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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 financial news.

Our Blog

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.

Five is the Magic Number

David McArdle - Wednesday, April 23, 2014

With the recent decision to hike up DIRT on deposits and exit tax gross savings and investment policies to 41% from 1 January 2014, more people will seek greater net investment returns. But beware… speculating is not investing and choosing funds and investments based on whatever is flavour of the day or is hotly tipped on the web or is leading the performance tables should set the alarm bells ringing.

Investment is all about you and your personal objectives and financial goals. In order to build and manage a successful investment portfolio it is recommended that you identify where your overall assets are invested and build a portfolio that has the right balance and risk that is right for you.

 The following five steps are easy to follow:

1. Have Clear Goals

Is the objective of your investment to seek a real return i.e. a net return ahead of inflation? Is it to generate income? Is it a combination? Can you invest part of the money with a longer term time horizon? What will you do for accessible cash?

2. Know Your Investment Risk Tolerance

Risk and return go hand in hand and if you want higher returns you have to take higher risks. There are no shortcuts and if an investment offers more than the risk-free rate (i.e. deposits) then it comes with higher risks in terms of capital loss and the possibility of lower returns than anticipated. Higher risk investments such as equities are generally expected to return more than lower risk-free investments such as cash. However, taking on a high level of risk does not guarantee greater returns or it wouldn’t be risky! There are numerous ways to measure risk but checking the volatility of your investment is a good place to start with (volatility being the extent to which your investment fluctuates in value). Volatility of an investment in isolation is not enough to assess an investment.

3. Focus on a Mix of Assets

Asset allocation is the process of dividing up your capital and allocating it to more or different types of asset classes. An asset class is the term given to a group of investments that share similar risk and return characteristics and includes cash, equities, fixed interest, property, commodities and alternative investment styles. The key is getting the mix aligned with your risk profile.

4. Select High Quality Funds

Investors derive much of their financial knowledge from what they read, hear or see in newspapers, magazines, websites, television and books not to mention the internet. However, just because there is a lot of information does not mean that it is necessarily accurate, objective or relevant to your situation.

The best solution is to take advice from an experienced independent financial adviser who has a predefined process to his/her advice and investment strategy.

5. Monitor and Review

Investment does not finish at the point when you buy your fund or investment. With multi-asset class portfolios that use funds, over time, each asset class will generate different returns, which will cause your portfolio’ asset allocation and consequently its risk profile to change, or rather drift away from its original position. Other facts such as tax implications and if a fund manager moves job or a poor economic outlook can affect the reasons for holding an investment. It is therefore important to periodically reappraise your investments and discuss with your adviser.


Slow and steady wins the race! The greater the portfolio loss in any given year then the higher the level of future growth required to recover from that loss. Remember a 35% fall in a portfolio requires 54% growth to recover whereas a 5% fall in a portfolio requires only 5.3% growth. Once you are clear of your goals, minimising portfolio volatility should be a key objective and will prove its worth when we experience the next market downturn.

This article is intended to provide a general guide to the subject matter and is necessarily in a condensed form. Advice should be taken before acting on information in it.

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Small Claims Court

David McArdle - Friday, April 18, 2014

The Small Claims Court was set up as an alternative method of commencing and dealing with a civil proceeding in respect of a small claim, without the need for a solicitor. The aim of the Small Claims Court is to provide an inexpensive, fast and easy way for ‘consumers’ and ‘businesses’ to resolve disputes. The matter is dealt with in your local District Court office.

To be eligible to use the procedure, you, the ‘consumer’ must have bought the goods or services (or the service) for private use from someone selling them in the course of business. As a ‘business’ you must have bought the goods or services (or the service) for use in business from someone selling them in the course of business. Furthermore, the claim cannot exceed €2,000.

The following claims can be dealt with under the Small Claims procedure:

  1. A claim for goods or services bought for private use from someone selling the in the course of a business. (Consumer claims)

  2. A claim for goods or services bought for business use from someone selling them in the course of a business. (Business claims)

  3. A claim for minor damage to property (but excluding personal injuries); and

  4. A claim for the non-return of a rent deposit for certain kinds of rented properties (excludes claims which are handled by the Private Residential Tenancies Board).

Claims cannot be made in the Small Claims Court for debts, personal injuries or breach of leasing or hire-purchase agreements.

