Observations from a tax seminar

I was at a tax seminar yesterday and I was talking to an older accountant at it. We were discussing the secure email arrangement that the revenue have where you can address technical issues and he was saying that it was great because you could depend then on what they emailed back to you. But I made the point that it was good but only to the extent that you agreed fully with what they said. If after due diligence researching their point of view I had a different interpretation of tax law or I had what I felt was a valid basis to dispute their opinion or decisions then  I could still use the appeals procedure etc to try and get the best outcome for a client. The look he gave me was nothing short of disgust.
Anyway it goes to show the difference between accountants willing to settle on behalf of their clients and those willing to go the extra mile to get the up most best for clients.
There was several interesting tax planning arrangements which in the main apply to high value individuals willing to go abroad for prolonged periods of time. Which is I feel a reflection of how tight the Finance acts are now.
 However one very interesting point came to light about appealing the asset values assigned to inherited assets received during in the height of the boom period in relation to Capital Acquisitions tax (gift and inheritance)
If anyone has a Inheritance or gift liability based on property or assets inherited or gifted during the boom when asset values were high then give me a ring and I have what I feel is a very strong approach that can be taken to get it reduced significantly. page contents

Very good Article from Chartered Global Management Accountants Magazine about the world economy

Finding your pace in the three-speed world economy 

By Sabine Vollmer 

April 22 2013

The slow recovery in the US and the euro-zone crisis dampened economic growth worldwide last year and prompted the International Monetary Fund to lower its global economic growth projections for 2013. Europe’s economy is expected to contract yet again this year, but the US and particularly economies in Asia, sub-Saharan Africa and Latin America are beginning to see higher growth, the IMF projected in its spring 2013 world economic outlook.
The IMF estimated that the global economy will expand by 3.3% this year, revised down from a 3.6% estimate six months ago. The revised expansion is expected to be driven largely by an accelerated growth in emerging market and developing economies. Supported by resilient domestic consumption and functioning labour markets, this expansion in global output is projected to steadily rise to 4% and 5.7% in emerging market and developing economies in 2014.
IMF Managing Director Christine Lagarde (at left) has said the three-speed recovery isn’t good enough for an increasingly interconnected global economy and urged policymakers worldwide to take customised action that would allow the global economy a “full-speed recovery”.
The euro zone must press ahead with its banking union, Lagarde said. In the US, leaders need to fix the pace of fiscal adjustment. And fast-growing emerging markets need to strengthen financial regulation and invest in infrastructure.
With inflation largely under control thanks to lower food and energy prices, “emerging market economies are doing well,” the IMF outlook stated. “The main macroeconomic challenge in emerging market and developing economies is to recalibrate policy settings to avoid overstimulation and rebuild macroeconomic policy buffers.”
Risks that could derail the accelerated growth and affect world output include rapid credit growth, such as in China’s shadow banking system, an unexpected slowdown in key emerging markets or investment cutbacks, especially in Brazil, Russia, India, China and South Africa, a group also known as the BRICS.
Asia. Projections suggest the region is starting to recover after economic growth dipped to 6.6% in 2012 from 8.1% in 2011. Asia’s GDP growth is projected to reach 7.1% in 2013 and 7.3% in 2014.
Robust domestic consumption and investment and increased external demand, especially as the US economy improves, are projected to boost economic growth in China to 8% this year and 8.2% in 2014.   A remaining risk that is attracting more attention is China’s shadow banking system. Unregulated lenders are responsible for about half of the nation’s borrowing.
The purchase power of a growing class of consumers, a better monsoon season and a switch to pro-growth policies, including proposed reforms to clarify tax laws and stabilise the tax regime, are expected to raise GDP growth in India to 5.7% in 2013 and 6.2% in 2014. Economic growth dropped to 4% in 2012 from 7.7% the previous year.
Structural challenges, such as supply and labour bottlenecks, and an elevated inflation will keep India’s GDP growth from accelerating faster.
