Dennis O Brien High Court decision

One of the few ways to reduce or eliminate your tax liabilities is to be non resident in Ireland at the time that a tax charge crystalises. This is mainly of signfigance for larger tax bills as the costs associated with living or moving abroad may be restricitve unless a lot of money is involved in a tax bill. It also needs astute tax plannng to find a country which will results in a lower tax bill. As highlighted by the following

Denis O’Brien wins High Court case, will not have to pay €57m tax bill
The case focused on whether or not the billionaire businessman lived at a property on Raglan Road in Ballsbridge.
34 minutes ago 2,046 Views 25 Comments
Share6 Tweet Email3
Image: Niall Carson/PA Archive/Press Association Images

THE HIGH COURT has upheld a ruling by the Revenue Appeals Commissioner that Denis O’Brien is not liable for a €57 million tax bill.

The Inspector of Taxes had argued that the billionaire should pay €56.86 million in Capital Gains Tax on the €284.8 million received when Esat Digifone was sold to British Telecom in 2000.

In her judgement, Justice Mary Laffoy ruled that 6 Raglan Road – which O’Brien bought in 2000 – was not the permanent residence of the businessman during the 2000/2001 tax year.

Under Ireland and Portugal’s Double Taxation Convention, then, O’Brien is not liable for the tax bill.

Justice Laffoy said she was satisfied that the Appeal Commissioner did not adopt a wrong or mistaken view of the law.

She agreed that O’Brien lived in Portugal at the time of the sale. Revenue had argued the point but the Court found the premises were “unavailable for residential use” during June 2000 and February 2002 because of commissioned works.

Advie on Insurance, Pensions and Investments

The insurance, investment and pension side of our business is been handled on a consultacy basis by Derek Maguire of Financial Architects Ltd. He has provided my clients with the absolute best of advice on the full gambit of  financial product on a professional basis. Derek and his wife are two of the top financial consultants in the country. I have attached below a recent report that Derek provided for me relating to the performance of a clients investmkent portfolio which when analysised led to Derek bee able to switch the client out of a poor performing investment into one offering much higher returns.
I have always been an advocate of matching clients to investments which reflect their attitude to both risk and return. I have adviced cleints in relation to their businesses in this regard for the last 15 years and Derek does the very same by means of profiling with all of our clients. This ensures your hard earned money is placed where you are comfortable that it will be secure and provide a return that reflects your own personnal attitudes to risk.
If you contact me or Niamh on 0469293891 as a first step and we can set up a meeting to get you the best advice

Below is a copy of the report showing the performance of some higher risk investments for a client who met the criteria of been open to higher levels of risk in anticipation of a higher return on investment (ROI)


 Risk Analysis Report - 17/06/2008 To: 17/06/2013 - Weekly Frequency - Aligned to Start Date
MoneyMate Rating is calculated at 01/04/2013
Name Perf Ann
Perf Fund Rating Max
Drawdown Risk Profile
SL Synergy UK Smaller Companies 67.512% 10.869% Not Rated -47.765% Not Rated
SL Synergy Euro Smaller Companies 59.112% 9.734% -41.448% Very High Risk
SL Synergy North American Equity 45.995% 7.862% -38.846% High Risk
BOI Life - Smart Funds Davy Geared Hi Yield Fd 25.875% 4.710% -47.489% Very High Risk
BOI Life - Smart Funds Innovator S9 -19.848% -4.328% -49.098% High Risk
Presented by: MoneyMate Limited
The figures shown are based on the following:
Local Currency, Offer to Offer, Gross income re-invested on Ex-dividend date
Past performance is not necessarily a guide to future performance
Risk Free Return: 0%
© MoneyMate Limited 2012. All Rights Reserved. MoneyMate ®.

Income Tax first year of business

There seems to be confusion that business's don't pay tax the first year that they are in business. Unfortunately you pay tax every year that you have taxable income, it's just the timing of it that can cause confusion. You put in your tax return for any given year by the following 31 October. Therefore you do put in a return for your first year however isn't sent in until the following October. At this stage you need to pay the first year's tax and preliminary tax for the second year. So you get hit with a double tax therefore I always advice clients to pay income tax on a systematic basis in the first year to avoid a situation where you cant afford to pay all the tax that may be due. Its actually further complicated by a concession by the Revenue Commissioners that you can wait two years to submit the first return. This can be advantageous if your business is in need of a lot of working capital to get to a point of sustainability but it is a risky concession to avail of if you haven't planned for the amount of income tax that will become due in the third year which could amount to 3 years of income tax.

Proposed Light Version of Examinership in Ireland

Proposed Light Version of Examinership in Ireland

In Ireland the Examinership process is a means by which companies can avail of the protection of the High Court for a period in order to explore options to reorganize and restructure in the hope of securing the future viability of the company. As High Court Justice Clarke noted in the Traffic Group Ltd Case (2008) "It is clear that the principal focus of the legislation is to enable in an appropriate case, an enterprise to continue in existence for the benefit of the economy as a whole and, of equal, or indeed greater, importance to enable as many as possible of the jobs which may be at stake in such enterprise to be maintained for the benefit of the community in which the relevant employment is located. It is important both for the court and, indeed, for examiners, to keep in mind that such is the focus of the legislation".

