04 Oct 2017 | 10.28 am
Interview: Alma O’Brien, Baker Tilly Hughes Blake
Valuable tax reliefs are available if business is correctly structured
04 Oct 2017 | 10.28 am
Alma O’Brien, Partner and Head of Tax at Baker Tilly Hughes Blake, provides tailored tax solutions to owner-managed entrepreneurial and family-owned businesses. She is also a specialist in the property and construction industry.
In your dealings with business clients, what tax planning or tax resolution issues are of most concern to them at the moment?
The most common tax issues that arise are:
• Retention and incentivising key employees.
• Ensuring that the most tax-efficient structure is in place for both business sale and/or succession planning. There are hugely valuable tax reliefs available which can save significant taxes if the business is correctly structured.
• Holding of property and other investment assets without interfering with trading tax reliefs.
A recent ITI survey found that of companies availing of the R&D tax credit, almost half found it difficult to prepare and administer. What are the main pitfalls you encounter with clients, and how can your firm help?
In our experience, businesses often refrain from getting into the R&D space. The administrative burden is viewed as cumbersome, heavily wrapped in red tape and lacking in clarity. There is also a view that R&D tax credit is for tech companies only which is not the case. I have a significant number of clients who have benefited from this from more traditional sectors particularly in manufacturing so it’s worth exploring.
Our experienced tax team assist clients in ensuring that the paperwork to support their claims is sufficient to withstand Revenue review.
A business owners five years out from projected retirement – what are the important tax issues to plan for?
Any retirement plan should consider:
- Capital Gains Tax – Retirement relief and Entrepreneur reliefs.
- Preparation and restructuring of business for sale if applicable, to avail of above reliefs.
- Taking value from business prior to sale – tax-efficient termination and pension payments.
- Plan for effective replacement income (lump sum payment, pension provision, alternative source of income etc.).
What tax reforms would you like to see to assist business in the upcoming Budget 2018/Finance Act 2017?
Tax should not be a disincentive to the growth of business
Here at Baker Tilly Hughes Blake we deal with business owners and entrepreneurs, the people who provide jobs throughout the country. We firmly believe that people need to be supported and that the growth of their business needs to be encouraged across the board. Our national tax policy should provide this support. It is my view that the following measures could help:
- Equal tax treatment for the self- employed and employees/directors – in particular tax credits and USC treatment is disadvantageous to the self-employed.
- Reduction in Capital Gains tax rate to encourage more capital transactions
- Increase in Entrepreneur Relief threshold (currently €1m) to bring it in line with UK relief (currently £10m).
- Increase in Capital Acquisition Tax thresholds to take dramatic property value increase into account.
- Increasing the standard rate cut-off point to lessen employment costs for businesses. Our effective tax rates are relatively low on salary levels up to the average industrial wage of €35,783 compared to the rest of Europe. However, where wages are higher for more skilled and senior employees, the tax costs increase dramatically. These high tax rates result in demands for increased wage levels which can put pressure on growing businesses.