The group of ASEAN-5 countries (Indonesia, Thailand, Malaysia, the Philippines and Vietnam) is projected to see economic growth of 5.9% in 2013 and 5.5% in 2014. Indonesia leads the group, followed by the Philippines.
Latin America and the Caribbean. Strong domestic demand – supported by easy financing conditions and high commodity prices – is projected to help raise GDP growth in the region to 3.4% in 2013 and 3.9% in 2014. In the past two years, economic growth dropped to 3% from 4.6% in 2011.
Brazil’s economy, especially, is expected to do better. Economic growth in Brazil slowed to less than 1% last year, but new policies targeted at boosting private investment should start taking effect this year.
Mexico and most other Central American economies are projected to expand in line with potential, or about 3.5% to 4.5%.
Africa. Exports and domestic consumption and investment contributed to 4.8% economic growth in sub-Saharan Africa last year, down slightly from 5.3% in 2011 due partly to civil conflict in Mali and Guinea-Bissau and the interruption of oil exports from South Sudan. Growth projections for the region are 5.6% in 2013 and 6.1% in 2014.
Investments in infrastructure and production are expected to help boost economic growth in Nigeria to 7.2% this year and 7% in 2014, up from 6.3% in 2012.
Increased oil production is helping the Angolan economy expand a projected 6.2% in 2013 and 7.3% in 2014. Cote d’Ivoire’s economy is rebounding following election-related disruptions two years ago and expected to grow 8% per year in 2013 and 2014.
South Africa, which saw labour stoppages last year, is projected to generate economic growth of 2.8% in 2013 and 3.3% in 2014. That’s up from 2.5% in 2012.
Central and eastern Europe and Russia. The euro-zone crisis spilled over into emerging economies in central and eastern European such as Romania, Bulgaria, Serbia, Hungary and Turkey. But economic growth in emerging Europe is projected to reach 2.2% in 2013 and 2.8% in 2014, up from 1.6% in 2012.  Growth in Turkey is expected to accelerate, to 3.4% in 2013 and 3.7% in 2014.
Oil and gas exports are projected to help Russia’s economy generate about 3.5% of growth annually in 2013 and 2014, about the same as in 2012. Energy exports are also expected to boost economic growth above 5% per year in Turkmenistan, Uzbekistan, Azerbaijan and Kazakhstan.
Middle East and North Africa. Political instability has affected several countries in the region, particularly oil importers such as Egypt, Sudan, Jordan, Syria and Lebanon. But several of the oil exporting countries are seeing robust economic growth despite a scaling back of oil production. Qatar is projected to generate GDP growth of 5.2% in 2013 and 5% in 2014. Saudi Arabia’s economy is projected to expand 4.4% in 2013 and 4.2% in 2014.
The entire region is projected to see economic growth of 3.1% in 2013 and 3.7% in 2014, down from 4.8% in 2012.
Related CGMA Magazine content
“Top Five Emerging Markets Capture Foreign Investors’ Attention”: Western Europe and North America are still attractive to foreign investors, but not as attractive as the top five emerging market hot spots. Even lesser-known emerging economies are gaining ground.
“How Corporate Expansion Strategies Can Target Emerging-Growth Powerhouses”: Rather than zeroing in on specific countries as they devise a strategy, companies should focus on cities – in particular the 440 cities in emerging markets projected to grow at double the global economic growth rate by 2025.
“Rapid-Growth Markets Hit a Temporary Lull”: Rising domestic demand will help reverse the slowdown in rapid-growth countries, an Ernst & Young projection suggests. To tap this emerging demand, companies will have to pay attention to the different challenges and opportunities shaping up in specific national and regional markets.
“Emerging Markets Prove Resilient During Global Economic Uncertainties”: The Chinese economic boom is weakening, tensions remain high in the Middle East and inflationary pressures weigh on India, but as a group emerging economies are expected to grow. That growth is likely to change trade patterns and expand middle-class populations.
—Sabine Vollmer (svollmer@aicpa.org) is a CGMA Magazine senior editor.

S.W.O.T Analysis of the Agrifood Business in Ireland

S.W.O.T Analysis of the Agrifood Business in Ireland

Written by Frank McGivney BA ACMA CGMA

Date 02 May 2013                               

Introduction: Ireland has been a country of farmers for centuries we have the strong natural resources to both sustain ourselves and to export the balance of our agricultural produce to the outside world. In a dynamic and changing world what is the future of Irish agriculture? Agrifood is the business of selling our agriculture produce both domestically and internationally. 