The person against whom the claim is made will be given an opportunity to admit the claim, defend the claim and/or put in a counterclaim. Once everything is ready for Court you receive a letter from the Small Claims Office telling you the date and time of the court hearing and the location of the court itself.

If you need any advice get in touch with us and call FMB on 01 645 2002.

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Debt for Equity Swaps

David McArdle - Wednesday, April 16, 2014

What is it all about?

In recent years, in particular, we hear a lot about debt for equity swaps. Debt for equity deals occur when large companies run into serious financial trouble, and often result in these companies being taken over by their principal creditors.

A debt for equity swap is a capital reorganisation of a company where a bank or other creditor converts indebtedness owed to it by the company into one or more classes of the debtor company’s share capital. This is typically driven by the bank or other creditors of the company.

Such a reorganisation may occur where the debtor company is in distressed state but its creditors do not believe that the situation warrants the appointment of a receiver or liquidator. Any such appointment would mean that the creditors are likely to receive a lesser return than if they substitute some of their debt for equity. The hope is that with a lower debt repayment profile they will receive an acceptable return on their equity once the company returns to profitability or is sold.

A debt for equity swap has no set structure. The swap may simply comprise a direct exchange of debt or shares in the company. In more complex cases, a new company funded by debt and equity provided by the bank and other creditors and investors may be formed to acquire the existing business from a liquidator or examiner appointed to the financially distressed debtor company.

If you need advice on this area please get in touch with us and call FMB on 01 645 2002.

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Capital Gains Tax Exemption

David McArdle - Friday, April 11, 2014

Principal Private Residence Relief can be extended to a second residence in a individuals ownership for any period during which a dependent relative occupies the residence rent free. Therefore for the period that such a relative occupies a residence other than the individuals main residence, a capital gains tax (CGT) exemption can be claimed for both parties.

A dependent relative includes a relative of the individual or of his/her wife/husband. The relative must be incapacitated by old age or infirmity from maintaining himself or herself in order to be deemed dependent. A dependent relative can also include:

  1. The widowed mother or father, whether or not incapacitated, of the individual or of his/her wife/husband, who is maintained by the individual, or

  2. A person who is the father or mother of the individual or of the wife or husband of the individual and is a surviving civil partner who has not subsequently married or entered into another civil partnership.

There is no income test for the above reliefs.

The principal private residence exemption from CGT can only be extended to include one additional residence irrespective of whether or not individual is married.

If you need advice on this area please get in touch with us and call FMB on 01 645 2002.

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Home Renovation Incentive

David McArdle - Wednesday, April 09, 2014

The Home Renovation Incentive provides for tax relief for homeowners by way of an income tax credit at 13.5% of qualifying contractors.

Tax relief may be claimed on qualifying expenditure from €5,000 to a maximum spend of €30,000 inclusive of VAT. The income tax credit is payable over 2 years following the year in which the work is undertaken. Unused tax credits may be carried forward to the next tax year.

Qualifying works must be carried out on or after 25th October 2013, and up to 31st December 2015. Qualifying works carried out between 25th October 2013, and 31st December 2013, and paid for during that period will be treated as though they were paid in 2014 for credit purposes. Where planning permission is required, and is in place prior to 31st December 2015, works carried out up to 2016 will qualify for relief. The works may be phased, and multiple payments to different contractors are allowed. Claims may be made for costs at the 13.5% rate of tax and excluding anything subject to VAT at 23%.

In order to qualify for relief Homeowners must be LPT (Local Property Tax) compliant and Contractors must be registered for VAT and RCT (Relevant Contracts Tax) and must have a tax clearance certificate.

If you need advice in this area please get in touch with us and call FMB on 01 645 2002.

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Funding by the Masses

David McArdle - Friday, April 04, 2014

A new type of funding concept which is fast gaining popularity is Crowdfunding. It’s the practice of financing a project or venture by seeking many small amounts of money from a large number of people, typically using an online platform.

Crowdfunding is used to raise money for a variety of purposes, from donations for charitable or other philanthropic initiatives to reward-based investment for start-up businesses. In a depressed world-wide economy, it is seen by many as having the potential to be a very useful tool for businesses and other projects to access finance in a cash-starved environment.

