit documentation and queries as the spokes person went on to say:

“The new system is fully online, allowing documentation to be uploaded electronically. It gives customers greater flexibility to manage their payment schedule and make certain alterations to suit their circumstances.

We as always advise to ensure that all your documentation and tax files are in order well ahead of time to ensure that you do not face further issues going forward. Should you have any queries or concerns, our doors are always open here at EcovisDCA.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Pensions – it really is a case of Fail to Prepare…

Something we are told from a very young age is that it is never too early to start planning for the future. As true as this may be it is something that falls largely on deaf young ears as we move on with our lives without thinking about that distant future of our elders. As you progress in your working life, this statement becomes increasingly true as no matter what stage of your career you are currently at, it is vital to plan for a future in which you will no longer be earning.

Recent reports show that the majority or workers are not saving towards a pension for their futures. As we have discussed previously, the cost of living, renting and buying property continues to grow so it should come as no surprise that many workers find themselves unable to set aside money for distant days ahead as wallets get increasingly light. There has been a lot of speculation recently that we may be heading towards a time-bomb in terms of pensions, so the news that only 47% of workers are contributing to a pension only compounds this fear and places the future of the State pension in question.

There have been discussions that the Government is to roll out a mandatory scheme for pensions by 2022, but this still leaves a period of 3 years during which workers could take matters into their own hands and begin making contributions. Perhaps unsurprisingly, it appears that the worst uptake in pension contributions is among younger workers, who again are most likely to be stuck in the rental trap at present. Social Policy Officer with The Irish Congress of Trade Unions, Laura Bambrick has said that too little is being done to encourage lower- and middle-income workers to contribute.

“Tax relief has failed as a policy instrument for encouraging low and middle-income earners to save enough towards a financially secure retirement, and there is no legal obligation on an employer to provide or contribute to a pension scheme for employees.”

Funding issues for State Pensions are likely to become an increasing concern for the future if pension contributions don’t soon become a standard, and with many employers also not making any contributions for their employees, something likely must change and urgently.

If you are interested in beginning your own pensions journey, here are some tips from us.

Calculate:

As with any budgeting system, it is essential to first work out how much you need to be setting aside. There are a great many online calculators that can assist with this. It is also important to consider your own currently monthly budget.

Shop Around:

There are so many options to choose from that this can be daunting but take the opportunity to speak to some advisers and ensure that you find the right pension plan for you.

Speak with your Employer:

It is possible that your employer may be willing to match your contributions or make some contribution for you, it is important to find out if this is a possibility in your company.

Tax:

If there are tax breaks available, be sure to make use of them.

Save:

There are many small ways to make weekly savings, implementing these may mean that your pension contributions do not leave such a gaping hole in your pocket.

Should you have any concerns or queries on any business or financial matters, please don’t hesitate to contact us here at EcovisDCA where we are always happy to help.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Enterprise Tax Relief & Grants

Entrepreneurs exist in a section of Irish business that is often overlooked when it comes to grants, relief and assistance. It is an area that is prized and valued in terms of training initiatives, but often forgotten about when it comes to actioning. Entrepreneurship remains the riskiest sector of Worldwide business, but particularly in Ireland which is quite a small pond for any business-savvy fish to set up shop in. As we all know, SMEs form a massive part of all Irish businesses, and we have spoken recently about the ways in which increased support is being made available to these businesses, so this naturally begs the question as to why the same isn’t being extended to entrepreneurs who may be poised to become the next big names in SME or even large-scale enterprises.

The chorus of voices crying out for change and support in the entrepreneurship sector has increased exponentially in recent months. This call for change has begun to spread to state agencies with Enterprise Ireland becoming involved and in February, divisional manager of the high-potential start-up unit, Joe Healy went as far as to call entrepreneurs “The real heroes of the Irish economy who deserve recognition and attention”.

Mr Healy also revealed that Enterprise Ireland had invested €23million in start-ups in 2018, including many of the high-potential start-ups and expressed his belief that there should be increased support and recognition for entrepreneurial risk-takers as they are ambition, resilient and innovative, which should all be highly prized in the business world. Healy also expressed his desire that this support encourage more female entrepreneurs to take the lead in Ireland going forward as he has seen an increase in the number of female entrepreneurs in the last 2 years.