(1)   Strengths

Ireland is one of the largest beef and dairy exporters in Europe. We have a long established agrifood business which is based on the many strengths that Ireland has as a agricultural country. We have a very productive natural resource in the land and the climate that we experience. There can be adverse climate effects over the course of a number of years such as the current lack of growth in feed and grass due to the cold weather we have experienced. Ground temperatures have failed to reach the 6degrees necessary for growth and animals are dropping in the fields from a lack of fodder. However in general over the longer term we have a very productive natural resource.

We also have a very strong reputation in foreign markets. Ireland is seen as a country that supplies high quality produce and this helps the Irish agribusiness to get a foot hold in the supply chain abroad.

We also are known for having a regulatory framework which ensures the quality and consistency of the agriproducts we produce. It was Ireland and its monitoring environment which highlighted the presence of equine meat in the human food chain throughout Europe. We have a very strong TB testing regime and the department of agriculture and the use of herd numbers and paper trails based on animal tagging ensures the traceability of all animal stock in the country.

We also have strong human skills and experience which are world class. We have been farming and involved at a high level in the agribusiness for many years. These skills are the foundation of the future growth and prosperity of the Irish agribusiness. After all you can have the greatest resources in the world but they are no good to you if you don’t know how to use them productively and efficiently in a manner that meets market demands.

(2)   Weakness

We also have some significant weaknesses which hinder our potential progress unless they are addressed properly.

We have an inherent constraint on our production capacity due to the size of the country. There is after all only so much land available to us. There is nothing we can really do about this however what we can do is operate the land we have available to us in the most efficient, effective and productive manner possible. One of the hindrances to this is the traditional ownership model in Ireland. The average farm size is 33 hectares owned by individual farmers on an owner occupier model. This model does not lend itself to efficient methods of production. Larger farm sizes if run properly could lead to significant economies of scale and marked increases in production and output. Of course this is a purely economic analysis and does not take account of the socio economic consequences of a complete divergence from traditional farm structures. Although listening to the recent outcry about the fodder shortages I feel a change may be no harm when the sadness, isolation and loneliness of a generation of bachelor men living on farms was brought to light.

Our existing model of agribusiness is based on selling our produce as a commodity or as a food ingredient. We do not sell to a large extent to the final consumer. The problem with this is that the margins on commodity sales are a lot lower than the margins on end user sales. Therefore although the volume of sales is high the profit margin can be low. It certainly isn’t optimized by ignoring our potential to sell directly to the final consumer either through ourselves or in partnerships. Any move up the supply chain may offer greater profit margins.

There is also a lack of resources allocated to investment in research and development of products and product innovations. Consumer demand is rapidly evolving and it is vital that any business recognizes the need for constant innovation in order to remain appealing to the final consumer

(3)   Opportunities

I feel that with all the talk of recession and gloom and doom that people can forget that there is always opportunities for business. It is just necessary to discover where the opportunities lie. If you are a plasterer and think you can continue to make money hand over fist by subcontracting into the construction business on housing estates then really you are only fooling yourself. If however you are a plasterer and you research consumer demand and discover a way of using your skills to offer premium services to the final consumer (such as for example restoration work) then you have the potential to develop a successful business. The same is true for the agri business.  The potential is two fold first of all investing in innovative products which meet the demands of the consumer and secondly moving into the markets which have the greatest potential for growth.

The agribusiness has to offer products that are demanded. In order to access the high margin levels of the supply chain we need to offer innovative products. This may be just a case of marketing existing products in a different manner or accessing the retailer directly or even entering the retail market ourselves.