The European Commission has recognised the growth in Crowdfunding and as a result has launched a consultation paper covering the forms of crowdfunding and what it describes as a range of “soft-law measures”. The ideas which the Commission is considering in order to unleash its full potential include raising public awareness of crowdfunding and ensuring that EU-wide access is given to crowdfunding platforms. Apart from its many benefits, the consultation paper also addresses the risks and challenges of crowdfunding and the potential safeguards required to protect against illegal or undesirable practices in the areas of fraud prevention, intellectual property protection and anti-money laundering.

Crowdfunding may provide an alternative to the many Irish entrepreneurs and businesses struggling to access finance. The accessibility of the internet and social media makes its reach almost universal, a very different scenario from the traditional method of raising finance which generally involves seeking larger investments from a much more limited pool of potential investors.

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Relief For Long Term Unemployed Starting A Business

David McArdle - Wednesday, April 02, 2014

Where an individual who has been unemployed for 12 months and has been in receipt of inter alia jobseekers benefit, jobseekers allowance or a Single Parent Child Carer Credit that individual may be entitled to claim relief from income tax on the first two years of trading capped at a value of €40,000 per annum. USC and PRSI will continue to be payable.

The new business must:

  • be set up between 25 October 2013 and 31st December 2016

  • be a new business and not a business that was bought, inherited or otherwise acquired

  • be an unincorporated business (i.e. it must not be registered as a company

The relief can apply to multiple new trades carried on by the one individual provided the limit of €40,000 is not breached.

For more advice contact FMB on 01 645 2002 or Email

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Importance of Succession Planning

David McArdle - Friday, March 28, 2014

One of the toughest decisions that any family business may face is whether the business will be passed on to family members or sold by the retiring generation. This decision not only threatens the continuity of the business, but can threaten the family unit itself and often leads to costly litigious disputes. 

There are many other obstacles to successful continuation. Fortunately these can be overcome by detailed succession planning on both a personal and business level.

Initially, most family businesses are straightforward in terms of ownership and management as they develop a relatively simple system of natural governance. However, as a family grows, the demographic changes and the roles of different family members become more complex. It can be difficult to establish, and in particular agree upon, a clear balance of power and to have clarity of roles within the business.

If you need advice on this area please get in touch with us and call FMB on 01 645 2002.

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Write-Off Debt for Homeowners

David McArdle - Wednesday, March 26, 2014

Eligible customers will have mortgage split in two and bank will discount loan.

AIB is set to write-off debt immediately for homeowners in arrears who are deemed eligible for a new split mortgage product.

Under the plan, a customer deemed eligible for a split mortgage will have the loan broken into two tranches. The first part, which the customer will be expected to repay, will be based on the current market value of their home, while the other will be warehoused, interest free, for settlement at a later date.

For example, if someone owes €300,000 but the current value of their property is assessed at €200,000, that €200,000 figure becomes the first tranche, with the balance of €100,000 parked for repayment.

It is understood that AIB will, in addition, write-off up to 20 per cent of the first tranche. That means up to €40,000 of the €200,000 in the example above will be written-off by the bank immediately - leaving troubled homeowners servicing a mortgage of €160,000, nearly half the €300,000 outstanding. AIB is calling the write-offs a “partial compromise of principle debt” and a “right-sizing of the loan”.

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SEPA Post February 1st Deadline

David McArdle - Thursday, March 20, 2014

We have now passed the original SEPA migration deadline of Feb 1st, 2014. In January, due to slower than expected migrations across the SEPA zone, the European Commission allowed for an extended 6 month window to accommodate companies who were having difficulties with their migrations. Individual member states are allowed to decide how much of this extension they will need to minimise disruption to payment processing. IPSO (Irish Payment Services Organisation), has agreed with the Irish banks an extension until the 31st March 2014 will be required to accomplish full SEPA migration in Ireland.

With all that time and effort spent to ensure your company was SEPA compliant, it’s now time to make the most of your investment. Increased efficiency can be achieved by making greater use of bulk payment files, rather than manual inputting of individual payment. Further efficiencies can be gained by making greater use of data, such as invoice numbers and payment file details which can be included in the XML payment file. This information can be used to assist reconciliation for both the debtors and creditors.

e-Day on the 19, September, 2014, is a further initiative towards more efficient payment methods. From this date it is intended the public sector in Ireland will no longer write cheques to business users, nor will the public sector accept cheques from business users. Businesses will need to adjust their payment methods to accommodate this change.

The work is nearly completed, it’s now time to maximise the return on your investment!

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