While there are currently no large-scale plans for governmental support of entrepreneurs, the government have been repeatedly called upon to overhaul the Capital Gains Tax system and the Employment Incentive and Investment Scheme for entrepreneurial candidates. With the addition of a state funded body like Enterprise Ireland adding their voices to the cry for change it is hoped that we may soon see more steps in the right direction. As Healy stated:

“There are still challenges around retaining and attracting talent, and we need to ensure that the tax system supports and encourages risk-takers […] Not only changes to reward the real heroes of the economy but the tax system must be internationally competitive […] The taxation environment is critically important for starting and scaling companies. It is a key factor in the overall competitiveness in Ireland […] There is a need for an entrepreneurs’ relief scheme to reflect the risks of setting up a business, and a share options scheme to reward shares.”

Perhaps we may soon see Irish entrepreneurs being capable of entering the worldwide business market in a more competitive manner. In times of financial recovery such as these “risk” can often seem like a dirty and dangerous word, but this is perhaps exactly the right time to reward innovators and risk takers.

Should you have any concerns or queries on any business or financial matters, please do not hesitate to contact us here at EcovisDCA where we are always happy to help.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

In light of Brexit, is there an opportunity for more trade with China?

Trade and Trade Alike

As Brexit conversations continue to get increasingly unclear and Ireland’s standing remains uncertain it is important that focus shift onto Ireland’s business and trade strengths rather than solely where we may have difficulties following Brexit, particularly in the event of a ‘Hard Brexit’. In the past, year we have spoken about Irish optimism ahead of Brexit and the ways in which Irish businesses could ensure their continued strength and prosperity going forward onto uncertain terrain.

As China’s leader Xi Jinping continues his European Tour, one might expect that Ireland would not crop up in conversation or be worth much note at this time. It may seem like an odd comparison to discuss Irish trade and business in relation to Italy and China, with our small island seeming to pale in comparison to such trade giants and global superpowers, but you may be surprised to learn that Ireland in fact currently supplies more food to China than Italy, proving again the vitality and strength of our independent trade.

Whilst Italy has recently slipped into somewhat of a recession, and Ireland continues to grow following our own economic crisis, we are on more even footing than we may even realise. Discussions within this European Tour will hope to encourage more openly reciprocated trade routes between the European Union and China, into which Ireland is certain to factor. The attempt to create something of a modern day ‘silk road’ has been met with equal parts scepticism and fear as Italy sign on.

It seems that European leaders are now intent on creating a new bond with global giants such as China, and on securing the global status of the EU especially as talks continue for Brexit. The EU’s labelling of China as a “systemic rival” was met with displeasure as the EU begin to clamp down on any issues or threats, following the messy divorce that Brexit continues to be. It has been stated that the EU will no longer naively go along with any deals that do not benefit the greater good of the EU and will no longer allow access to the EU market when access is not reciprocated. This could open trade routes going forward and ensure the continued power of the EU globally.

Whilst Brexit continues to drag on and loom large, and we do not have a crystal ball into the future, it is good to know that Ireland is safe in the hands of its big sibling, the European Union.

As always here at EcovisDCA we are happy to reciprocate and welcome any questions or concerns you may have that we can assist with, we are grateful for your continued support and friendship.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Bank Holiday Payment Entitlements

Time Marches On

March is always a strange month, whilst January can seem endless and February spins by before you’ve even adjusted to writing the New Year on your documents, March somehow signals that more time has passed in the current year than we could have realised. One bonus that comes along with March for those of us working away on our fair green Isle is that it offers us our first little break in the year in the guise of parades and fairs celebrating our patron saint.

One thing to be aware of however is that occasionally, as was the case this year, the Public Holiday may not fall on the traditional Monday associated with a Bank Holiday. In this scenario there are a number of ways to tackle the change and we thought it prudent to give information on who may be entitled to Bank Holiday payment.

Contrary to popular opinion, there is not an automatic entitlement to the Monday following the 17th of March off, but it does usually suit business operations to proceed in this manner.

The entitlement for full-time employees is as follows:

  • A paid day off either on the public holiday, or the following Monday for those who work Mon-Fri when the public holiday falls outside of the standard.
  • An additional day of annual leave
  • An additional day’s pay in this pay round.
  • A paid day off within a month of the Public Holiday.

It is also not always widely known that the employee is entitled to ask which options apply to their circumstance 21 days before the Public Holiday, and should the employer fail to respond within 14 days of the holiday, the employee then becomes automatically entitled to take the Public Holiday as a paid day off. It is advised to communicate this to your employees well in advance in order to avoid confusion on either side.

The entitlement for part-time employees is as follows:

  • Employees who have not worked at least 40 hours in total in the 5 weeks prior to the Public Holiday to not meet the minimum requirement to avail of their Public Holiday entitlements.