Traditionally the Irish agribusiness has concentrated on existing markets which are largely developed countries. However it has started to make inroads to newer markets such as the BRIC countries of Brazil, Russia, India and China which are all considered to be at around the same level of development. Also the VISTA countries of Vietnam, Indonesia, South Africa, Turkey and Argentina are under going significant development and growth. It is these types of countries where we can differentiate the Irish agribusiness and avail of the opportunities that they offer. We can’t really produce the volume to feed the poorer countries food demands and we may not want to try. The high volume sales that poorer countries offer are usually at very low profit margins. Ireland however has a limited supply of agricultural produce so we need to maximize out profitability on this limited supply and this is achievable by targeting the growing middle classes in developing countries.

The opportunity is there to go to these countries and perform the due diligence and research needed to generate a market for Irish agrifood. We could foster partnerships both within our own economy in order to achieve economies of scale and to reduce costs such as marketing and transportation. We could also establish partnerships with retailers or producers in the developing countries to reach higher levels of the supply chain and sell high volume output at high margins.

Another major opportunity is to sell our skills set. We have some major agrifood businesses which have developed into world leaders. We can sell the skills we have obtained to other countries. Many countries may have great natural resources or machinery but they lack the people necessary to optimize these resources. By sending our talented people to these countries we can make a lot of money and help develop markets that we can then sell our products into.

(4) Threats

The world economy is currently in a major recession and this is a barrier and threat to the Irish agri business. The banking sector is very hesitant to give finance to business and this may prevent the necessary investment needed to access global markets. The recession has also resulted in weak demand through the world economies as unemployment levels rise and the disposable income of people falls dramatically.

The common agricultural policy is been renegotiated and this can be seen as a potential threat if the negotiations do not promote the growth of the agri business sector.

There are factors outside the control of the agribusness such as ever increasing energy costs and weak exchange rates for the euro. These have to be worked with and managed by the industry.

The biggest threat is the consumer itself. The consumer is constantly changing its behavior and demand patterns. People no longer are influenced so much by huge advertising campaigns. Increased access to the internet makes people aware of the full range of foods available and also allows them to judge the quality and source of the food they are buying. It is the objective of any agribusiness to keep up with the demand patterns and behaviors of consumers and to offer products which meet this demand.

In conclusion the agri business has potential to avail of the huge forecasted growth in global demand for food products. We just have to be aware of this potential and focus our efforts on the areas which will offer the greatest returns for the resources we have available to us.

Why the audit function is so important to larger public companies

Why do large companies need auditors?

Author Frank McGivney

Date 20 April 2013

The company structure is the vehicle by which people with resources can invest in different enterprises in order to increase the long term value of these resources (share capital growth) and to obtain some short term income from their investment(annual dividends) .The company structure allows investors to risk some of their resources while availing of the protection of limited liability. This means that the extent of any loss they will incur is limited to their investment. If a company fails then their other  resources and assets will not be affected. This is a vital prerequisite in order to encourage investors to take the risks involved in putting money into any enterprise. Before the advent of the principal of limited liability the investor could lose all of their wealth if an enterprise failed. 

As companies have developed over the centuries there has been a separation of management from the ownership of companies. In the modern world companies are owned by a large number of investors (shareholders) and the company is run by the directors. This means that the people who run the company are different from those who own the company. This has lead to the development of the agency theory. Essentially the directors act as agents for the owners. The objective of directors should be to maximise the return to share holders both in terms of long term growth and in short term revenue, while also protecting the interests of other stake holders, while still operating the business in accordance with company law regulations and requirements. Agency theory contends that directors however will be motivated to maximise their own salary, benefits, bonus and share options. While also maximising the short term share price so as to reflect favourably on their own personal success in operating the business. However the pursuit of these objectives does not necessarily lead to decisions that are in the best interests of shareholders. This conflict of interest is the reason that auditing is so vitally important. Once one man is entrusted with the resources of another for the pursuit of wealth then given the nature of man it is vital that the fidelity of the controller of the resources is checked and verified.

In Ireland and the UK there has developed an option for smaller private companies to claim audit exemption. This is because in a lot of small companies the above separation of ownership and control does not occur because the owners are also the people who run the company. Therefore the need for an audit is diminished. Also it allows small companies to avoid the high costs of audits, However even within these companies there are published guidelines as to how their accounts should be produced so that they still have financial controls to protect other stakeholders such as creditors and the revenue commissioners.