 It is a process unique to Ireland and it allows firms to avail of the stewardship of an independent examiner (usually an accountant) to negotiate and reorganize itself so that it can continue to operate into the future.

At the moment the process is extremely expensive both in terms of the legal costs because of the fact the High Court is the court involved and also because of the costs of the examiner who because he is appointed by the High Court is also under a duty of care and responsibility that can only lead to high costs. Also the highly complicated and detailed work involved makes it costly.

However there are proposals that the proposed new Companies Act will provide provisions for the process to be availed of by smaller companies. The usual criteria of meeting two of the following will likely apply

(1)   Turnover is less than 8.8million per annum

(2)   A balance sheet value of less than 4.4 Million

(3)   Fewer than 50 Employees

This new process will allow applications for examinership of a certain size to go to the Circuit court. Hopefully this will help to reduce the costs involved and to allow more companies to avail of it.

A lot of companies that fail do so because they can not meet their debts as they fall due at a particular point in time. However this liquidity failure does not mean the business couldn’t be made viable by reducing its cost base and intelligent restructuring of its systems and processes.

Hopefully the Minister can recognize this and implement a scheme that will allow for the successful protection of firms and the employment they provide.

By Frank McGivney BA ACMA CGMA 30 July 2013

Thought of the day 20 June 2013

There is of course a silver lining in every cloud and from every person or situation there is a lesson to be learned. Sometimes the silver lining is hard to recognise and sometimes the lesson is hard learned. Also sometimes the lesson to be learned is simply not to listen to the advice of someone in the first place, especially if not experienced or trained in the area that they are talking about.
In the areas of law and taxation people form opinions and have knowledge based on either their own experiences or from the media or google etc. The problem is that every person and every situation is different and you need to know the full extent of the legislation relating to taxation and accountancy in order to be confident that you are correct in your opinions about any matter. Hence the need for accountants and tax advisors.
Often times people come in and tell me that their friend Tom down the road told them (usually at some social function after consuming copious amounts of alcohol) that he earned a huge amount of money last year and paid no tax hardly on it at all. Or they relate stories of a similar nature. The problem is Mr SO and SO is not them. His circumstances are invariably different and also he may not have received good advice in the first place. So the message of the day is to proceed with caution when taking advice you hear and at least check it with your accountant before acting on it (or check with your solicitor as the case may be).
I have a Volvo that I love driving, its big and old and my good wife is allergic to it. But I love driving it and refuse to change it on the basis that it was built for me in mind. However if by some unusual circumstance it breaks down I have this policy of bringing it to a mechanic to be fixed instead of the next door neighbour. Whom by the way has a keen interest in automobiles and has acquired what could only be referred to as a substantial amount of tools which he proudly displays in his garage.
I presume they are related to the repair of cars and vans as I personally have no ideawhatsoever of their function. The same Ipropose should be your feelings in relation to your financial affairs. If you want tax advice ring an accountant and preferably me or Niamh on 0469283891

Capital Gains Tax Planning with residence and domicile

Capital Gains Tax Planning with residence and domicile

Capital Gains Tax (at 33%) in Ireland is a tax imposed when you sell an asset. This is distinct from when you operate as a trade which is taxed by way of income tax. It was introduced to the UK in 1965 to commercial trasactions which up to then were outside of the tax net and 10 years later the Capital Gains Tax Act 1975 was introduced in Ireland. I have outlined below three tax planning mechanisms that can assist people in certain circumstance to minimise their capital gains in Ireland

(1) If you are non resident (you have spent less than 183 days in Ireland in a tax year or 280 over two years) but still ordinarily resident in ireland (i.e. you are less than 3 year out of Ireland)then you can use the fact that irish tax treaties take precidence over domestic tax law. By living in a country with a lower capital gains tax rate (which has an appropriate tax treaty with Ireland), you can elect to have a gain taxed in your new country of residence and avail of the lower rate.

 (2) If you are married to someone who is non domiciled in Ireland. i.e they were born in another country and have not changed their place of domicile to Ireland (there is more to domicile than this but it gives an indication of what it means) then if you transfer foreign assets to your spouse before you sell them and as long as the proceeds from their sale are not remitted (brought into Ireland) then they should not be taxable under capital gain tax in Ireland

 (3) If you are non domiciled in Ireland (i.e. born in another country and you havent changed your domicile to Ireland) then if you sell assets abroad then only the amount that you bring back into Ireland is taxable

Of course these tax planning issues are only outlined above and you should get professional advice from an accountant such as ourselves before you avail of them. In particular in relation to the five year rule for CGT holidays (which would appear to be in contravention of EU Law.
 Author Frank McGivney BA ACMA CGMA
 Frank McGIvney & Co. Ltd,
 38 Cherryhill Court, Kells,
 Co. Meath
 0469293891 fmcgivney@live.com

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