The payment options for a Public Holiday are as follows:

  • If the employee works on the Public Holiday they are entitled to payment for that day worked, as well as an additional day’s pay equivalent to the last day worked prior to the holiday.
  • If an employee normally works the day that the Public Holiday falls on they are entitled to the day off and their normal day’s pay.
  • If an employee does not normally work on the day the Public Holiday falls and is not required to work on this date, they are entitled to one-fifth of their normal wage.
  • Employees on sickness and maternity leave will also have entitlement as though they worked on this day.

We hope that you all enjoyed the first Public Holiday of the year and that this information will be of use for those still to come. Should you have any queries or concerns on any business or financial matters, please don’t hesitate to contact us here at EcovisDCA, where we are always happy to help.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

The Rescue & Restructuring Scheme

Financial Aid To Restructure & Survive

As you are all aware, we here at EcovisDCA are massive supporters of Irish SMEs (Small and Medium Enterprises). We understand the importance of these types of companies, underpinning and creating a foundation for all Irish business. In general, we like to keep our clients and friends up to date on any issues that may negatively or positively affect these vital businesses. You may or may not have heard of the Rescue and Restructuring Scheme in Ireland. The scheme provides financial aid and State support to companies experiencing acute liquidity. The intention was that the scheme would offer assistance to those struggling companies who have the possibility of restructuring and continued survival in the business world.

The scheme was first introduced in November 2017, offering a fund of €10million to struggling Irish SMEs. In 2018, an extension to the scheme was approved and announced, with an additional €10million being made available to these businesses. The scheme was scheduled to run until 2020 and would offer support in form of loans repayable over a period of 18 months. The only exemptions to the scheme were those companies in the financial, coal and steel sectors.

The introduction of this scheme in 2017 and 2018’s subsequent extension and funds increase was already a massive boon to the Irish SME sector, offering some form of safety net in times of trouble. As we are all aware, financially speaking anything can happen in the economy and smaller businesses are usually the first to feel the negative effects, so this offer of €20million to survive Brexit woes for struggling SMEs was welcome news.

Further good news arrived on the horizon this month, with the announcement that the scheme would once again be extended with further funds being made available. Perhaps the whispers of terms like “hard Brexit” and “borders” may have had something to do with it, but on this occasion we see a massive increase as it was recently announced that The European Commission has agreed to increase the budget of the scheme by a whopping €180million to €200million.

We are delighted that the Government are taking the appropriate steps to assist in the safeguarding of these vital companies and their future in the eye of the Brexit hurricane, as it has long been known that Irish SMEs could be the most vulnerable in the event of Brexit causing trade and financial issues in Ireland. These additional funds show a willingness to create and support vulnerable businesses and create an ongoing contingency plan for these uncertain weeks and months ahead.

Should you have any queries on any business or financial matters, please don’t hesitate to contact us here at EcovisDCA where we are always happy to help.

Changes that could negatively impact your Pension

Fail to Prepare?

If the economic climate of the last decade has taught us all anything, it is that it is never too early to start planning ahead for the future of you, your family, and your business. Often we forget that when the time comes for our retirement from the business world, State Pensions may not offer us the lifestyle we wish to have during the Golden Years of our lives. As such, it is always advised to begin looking into pension options as early in your working career as possible to begin saving for your own future and that of your family. We have spoken in the past about preparing your business for your departure, but preparation of the self can often be overlooked.

A recent report by leading pension actuaries Tony Gilhawley and Roma Burke has found that when it comes to State Pensions and the tax reliefs on same, public servants are the primary individuals who benefit from these reliefs. It is suggested that any movement to reduce tax reliefs may encourage Government workers to seek pay increases which could have consequences in many areas.

According to the report, the State’s contribution to the pension of public servants is on average just under 30%, or 53% for Gardai. This of course applies only to public sector workers engaged in employment before 2013. This is in stark contrast to the average private sector worker who will receive an employer contribution of as little as 7%, if they receive any employer contributions to their pension at all. The leading actuaries even went as far as to state:

“If you want to retire on a good secure pension, don’t work in the private sector. Join the public service.”

Suggesting that the current pensions system in Ireland is somewhat discriminatory against workers in the private sector. The report also suggests that there are incredibly few employers in the private sector willing to make decent contributions to the future pensions of their employees. Whether or not this discrimination is the case, or whether your own company chooses to contribute to your pension it is wise to begin looking into your options and begin making plans for your extended future beyond the working world.

Should you have any queries on any business or personal financial matters, please don’t hesitate to get in touch with us here at EcovisDCA, where we are always happy to help.