 Of course in most cases auditors and mangers are on the same side as they attempt to protect the assets of a company and identify anyone who is trying to commit fraud. However they can diverge when it is the managers/directors who are the actual ones who are trying to commit fraud or enrich themselves at the expense of the shareholders of the business. At this stage they separate as the auditors are the ones who will attempt to identify any such malpractice or fraud. The effectiveness of external auditors to actually identify such misbehaviour has been justifiably called into question. Most fraud is identified by whistleblowers and by other parties rather than the external auditors. Currently a lot of work is been undertaking in the accountancy field to rectify this situation. Of particular concern in my opionion is the fact that the four big accountancy firms are the only ones who perform audits in public companies quoted on stock exchanges. Also companies don’t change their auditors regularly and therefore a relationship develops which is not consistent with the off hand nature that auditors should operate in. Some suggestions are that public companies will have to change their auditors regularly. It is also suggested that the firms of a size just below the big four accountancy firms should be allowed to develop to order  to compete for public company audits, There are market forces which are an obstacle to these firms growing to the size where they can compete for public company contracts and these need to be removed in my opinion in order to give more credibility to the profession

 The Cadbury report was produced because of Robert Maxwells Mirror group scandal and the BCCI scandals. In 1992 it stated that “The central issue is to ensure that an appropriate relationship exists between the auditors and the management whose financial statements they are auditing.”

Prior to 1844 in the UK and Ireland only the crown could issue Charters of Incorporation. Examples of such charters were The Honourable East India Company and the South Sea company. The south sea Company was the Enron of its day where false claims of potential profits lead to huge investments in the company. The business proposals proved to be fraudulent and the company collapsed leading to the ruination of many of the investors. The industrial revolution lead to a huge increase in the level of trade and manufacturing in the UK and  an Act of Parliament was passed in 1844 that allowed the incorporation of Joint stock Companies. This was followed in 1855 with the passing of the Limited liability Act which allowed for investors to quantify the risk of loss they were taking in their investments. This resulted in the divergence of ownership and control in large public companies as discussed above.

In 1900 the push towards accountability took a big step with an act that required the publication of a audited balance sheet and thus began the steps to the modern situation of producing full audited accounts by large public corporations in a way to ensure transparency and accuracy in the accounts and information presented to the public.

In Summary audits of large companies are necessary in order to protect the interests of all its stakeholders. These stakeholders include the owners of the business. The auditors function is to ensure the owners investment is safe and that the directors aren’t diverting the resources to their own gain. The auditor also protects creditors to ensure that the assets of the business are preserved to allow it to pay its debts. The auditors’ objectives are extremely complex in the modern business environment and hopefully all of the current developments will give confidence back to people in the work of the auditor.  

We specialise in producing audit exempt accounts for small and medium size companies in Ireland to the high standard required by the Companies acts 1963 to 2013 and accounting standards.
Frank McGivney & Co. Chartered Management Accountants Kells, Co Meath

Fraud Prevention in SME's

Fraud in Small and Medium size enterprises

Author Frank McGivney BA ACMA CGMA

Date: 14 April 2013

Every business owner should be aware of the risks that their business can face in relation to fraud by any party that is involved with the business. The biggest risk of been subject to fraud is the complacency that it will not happen to your firm. This complacency allows fraudsters to operate with ease. A lot of people start their business in good faith and it is easy for them to be unaware of all of the risks involved in running a business as they strive to build a fledging business idea into a success. Historically the following enterprises are most at risk:

(1)   Where the business owners are not aware of the dangers of fraud.

(2)   Where staff are not managed properly

(3)   Where members of staff have unresolved personal issues such as gambling problems, who suffer from alcoholism etc

(4)   Industries which have traditionally been subject to corruption

(5)   Industries which are in decline or which are subject to poor trading conditions.

(6)   Business where proper control and risk assessment systems are not implemented

Of course no matter what controls you put in place there is always a risk of someone committing a fraud on you.

