Farmers urged to tackle vulture funds
WITH so-called ‘ vulture funds’ seemingly becoming more and more prominent, farmers whose loans have been sold to such funds are being given the option to move them to high street/ pillar banks, while keeping their existing low rate of interest. The Irish Farms Accounts Co-operative are keen to publicise the way out of vulture funds for farmers.
Ashling Kavangh, Head of the Enniscorthy IFAC Office, says that negative connotations can often be associated with loans that are sold to vulture funds, when often it has nothing at all to do with the borrower and can simply be a matter of their lender leaving the Irish market or reducing their loan books.
While, she says, things in theory should continue as normal, problems can arise down the line after a vulture fund takes over the loan.‘Problems arise with these loans if the farmer wishes to restructure, refinance or use the security on another loan,’ she said. ‘In order to make any changes to these loans the farmer will have to refinance with a high street/pillar bank, which unfortunately may result in a higher interest rate.’
However, Ashling says that recently high street/pillar banks have been offering a way out for farmers.
‘ They are willing to refinance the debt at the same terms and conditions as the original loan. This will give the farmer more options into the future if they wish to restructure, refinance or use the security on another loan. In addition the farmer will have the certainty of dealing with a bank that’s on the high street and regulated by the Central Bank of Ireland.’
IFAC are encouraging local farmers to move loans while the opportunity is available and say goodbye to vulture funds for good.
Q ATHERE are two main options open to entrepreneurs setting up in Ireland – sole trader or limited company. I will briefly outline the differences between the two and the issues you need to consider when making a decision on which structure to choose. Sole Trader: This is the simplest option. To set up as a sole trader, you will need to register as a sole trader with the Revenue Commissioners and submit an income tax return once a year (deadline 31 October of the following tax year). The books are generally easier to maintain and don’t have to be audited. As a result, accountancy fees should be lower than for other structures. Some sole traders register their business name with the CRO. Closing down the business is relatively straightforward.
Limited Company: This is a legal entity separate to yourself and shareholders liabilities are limited to the amount of shares they subscribe for. With a limited company if you are setting up in business on your own, you will need to find another person to act as a Company Secretary although you can own 100% of the shares in the company yourself in a single member company.
A limited company and its directors are subject to more regulation than a sole trader but the company structure offers advantages in terms of taxation. A simple example of this is if the business is making more money than the director-owners need then the excess is taxed at 12.5% in a company rather than a potential income tax of 20%/40% plus USC plus PRSI for a sole trader. The Company can avail of tax relief at 12.5% if they set up a pension contribution through the company.
Every year, Financial Statements (accounts) will need to be prepared together with a Corporation Tax return and an Annual Return to the Companies Registration Office. Companies which do require an audit include:
- Companies who submitted their annual return to the CRO late in the current or previous year;
- Generally, companies who do not meet 2 of the 3 size criteria: turnover exceeding €8.8 million, net assets greater than €4.4 million and average number of employees of 50 or more;