‘Indirect taxes can have unintended outcomes’

FIONA MURPHY

ACTIVITY In recent years we have seen significant activity in the area of mergers and acquisitions. For the RBK tax department such work would include vendor and purchaser due diligence, review of share purchase agreement and tax deed, and review of tax warranties and indemnities.

On a sale of a business, one of the primary concerns is taxation — i.e. ‘Am I structured correctly to take advantage any of reliefs available and to pay the most effective rate of tax?’ When considering these aspects, it may be necessary to carry out presale restructuring which may involve the separation of trades to allow the sale of one business, separation of trading and nontrading/investment assets etc.

Often the planning of an exit may not involve a sale but the transition of a business to the next generation. While tax is only one aspect to be considered in this type of transaction, our clients want to ensure they are availing of the reliefs that might apply, and ensure that the transition from parent to the next generation is completed in a taxefficient manner.

We provide clients with advice in relation to the employee remuneration packages. We review the tax implications on providing different elements of the package, whether it is the basic salary, BIK on motor vehicles, or on the provision of accommodation, medical insurance, share options etc.

As our client businesses have been growing, we have seen an increase in crossborder activity. Indirect taxes such as VAT and Customs can be onerous and have unintended outcomes. The supply chain and the Incoterms are two issues that need to be resolved to ensure that the appropriate VAT treatment is applied.

TAX POLICY Important tax policies for the indigenous section include the R&D tax credit, the EII scheme, and Key Employee Engagement Programme. At times, companies find that the conditions around these reliefs are onerous and require professional advice, which erodes the benefit and acts as a barrier to access of the reliefs.

WAREHOUSED TAX DEBT In our experience, while Revenue are being pragmatic in working with taxpayers on entering into phased payment arrangements, we have not seen any instances where Revenue were agreeable to write-offs of tax debts. Taxpayers who have not yet engaged with the process should work with their accountant on the completion for the relevant PPA form before the 1 May 2024 deadline. Non-engagement with the process will result in enforcement the tax debts.

TAX INCENTIVES At the income tax filing deadline, pensions is the number one choice of our clients to reduce their tax burden. Income tax relief is available at the higher rate of 40% on contributions, and a tax free lump sum of 25% of the retirement fund is available at retirement, capped at €200,000. Investment through the Employment and Investment Incentive scheme is available for offset against total income, though it does require a cash flow from the taxpayer’s perspective.