There are three costs associated with fraud

(1) The cost of the fraud itself. This can add up to a significant amount. Take for instance an employee in a retail outlet who pockets Euro100 a week from the till every week. Even a small retail shop may have a turnover of over a million euro a year and so 100 a week out of a turnover of 19000 a week may seem nothing to the fraudster but it adds up to 5000 a year and given the low percentage profit on many retail outlets and the high rental costs this adds up to a high   percentage of the firms overall profit. If the overall profit margin is 15% then the gross profit of the business on a million is 150,000. If you take away rental costs of say 30000 a year and electricity costs of 12000 and staff wages of 50000 a year then the profit is down to 58000. Then take away rates and other expenses and the profit on a million euro turnover is soon down to 30,000 a year and then the 5000 of defrauded money can clearly be seen as a huge percentage of the firms profit

(2) The cost of discovering and quantifying the loss. Forensic accountants may have to hired or an investigator and these all add to the cost of the firm

(3) The cost of putting in place systems to prevent the fraud from reoccurring.

Internally to a firm there are two forms of fraud

(1)   employee fraud this is where an employee defrauds the firm of money

(2)   Financial statement fraud This is here a firm produces financial statements which reflect a better position than reality in order to influence external stakeholders. I will have a future article exploring this area.

Externally other parties can also commit fraud on a firm. This can be done by external contractors, customers and suppliers. This can include double billing for supplies or services. Supplying goods of a quality or value much lower than invoiced, looking for refunds on high value sales with fake sales invoices, etc. Some of the frauds from external parties rely on collusion with employees of the firm. Controls need to be put in place to prevent as much as possible of such collusion. One of the most fundamental controls is ensuring segregation of duties to ensure no one person is in full control of any area of a business on their own. Also managers should not be capable of overriding internal controls on their own

 Fraud prevention and detestation has a lot to do with the culture of the firm. An attitude that fraud is not acceptable and will be fully and firmly dealt with should permeate from the business owners down to every level of the firm. All employees should be aware that fraud is not acceptable and a whistleblowing policy should be established and implemented in a way that will protect the whistleblower.

While every one in an organisation can prevent and detect fraud there are specific people who should be utilised to minimise the risk of fraud been committed. Internal and external auditors should always perform there duties with an awareness of the need to detect and investigate any potential instance of fraud. Auditors can use various tools and analysis to highlight potential areas of risk. Often times analysis which shows skewed results are the pointers to fraud, Simple indications such as employees who never take holidays or staff who will not delegate responsibilities or duties are suspicious. In my experience when employees who go missing when you try to audit them or who can’t explain the operation of their jobs in clear terms are areas to investigate. Of course this can also just be due to factors such as incompetence or resistance to having their work assessed. While doing investigative work for one of the Irish semi-state bodies I found a lot of resistance from older employees as there seemed to be a culture of resistance to change in the company and really a resistance to management in general that I haven’t experienced to such a level in private industry. However I overcame this with proper communication of the objectives of the investigation which was purely commercial in nature. It did highlight areas of concern and lead to a lot of improvements beyond the core work I was contracted to work on.

On occasions where there is suspicion of a fraud then a specialist such as a forensic accountant may have to be used. The forensic accountant’s functions are to

(1)   Determine if a fraud has been committed by using various different techniques and methods of analysis

(2)   Determine the scope of the fraud and how much of a loss has been incurred

(3)   Determine who is responsible for the fraud. In larger firms there is often more than one employee involved and often times there are outside parties also involved

(4)   Determine how the fraud operated and then put in place controls that will prevent it been repeated.

As with everything in life the experience of someone committing a fraud against your firm can be used in a positive manner to learn lessons and to allow the business owner to improve the business. Often times during the forensic accountants work other information and data comes to light. This may relate to how tasks are perfumed and these can lead to more effective and efficient systems bee put in place, as in my example of the semi state body above.

If you feel you have been the subject of a fraud or you want to analysis the ability of your firm to detect or prevent fraud then you can contact Frank McGivney & Co. Ltd on 0469293891 or fmcgivney@live.com. I have experience of forensic analysis for any number of small firms. I have also experience of preparing fraud investigations for the High Court involving cases against among others the banks. I have also produced forensic reports for criminal cases which have been provided to the Criminal Assets Bureau. I also work extensively in forensic reports for divorce cases.