Safeguarding your Business against the Brexit Blizzard

It seems that we have been talking about the looming shadow of Brexit for many years at this point. Now that there is finally a set date, it may seem that there is still very little information available for Irish companies with ties to the UK, so today we will focus on some possible implications of Britain’s upcoming exit from the European Union for Irish companies to enable you to best prepare and secure your company.

The United Kingdom (UK) is now set to leave the European Union (EU) on March 29th 2019 and there are many ways in which this could have implications for many Irish companies with ties to the UK. The main implication from the outset will be that the UK will no longer be part of the European Economic Area which may cause a number of shifts for Irish companies.

EEA Resident Director:

Under the Companies Act 2014, all Irish companies are required to have at least one director who is resident in the European Economic Area. Any companies who have directors ordinarily resident in the United Kingdom will be required to appoint a director who is resident within the EEA, or to take out a Section 137 Insurance Bond against non-compliance until they are fully compliant with this rule. It is suggested that this be done immediately to avoid issues.

There may be a loophole available should the director have a “real and continuous link to the State of Ireland”. These specifications must already be met and will not be satisfied on the basis of future intent.

Exemptions for Irish Subsidiaries:

In certain cases, Irish subsidiary companies may not need to file ‘Individual Entry Financial Statements’ with their annual return. This applies only to Irish subsidiaries held by holding companies under the laws of an EEA country, and in no other circumstance. If the subsidiary is held by a UK holding company, this will not apply.

Changes to Year End:

Under current Irish law, a company can change their financial year end date once every 5 years. Currently, if the aforementioned company is part of an EEA multi company structure, the financial year end dates of all companies can be aligned. This will no longer be applicable to company structures which include a UK company.

Irish Branches:

Many UK companies have registered an ‘Irish Branch’, which would naturally be a branch of an EEA company. Following Brexit, this will no longer be applicable and the Irish branch will find itself subject to stricter filing rules.

Imports and Exports:

This is arguably the most crucial item for Irish companies with links to the UK. It will be required post-Brexit for all companies importing or exporting goods into or out of the European Union to have an Economic Operators Registration and Identification Number (EORI). This will be essential for customs purposes and it is advised that all companies with trade links to the UK ensure that they have this ready.

As we have stated in the past, the future post-Brexit is uncertain but does not need to be clouded in doubt and negativity. The above issues are important to be aware of so that you can safeguard your business in these uncertain times, but many businesses can continue to thrive in this new environment without the assistance of our closest neighbours.

As always, we here at EcovisDCA are ready and waiting to assist you with any issues you may have on any business or financial matters and we look forward to continuing our relationships with all our clients and friends.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Boom or Bust?

We have spoken on many occasions over the years about the difficulties faced by prospective first-time home owners in the current market. From the inception of the more stringent rules for attaining mortgage approval, to the ever-increasing cost of living, renting and the increasing prices of homes available for purchase as demand increases and supply dwindles. With many effectively pushed out of the property market for the time being, it may come as a shock to learn that almost half of all properties sold in 2018 were paid for with cash or savings.

The latest Consumer Market Monitor from the Marketing Institute of Ireland and UCD Smurfit Business School confirms that despite a property market which remained sluggish throughout 2018, approximately 45% of all properties sold in 2018 were snapped up by cash buyers. Whilst remaining relatively sluggish, there was an increase of 8% in the amount of homes sold with 55,000 being sold and 25,000 being paid for with cash or savings. While this may seem like a rather large number of sales and a positive step for the industry, it is in fact still a massive difference to the number sold during the last boom, which reached 105,000 sales. The current numbers of cash sales in fact are more similar to those in the recession years during which mortgage approval numbers were at an all-time low.

Whilst cash buying may seem like harking back to boom times, and other areas of the economy continue to improve, the numbers actually suggest that while more mortgages are being approved than previous years, this is by no means a boom as levels remain consistently much lower than during that period.

Author of the report, Professor Mary Lambkin has said that;

“The property market’s sluggish growth does not reflect the large increase in the working population. […] While the number of homes for sale has increased, the level of property sales should be about double the current level, approaching the level that the market experienced during the early 2000s, when the workforce was about the same level as it is today.”

The cash buying phenomenon we currently find ourselves in has seen the price of modest homes skyrocket as cash buyers would appear to be more likely to purchase homes on the cheaper end of the spectrum. It is hoped that an increase in the construction of new homes will facilitate an increase in residential property sales in the coming year. As 35,000 homes are needed each year, it is hoped that construction will continue in order to begin to meet rising demand, with 23,000 new homes set to be built this year and next year.

As always, we here at EcovisDCA are available to assist should you have any queries on any business or financial matters. We look forward to hearing from you.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY