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Welcome to the FMB Chartered Accountants Blog. We answer all of your financial and accountancy questions, as well as keep you up-to-date with the latest news from FMB.

Resignation of Directors

David McArdle - Friday, August 22, 2014

There is no legal limit to the amount of time that you can remain a director of a private limited company, as long as you continue to meet the mandatory requirements. However some restrictions are imposed for public companies and the Multi-Unit Development Act, 2011 also limits the terms that Directors of Owners’ Management Companies may serve on the board.




There are of course a wide variety of circumstances that may require a Director to resign, ranging from a conflict of interest, a desire to seek new opportunities elsewhere, a disagreement with the board of directors on a commercial point or indeed if they believe that the company is undertaking activities that are illegal or fraudulent.


Retirement by Rotation

Some companies, inline with Table A of the articles of association, include a regulation which provides that up to one third of directors retire each year. Usually these directors then offer themselves for re-election at the annual general meeting, conversely a director may retire by therefore simply not offering himself for re-election. In practice this provision tends to be cumbersome and inconvenient and many private companies amend their Articles to remove it.


Resignation by Notice in Writing

Table A again requires that notice of resignation be given in writing. Such notice should be addressed to the chairman or secretary and be precise as to the actual date of resignation,

furthermore it cannot be retrospective.


Whilst this provides a general rule of thumb for the most common mechanism utilised for resigning as a Director, individual companies may include specific provisions of their own Articles such as the length of notice required and the format or manner in which it is to be delivered.


How is a Resignation Notified to the CRO?

As with the appointment of a Director, the resignation of one must also be notified to the CRO on a B10 form within 14 days of it occurring. Are signing Director cannot sign his own B10 form and the onus is therefore on the company, and the remaining Directors, to ensure that the form is lodged. Just like an appointment, the company must also ensure that the Register of Directors & Register of Directors’ Interests is duly updated.


What Happens if a Company Fails to File a B10 Form?

If a company fails to file aB10 form in respect of a Director who has resigned, there is a procedure in place whereby the former Director can notify the CRO of his own resignation

using a Form B69. Prior to filing the form B69, the Director in question must follow a specific procedure.


This includes notifying the company in writing of his resignation, which, if not acted upon, is then followed by a further request to the company for the B10 to be lodged within 21 days and the resigning Director also forwarding a copy of his resignation and his notice of request to the company, to every person who is, to his knowledge, an officer of the company.


Removal of Directors

A Director cannot be dismissed by the board unless the Articles of Association make specific provision for it. However, if someone is a life Director of a private company, they can be dismissed from that position, at any time before the expiration of their term of office, by an ordinary resolution passed by the shareholders in general meeting.


This is regardless of any provisions that might exist in the Articles of Association or indeed in any contract of service between the company and the Director. Are solution to dismiss a Director in this manner must firstly be proposed by a shareholder who requisitions the Directors to call an EGM, which must be held at extended notice.


The company must also send notice of the EGM to the Director who is to be removed and he must be afforded the opportunity to make representation. Once there solution has been passed,

the form B10 is then filed with the CRO in the normal manner. When undertaking any procedure to retire or dismiss a Director, extreme care should be taken to ensure that their signing powers on the company’s bank account and elsewhere are cancelled. The dismissal of a Director may

also lead to the Director in question seeking damages, if he is an employee, for breach of his service contract, or he may also be able to claim redundancy payment or compensation

for wrongful dismissal.


If he is also a shareholder it may lead to a winding-up petition or a petition based on oppression. For these reasons, legal advice should always be sought prior to proceeding with the removal of a Director.


Resignation of Directors is a follow up article of our past blogs, How to Become a Director? and Appointing a Director.


Contact our team for advice and information. Call FMB on 01 645 2002 or email enquiry@fmb.ie.

You can also signup for our quarterly Newsletter and keep up-to-date with FMB news on business, finance and more.


eDay Deadline from Revenue

David McArdle - Thursday, August 21, 2014

Revenue launched a reminder of the eDay deadline for which central Government, local authorities and State agencies stop issuing and accepting cheques from businesses.




eDay is the 19th September, this year.


eDay is there to encourage SME’s away from using cheques as it is an expensive way of payment for businesses. As stated by Revenue, ’Businesses are migrating away from cheque usage and opting for more efficient payment methods instead. e-Day will move this process along while reducing costs for businesses.’


Revenue’s online payment methods as an alternative to cheques and cash include direct debits, single debit instructions, debit card and credit card.


Business Customers using Cheques

Revenue has advised those that are business customers paying or receiving cheque refunds to be prepared for the eDay Deadline.


Business customers can contact ROS Payment Support Unit at 1890 226 336 to discuss payment solutions with the Revenue Commissioners.


Contact our team for advice and information. Call FMB on 01 645 2002 or email enquiry@fmb.ie.

You can also signup for our quarterly Newsletter and keep up-to-date with FMB news on business, finance and more.

Appointing a Director

David McArdle - Thursday, August 07, 2014

Last month we talked about Who Can Become a Director. Today FMB highlights the important points for Appointing a Director.




Appointment of Directors

New Directors can be appointed to a company in a number of ways;

  • By an ordinary resolution of the shareholders at a general meeting
  • By co-option by the existing board of Directors. Directors so appointed are usually required to retire and stand for re-election at the next Annual General Meeting
  • By any special procedure provided for in the Articles of Association e.g. the Articles of a subsidiary company may empower the parent company to appoint or remove a director by way of notice sent in writing to the registered office of the company.

Whichever mechanism is used, all appointments of directors must be notified to the Companies

Registration Office within 14 days, through the filing of a B10 form. The Register of Directors and the Register of Directors’ interests, if appropriate, must also be updated, as a B10 on its’ own, whilst indicative, is not conclusive proof of who is an officer of the company.


Can I Be a Director of More Than One Company?

A person can hold up to 25 Irish directorships at any one time. In the calculation of this threshold, certain directorships can be excluded such as those relating to public limited companies and or groups of companies.


Can I Be Appointed a Director Without My Consent?

Both the notice of the appointment of first Directors (CRO form A1) and the notice of appointment of all subsequent Directors (CRO form B10), must contain the signature of the appointee signifying their consent to their appointment. Therefore, appointments cannot be made effective without your consent.


Contact our team for advice and information. Call FMB on 01 645 2002 or email enquiry@fmb.ie.

You can also signup for our quarterly Newsletter and keep up-to-date with FMB news on business, finance and more.


Relief to Individuals on Loans Applied in Acquiring an Interest In a Partnership

David McArdle - Friday, August 01, 2014

An individual could claim tax relief on interest paid on money borrowed to acquire a share in a partnership.


Finance (No.2) Act 2013 abolished interest relief for all loans made on or after 15 October 2013 (save for some acquisitions of interests in certain farming partnerships. Interest relief for existing qualifying loans is to be phased out over 2014 - (75%), 2015 – (50%) and 2016 – (25%) with no relief available after 1 January 2017.


Revenue has confirmed that where a loan is issued post 15 October 2013 but it replaces an existing qualifying loan and the replacement loan does not exceed the balance and term of the existing loan, tax relief will still be permitted in line with the phased out relief until 1 January 2017.


Contact our team for advice and information. Call FMB on 01 645 2002 or email enquiry@fmb.ie.

You can also signup for our quarterly Newsletter and keep up-to-date with FMB news on business, finance and more.



How to Protect your Business from Becoming Involved in VAT Fraud

David McArdle - Saturday, July 26, 2014

Revenue have recently published guidelines on How to Protect your Business from Becoming Involved in VAT Fraud.




These guidelines are there to warn about the consequences of becoming involved in a set of transactions with a VAT fraud even if the transactions in which the business is involved are not themselves unlawful.


What to expect in the Revenue Guidelines

The European Court of Justice in a number of cases concerning VAT fraud has held that:


(a) a taxable person who knew or ought to have known that, by his purchase of goods, he was party to a fraudulent transaction can have his right to deduct related input credits refused.


(b) a taxable person who knew or ought to have known that the transaction carried out was part of a tax fraud committed by the purchaser may be denied the right to zero-rate the intra - Community supply to that purchaser. Revenue will apply the principles established in these cases where it has satisfied itself, having regard to objective factors, that the taxable person knew or ought to have known that he was participating in a transaction connected with VAT fraud. Revenue will also apply addition penalties where appropriate.


Due Diligence

It is good business practice to undertake due diligence when entering into a business transaction, particularly with an unknown party. In order to help avoid being an unwitting party to a VAT fraud, we have set out examples of reasonable steps you can take to establish the integrity of your customers, supplies and supplies. Revenue expects that as legitimate traders you will, on an ongoing basis, assess the integrity of your supply chain and the suppliers, customers and goods within it.


Risk Indicators

You should be particularly alert to practices that deviate from normal commercial practices within you industry. To minimise your risk, you should, in addition to the due diligence checks, consider:


  • The nature of the supply;

  • Payment arrangements and conditions; and

  • Details of the movement of goods involved.

“If a commercial proposition looks too good to be true it probably is and you need to undertake whatever inquiries are necessary to establish the bona fides of the transaction or transactions concerned and the trading partners involved" - Revenue


Get the full Guidelines from Revenue HERE.


Contact our team for advice and information. Call FMB on 01 645 2002 or email enquiry@fmb.ie.

You can also signup for our quarterly Newsletter and keep up-to-date with FMB news on business, finance and more.



Who Can Become A Director?

David McArdle - Friday, July 25, 2014

As there are no specific qualifications required by law, almost any individual person can become a Director of a private limited company in Ireland.


There are of course some exceptions to this rule and the most common examples are listed below:

  • Undischarged bankrupts are prohibited from becoming directors

  • A corporate body is not permitted to be a director

  • The company auditor is prohibited from also acting as a director of that company

  • Those who have a disqualification or restriction order against them (interestingly, a person disqualified in another jurisdiction is permitted to act as a Director of an Irish company provided notification of this is given to the CRO prior to appointment).




Other common restrictions relate to age (minimum and maximum) and whether a Director must also be a Shareholder of the company. It is also important to note that whilst Directors of Irish companies need not necessarily be resident in the country, at least one of the Directors must be

resident in the EEA (European Economic Area).


DUTIES & RESPONSIBILITIES OF DIRECTORS

The Directors are appointed by the owners of the company (the members or shareholders) and their primary function is to manage the company on behalf of the members. Under present legislation every company must have a minimum of two Directors at all times, however proposed changes in the Companies Bill 2012, do allow for a new single-Director company for the standard private limited company type. Although it should be further noted that in such cases a separate company secretary will also be required.


Directors have both statutory and common law duties that they must fulfil, and the legal onus on them should not be underestimated.


DUTIES OF A DIRECTOR

3 categories of duty - ordinary, fiduciary & statutory

Power to allot shares

Power to declare dividends/carry forward profits

Power to borrow money

Power to appoint a Managing Director


Directors can also find themselves subject to prosecution in a personal capacity, most commonly by the ODCE for contraventions of Section 202 (failure to keep proper books of account). In the event of a successful prosecution, where fines are levied they can run into thousands of Euro. Directors of companies who persistently file their annual returns late, or not at all, can also find themselves personally prosecuted by the CRO.


In summary, if Directors keep proper books and records, file their returns on time and do not take unauthorised money they will meet most of their obligations.


APPOINTMENT OF DIRECTORS

New Directors can be appointed to a company in a number of ways:

  • By an ordinary resolution of the shareholders at a general meeting

  • By co-option by the existing board of Directors. Directors so appointed are usually required to retire and stand for re-election at the next Annual General Meeting

  • By any special procedure provided in the Articles of Association e.g. the Articles of a subsidiary company may empower the parent company to appoint or remove a director by way of notice sent in writing to the registered office of the company.


Whichever mechanism is used, all appointments of directors must be notified to the Companies Registration Office within 14 days, through the filing of a B10 form. The Register of Directors and

Directors’ interests must also be updated, as a B10 on its’ own, whilst indicative, is not conclusive proof of who is an officer of the company.


CAN I BE A DIRECTOR OF MORE THAN ONE COMPANY?

A person can hold up to 25 Irish directorships at any one time. In the calculation of this threshold, certain directorships can be excluded such as those relating to public limited companies or groups of companies.


CAN I BE APPOINTED A DIRECTOR WITHOUT MY CONSENT?

Both the notice of the appointment of first Directors (CRO form A1) and the notice of appointment of all subsequent Directors (CRO form B10), must contain the signature of the appointee signifying their consent to the appointment. Therefore, appointments cannot be made effective without your consent.


Contact our team for advice and information. Call FMB on 01 645 2002 or email enquiry@fmb.ie.

You can also signup for our quarterly Newsletter and keep up-to-date with FMB news on business, finance and more.


Adjustment of VAT deductible where consideration is unpaid after six months

David McArdle - Friday, July 18, 2014


Source: Revenue.ie

The Finance Act 2013 has inserted a new section 62A in the VAT Consolidation Act 2010. This deals with the adjustment of tax deductible in relation to unpaid consideration.


The point of this section is to provide for an adjustment of the amount of VAT deductible where a person who has made a deduction of VAT in a taxable period, has not paid the supplier for the related goods or services within six months of the end of that taxable period. For part payment that has been made, the adjustment is required for that element that remains unpaid after six months.

Where an adjustment is made and the person subsequently pays the full consideration or part thereof, a corresponding re-adjustment should be made. 

In exceptional circumstances, where there are genuine commercial reasons for not having paid the consideration and Revenue are satisfied with these reasons, no adjustment is required. This new provision has effect in relation to tax deducted in VAT periods from January 2014.

Contact our team for advice and information. Call FMB on 01 645 2002 or email enquiry@fmb.ie.

You can also signup for our quarterly Newsletter and keep up-to-date with FMB news on business, finance and more.


PAYE: Employer’s obligation to Register Employees

David McArdle - Thursday, June 19, 2014

On 13th June 2014 the Revenue Office released a Tax Briefing with regard to new responsibilities for employers in relation to the PAYE system. Employers are now obligated by law to maintain and keep a Register of Employees and may at any time be requested to produce a hard or soft copy of the register.




The Register of Employees details

The Register of Employees must contain certain details of each employee beginning from the tax year 2012 and cover all subsequent years. Details that must be included in the register for each employee are:

  • the name,

  • address and

  • Personal Public Service Number (PPSN) of each employee;

  • the date of commencement of employment of each employee;

  • and where relevant, the date of cessation of employment of each employee.


The brief also states that employers must keep and maintain the Register of Employees (or a copy of it) either at the normal place of employment of each employee or at the main place of business of the employer. In the event of an employer having more than one place of business, the Register of Employees may be kept in one location where the records are held may be accepted as that employer’s main place of business for the purposes of being the place of retention of that employer’s Register of Employees.


Producing the Register of Employees

Revenue officers carry out pre-arranged and unannounced visits to businesses to ensure that such businesses comply with their tax and duty obligations (including obligations on employers to register with Revenue for the purposes of the PAYE system and to keep and maintain, for PAYE purposes, a Register of Employees). Such visits may be random, may be part of a "sectoral review" of specific types of businesses or may stem from complaints to Revenue as regards an employer’s failure to operate the PAYE system (or to operate the PAYE system correctly).


Employers may be requested to produce an extract of their Register of Employees within a specified time period. There is a statutory obligation on employers to produce either their Register of Employees or an extract of same, upon request from a Revenue Officer, within a specified time period.