Brief summary of some tax rates in Ireland in 2012 and 2013

Brief summary of some tax rates in Ireland in 2012 and 2013

(A) Corporation Tax is the taxed charged on the profits of a company. They are calculated on an annual basis on the taxable profits of the business

Trading Profit and foreign dividends derived from trading income are taxed at 12.5%.

Start up Relief: if you start a company and it is not set up to replace a former trade (i.e. you not switching an existing trade to a new company whether sole trade or another company) then  the first 40000 of corporation tax over the first three years is not collectable by the Revenue. This is linked to employers prsi at a limit of 5000 per employee.

Non trading income such as interest, foreign rental income, miscellaneous income and rental income are all taxed at 25%.

If you have investment or estate income and do not distribute it to shareholders by the end of 18 months then any of this income not distributed is subject to a surcharge of 20%

The same is true for a service company at the end of 18 months but at a rate of 15%.

Company chargeable gains are taxed at 25%.

Vat

The Vat rates are

0%

5.2% Farmers flat rate

13.5% reduced rate which for certain industries is 9% until December 2013

23% standard rate

The rate you charge depends on your product or service. There is a list on www.revenue.ie .

Some business such as in the education and medical fields are exempt from vat.

Capital acquisitions tax is charged at 30% on all amounts over the relevant thresholds. If you receive the following amounts from these people then you are exempt from the tax. However the amount is cumulative so if you get 100,000 of your mother in 2010 and 200,000 from your father in 2012 then the 50,000 over the 250,000 limit is taxable

(1)   parent to son or daughter 250,000

(2)   Brother or sister, nephew or niece 33,500

(3)   Cousin or stranger 16,750

Stamp Duty

Stamp duty on transfers or conveyance of land or buildings is at the following rates

(1)   non residential property 2&

(2)   Residential: first 1,000,000 is at 1% and balance is at 2%

Advice for setting up your new business

Frank McGivney & Co. Ltd

Chartered Management Accountants

Useful steps for when you set up your new business

Written by Frank McGivney BA ACMA CGMA

Before you decide to set up your new business

(1)   Market Research Carry out market research and investigate the business you are proposing to start

(2)   Pick the right name which will reflect the service or product you want to sell

(3)   Prepare projections to forecasts to determine whether the business is likely to make money

(4)   Decide what structure is most appropriate, i.e should you operate as  company or  sole trader/ Partnership

When you are setting up business

(1)   incorporate a company with the companies registration office if you have decided to operate as a company

(2)   or register a sole trader business name with the companies registration office if you are going to be a sole trader or partnership

(3)   register with revenue commissioners for relevant taxes such as corporation tax, income tax, vat, paye employer and relevant contract tax

(4)   set up bank account, this may take up to ten days

(5)   advertise and market your product or service to your target market

Once you have set up your business you need to establish

(1)   Sales control this involves having an invoice book , setting up a system for sending out monthly statements, setting credit limits for customers and having a system for collecting money

(2)   Purchase Control: this involves choosing suppliers of goods and services, putting in place payment schedules for paying your bills, setting up direct debits for some bills such as electricity, telephone etc

(3)   Financial management. This involves controlling your finances, you need to ensure you get in all the money that is owed to you in a timely manner and then controlling your spending so that you can pay important bills when they fall due

(4)   Control expenses you need to find the best value for the goods and services you purchase that gives you the quality you need at the best price

(5)   Keep records. You need to establish a system to record purchases and sales. You have to keep all your invoices. You should file your bank statements. Make sure you fill out all your cheque stubs legibly

(6)   Do your tax returns on time. Make sure you meet all relevant deadlines for filing returns and pay all taxes as they fall due

I have more detailed articles on most of these subjects on http://frankmcgivney.blogspot.ie/ or you can ring me Frank McGivney on 0469293891 or email me on fmcgivney@live.com for more detailed advice on any of the above. I offer  full accountancy and tax service. 

 Frank McGivney & Co. Chartered Management Accountants Kells, Co Meath