30 Sep 2017 | 12.31 pm
Interview: Donal O’Leary, PKF O’Connor Leddy & Holmes
'The main problem with the R&D tax credit is a lack of clarity'
30 Sep 2017 | 12.31 pm
Donal O’Leary, Managing Partner at PKF O’Connor Leddy & Holmes, has more than 25 years of experience in the tax sector and advises on areas such as income tax, corporation tax, VAT and Capital Gains Tax.
In your dealings with business clients, what tax planning or tax resolution issues are of most concern to them?
Clients are always concerned that they are fully compliant with current legislation and revenue practise, and they their business is availing of all the reliefs and that they are minimising tax exposure.
Many companies availing of the R&D tax credit find it difficult to prepare and administer. What are the main pitfalls you encounter with clients?
The main pitfall with the R&D tax credit is the lack of clarity and certainty in relation to what activities actually qualify for the tax credit. It is very important that companies who claim the R&D tax credit have a high degree of certainty that, having calculated and claimed the credit on a reasonable basis, they will not see their claims being significantly altered as a result of future Revenue checks or audits. From a company’s perspective, real time record keeping of projects significantly increases the potential to claim the tax credit.
How common is it for businesses to come unstuck on VAT issues?
VAT often tends to be the forgotten tax for businesses as in theory VAT should not be a cost to most businesses. However, as VAT is a transactional tax as opposed to a profit orientated tax, liabilities can accumulate quickly. Add to this the fact that businesses are becoming ever more globalised and it is easy to see why VAT is a high risk tax.
A business owner five years out from projected retirement – what are the important tax issues to plan for?
As retirement nears it is essential for business owners to have a succession plan and an exit strategy. Business owners need to ensure that they maximise the benefits of reliefs such as entrepreneurial relief and/or retirement relief. Business owners need to decide whether they are going to sell their business, gift it to the next generation or simply wind up the business. Business owners also need to consider pension planning in the context of their overall exit strategy.
What tax reforms would you like to see to assist business in the upcoming Budget 2018/Finance Act 2017?
- Reduce CGT to OECD average of 23%.
- Increase entrepreneurial relief threshold to €5 million.
- More reliefs for CAT to encourage transfers of assets to next generation to all their purchased homes.