Penalties

Where an employer is obliged, but fails, to keep and maintain a Register of Employees at the normal place of employment of each employee or at that employer’s main place of business, Section 987 Taxes Consolidation Act 1997 provides that that employer shall be liable to a penalty of €4,000. In addition to the penalty of €4,000, where that employer is a company, the secretary of that company is liable to a penalty of €3,000.

In some instances, an employer may, for the purposes of payroll, human resources or fulfilling a non-tax related statutory obligation, hold a record or register of all employees (and former employees). Such a record or register will suffice as a Register of Employees for PAYE purposes provided that it includes the relevant details outlined above.


If you need any advice, contact FMB by calling 01 645 2002 or emailing enquiry@fmb.ie.


Sign up for our quarterly Newsletter and keep up-to-date with FMB news on business, finance and more.



Taxman gets €9m in expenses crackdown

David McArdle - Tuesday, June 17, 2014


The Tax authority has been conducting a National Audit Project on those who work for one client and provide services through their own company, mainly contractors in the IT, Scientific, Technical and Administrative sectors.


It is said that the claim of excessive expenses from professionals through a company has yielded €9.3m for the Revenue Commissioners since last year.


Quoted by Finance Minister Michael Noonan, the expenses reimbursed tax free “was found to be excessive and several cases included expenses which had not been incurred at all or were personal rather than business related.”


Michael McGrath of Fianna Fail advised, "In light of these startling figures any self-employed contractor providing services through a company under contract to a third party client would be well advised to have their tax situation independently checked to ensure they are not building up a massive bill of underpaid tax,"


Following a Revenue pilot project which yielded €4.5m in the South West region, a total number of 385 audits have been closed with additional tax due in 299 cases. 49 have agreed to settlements. 368 companies are still under audit, and €9.3m in interest tax and penalties has been collected.


If you need any advice, contact FMB by calling 01 645 2002 or emailing enquiry@fmb.ie.


Sign up for our quarterly Newsletter and keep up-to-date with FMB news on business, finance and more.



FOREIGN EXCHANGE: Risk Management

David McArdle - Friday, June 13, 2014

The Irish economy generates foreign exchange (FX) flows of approximately €200 bn every year from the import and export of goods and services in addition to financial flows. Volatility in the FX markets is an ever present challenge to financial managers and business owners who are trying to minimise the impact that movements in FX rates can have on their core business.



An effective and flexible hedging strategy can achieve the dual aim of protecting the bottom line while giving the business the opportunity to benefit from an improved exchange rate environment in the event it becomes achievable throughout the year. The reality is that nobody can predict where the market will be in 3, 6 or 9 months time but we can examine current conditions, weigh up how these factors will evolve over the coming months and make informed decisions based on these considerations


What you can do?


SPOT

Spot contracts are suitable for those who need to buy or sell a currency quickly, and need to make payments to suppliers or convert sales proceeds immediately. Price and speed of delivery are the most important factors to consider.


FORWARDS

This type of contract allows you to book an exchange rate for a specified date in the future. Forward contracts are a useful hedging tool that allow you to lock in a rate now for a transaction at a later date, providing certainty as to the Euro equivalent of your income or expenditure. This allows you to protect your business against adverse movements in the currency markets.


OPTIONS

Typically an option is a contract that gives you the right, but not the obligation to exchange money at a pre-agreed exchange rate on a future date. However, for the extra flexibility that foreign exchange options can provide, there is a cost to purchase these contracts in the form of an up-front premium.


ORDERS

LIMIT ORDERS

Orders can be left out in the market, allowing you to target an exchange rate that is better than what is currently available. When the target rate is reached, you will automatically buy or sell the currency required. These can be useful if you have specific currency requirements but are not restricted by tight deadlines.


STOP LOSS ORDER

A stop loss order allows you to set a minimum or 'worst case' exchange rate at which you will buy or sell your currency. It is put in place to ensure that, should rates move against you, you have a safeguard in place to protect against further dis-improvement beyond your 'worst case' rate.


If you need any advice or information, contact FMB by calling 01 645 2002 or emailing enquiry@fmb.ie.


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