The Revenue Commissioners have released the following statement re Capital Acquisitions Tax and debt write off. Basically no CAT liability arises.
Section 5 of the Capital Acquisitions Tax Consolidation Act 2003 provides that a person is deemed to take a gift where, under or in consequence of any disposition, that person becomes beneficially entitled in possession, otherwise than on a death, to any benefit otherwise than for full consideration in money or money’s worth paid by such person.
By virtue of the definition of “disposition” in section 2 (1) CATCA 2003 the release, forfeiture, surrender or abandonment of any debt or benefit, or the failure to exercise a right may be subject to CAT in certain situations.
Where for bona fide commercial reasons, a financial institution enters into a debt restructuring, forgiveness or write-off arrangement with a customer, Revenue’s approach, subject to being satisfied as to the bona fides of the arrangement (which may be subject to Revenue audit or enquiry) is that the financial institution is not intent on making a gift of any sort to the mortgagor/debtor – and accordingly the mortgagor/debtor would not be subject to a CAT charge in respect of any such debt restructuring, forgiveness or write-off arrangement.
This approach will only apply in the above-mentioned circumstances. In particular, should any debt restructuring, forgiveness or write-off arrangement be undertaken for the purposes of the avoidance of tax, the treatment outlined above would not apply.
As you may be aware the Revenue Commissioners have launched a review of tax compliance by contractors in the Munster region. Revenue are focussing on both the One Contractor One Company and Composite/Umbrella company structures.
This project has been so successful for Revenue that they are rolling the review out nationally with immediate effect.
We recently met the Revenue Commissioners review team in Cork to assess their progress in this project.
The key issues we learnt are:
• Revenue believe a large number of contractors are over claiming home office and travel costs.
• Revenue have predefined parameters they are using to identify contractors to be audited.
• Once identified for audit, Revenue have specified levels of ‘unvouched expenses’ they are prepared to accept without penalty for the contractors.
• If contractors have levels of expenses which Revenue believe are unjustified, Revenue are seeking to charge interest of 12% pa and penalties ranging from 10% (unprompted disclosure) to 100% (liabilities discovered in audit) of the tax liabilities.
Following our meeting with the Revenue Inspectors, we are familiar with the audit parameters and unvouched expenses thresholds Revenue are utilising in this review.
Noone Casey are acting for numerous contractors in their negotiations with Revenue using our industry knowledge and the specific knowledge we have obtained in our meetings with Revenue.
If you are or have been contracting in the past 4 years and have any concerns over your tax compliance, feel free to contact me firstname.lastname@example.org or 01 6766476 for a free, confidential review of your tax status.
So, the Revenue Commissioners have announced a review of ”the tax affairs of companies and their directors, where the main source of income is a contract or contracts “for service” with a larger company or companies (directly or through intermediaries), the company in question does not appear to have a substantial business separate from these contracts, and in most cases the director(s) are the only employees of the company and pay tax through PAYE”.
Revenue have “established that in many cases there are deficiencies in accounting for input costs and expenses, with the result that there has been a significant understatement of tax liability to the benefit of the director(s)”.
In other words, Revenue believe contractors are over claiming expenses relative to their work profile.
It is our understanding that Revenue are also examining the Umbrella/Managed company status of many contractors. There is real concern that the PRSI class applicable to many contractors operating through Managed companies is incorrect and substantial liabilities may exist.
This review is being carried out in the Revenue South West region incorporating Cork, Limerick, Kerry & Clare.
At Noone Casey we look after the tax affairs of many hundreds of contractors using our real time online accounting tool I-Finance. We ensure only appropriate expenses are claimed thus avoiding the issue of underpayment of taxes.
I-Finance is structured so that you
• Operate as a proprietary director of your own limited company. Why is that important?
o You have greater control over your own money – no 3rd parties controlling the bank account.
o You have no exposure from Revenue should they move against the umbrella/composite company structures.
o You can maximise simple tax saving techniques which are not available in a Sole Trader/Umbrella Company structure.
• We process all the financial administrative tasks relating to your contract – which gives you more time to focus on the things you want to do.
• We prepare and issue all your client-approved invoices.
• You dictate how much you want to be paid, we process the payroll for you and make sure all your PAYE/PRSI is correctly deducted and returned on your behalf.
• We monitor your company bank account and assist you execute a ‘same day payment’ model via online banking into your personal bank account.
• We offer you up-to-date advice on all allowable business related expenses.
• We prepare and file all your annual returns (both personal and company related).
• We advise you on how to financially plan for the future and assist you in selecting the best savings and investment options for you personally.
If you are operating as a contractor in the Munster region and have concerns over the expenses you have claimed and /or your Managed company structure, contact me today email@example.com or 01 6766476 to discuss your affairs.
We will advise you on the correct route out of your potential difficulties.
Welcome to the Noone Casey Budget 2013 summary.
As austerity measures kick in & disposable income reduces, we are very conscious of the ongoing struggle to keep business afloat. Noone Casey is offering you a free financial review to assess the key financial issues you are facing.
Contact me to arrange this review.
Our Budget 2013 Newsletter is now available to download in PDF format (273kb).
Click below to watch our Budget 2013 Highlights video.
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Noone Casey sponsored last night’s Irish Web Awards Best New Web App category. We are pleased to announce the winner is FixMyStreet.ie
Congratulations to all the Award winners and well done to Michelle and Damian for organising another great night.