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info@eastcorkjournal.ie East Cork Business Post


3 Tax Tips for Business Owners, Homeowners and the Self-Employed


from 2010 to 2013, the lia- bility date was 31 March. There were


some by GERARD O’BRIEN


Non-Principal Private Residence Charge (NPPR) The NPPR was an an-


nual charge applied from 2009 to 2013 in respect of residential property that was not the owner’s only or main residence in those years. If you owned residen- tial property on the liability date in any of the years 2009 to 2013, and it was not your only or main residence on that date, you were liable to pay the charge of €200. The first liability date was 31 July 2009. For each year


ex-


emptions to the charge, for example, for mobile homes, caravans or granny flats etc. The NPPR charge was €200 for each property that you owned on the liability date each year, apart from your main residence. From 2014 onwards, the


NPPR is no longer charged, but


outstanding liabilities


and payments will still be collected. Earlier this year, the High decided that


Court the


charge could be claimed against tax following a case taken by a landlord. That opened up the possibility that tens of millions of euro being repaid to landlords by the Revenue Commis-


sioners. However, it has


now emerged the State is appealing the High Court judgment to the Court of Appeal. I would advise you to speak to your Accountant to make sure you are fully prepared in case the State loses the appeal.


Home Renovation Incentive (HRI) The Home Renovation


Incentive (HRI) scheme enables homeowners or landlords to claim tax relief on repairs, renovations or improvement work that


is


carried out on their main home or rental property by tax-compliant contractors. The HRI is paid in the form of a tax credit


13.5% of qualifying ex- penditure, which can be


set against your income tax over 2 years. This effectively reduces the rate of VAT to zero on qualifying work, up to a value of €30,000. To qualify for the HRI,


the work must be done be- tween 25 October 2013 and 31 December 2018 for homeowners; and between 15 October 2014 and 31 December 2018 for land- lords. To qualify for the HRI as an owner-occupier, the work must be carried out on your principal private residence. The type of work that


at


qualifies for the HRI is re- pair, renovation or improve- ment work that is subject to VAT at 13.5%. This in- cludes extensions, garages and attic conversions; the


Legal Matters Bank Debt- Farming Write Offs by KAREN WALSH Irish farmers and farm-


ing business development in general has been sup- pressed in recent years due to high levels of bank debt. It is enshrined within the Irish way that a farmer’s land is his pride and joy and heaven forbid any- thing would happen to it, least of all, for it to be re- possessed by the bank. Bank debt can arise out


of a number of different scenarios. The most com- mon bank debt is mort- gage debt. When a farmer purchases land or build- ings, they normally will require a mortgage facility from the bank to do so. A mortgage can also be taken out to carry out works on


the land such as construct- ing farm building. Under the legal process, the land is registered under the farmer’s name as the legal owner and the mortgage is registered as a charge on the land. This means that if the farmer wishes to sell the land at a later stage, they will require the bank’s consent


if the mortgage


has not been paid. Nor- mally when the mortgage has been paid, you apply to remove the bank’s charge from the land. It is common for farm-


er’s to require overdraft fa- cilities from a bank to pay for the day to day running of the farm. Examples of this would be paying credi- tors and buying stock such as cattle feed. Throughout the recession it was not dif- ficult to find farmers who had invested too heavily and were then under pres- sure to keep the farm and pay the banks as farming revenues deteriorated due


to low grain, dairy and beef prices. This can cause stress


and pressure


there is a risk of losing the farm. However, there


and is


always a solution and it is advisable to speak with a solicitor or a financial ad- visor at an early stage with a view to rearranging the debt or the possibility of a write down. It is recommended that


the bank or financial insti- tution are approached with a view to renegotiating the debt. This would normally entail changing the repay- ment structure based on what you can afford to pay. A write down of the debt may be considered by sell- ing some assets with a view to paying off the debt at a reduced figure. The value of the land or buildings may have


reduced from


when it was purchased and when the mortgage was taken out. This is known as negative equity. In this sce- nario, the banks are often


amenable to a write down of the debt in order that they can recover some of the debt. There are clear regula-


tions set out by the Central Bank stating the frame- work that use when


lenders must dealing


with


borrowers in mortgage ar- rears. This is known as the Mortgage Arrears Resolu- tion Process. “It requires lenders to handle all such cases sympathetically and positively, with the objec- tive at all times of helping people to meet their mort- gage obligations.” You will normally be the


required to provide


bank with a statement of means which sets out all your assets, income, lia- bilities and expenses and will show your net worth. This assists the parties in ascertaining what a via- ble


repayment would be. structure It is important


that you keep up to date financial records includ-


Tel: 021 463 8000 • Email: info@eastcorkjournal.ie • Web: www.eastcorkjournal.ie


ing copies of all receipts and invoices and engage an accountant to prepare financial accounts to see whether the farm is run- ning at a loss or profit. If you do not do this, you are in a considerably weaker position if the arrears are significant as a court will also wish to be provided with such documentation. If a farming business can show some liquidity and efforts being made to keep the farm such as business innovation or business de- velopment with the view to making better profits, this will be benefit. In the re- gard it would be advisable to approach an accountant or a financial advisor with a view to putting a propos- al to the bank. In the event that the ar-


rears have become signifi- cant, the bank of financial institution will more than likely bring court proceed- ings against you to recover the debt. There are a num- ber of courts, the district, circuit and high court. As to which court the pro-


ceedings are bought in will depend on the amount of the debt. The bank nor- mally bring two types of proceedings 1) debt claim or 2) possession. The for- mer is where the bank seek to recover the amount due to them and the latter is where they seek an order for possession of the mort- gaged lands/property with a view to selling. There is still a possibil-


ity to negotiate with the bank after court proceed- ings have been issued and it is advisable to do so to try and reach an amicable solution. A judge will not normally give an order unless they believe there is no other option and a complete lack of engage- ment or cooperation from the borrower. Judges often stay orders for a number of months in order that you have time to put your affairs in order and sell the property without the ne- cessity of the bank doing so.


There is always a solu- tion to bank debt and it is


eastcorkjournal


best to tackle it early rather than leave it build and it is recommended you should get professional advice from a solicitor, account- ant, personal insolvency practitioner or financial advisor to assist making an approach to the bank. In the event there are court proceedings, you should consult with a solicitor. Karen Walsh, from a


farming background, is a solicitor practicing in Walsh & Partners, Solici- tors, Dublin and Cork, and author of ‘Farming and the Law’. Email: info@walshand-


partners.ie Web: www.walshand-


partners.ie Disclaimer: While every


care is taken to ensure accuracy


of information


contained in this article, solicitor Karen Walsh does not


accept responsibili-


ty for errors or omissions howsoever arising, and you should seek legal advice in relation to your particular circumstances at the earli- est possible time.


@eastcorkjournal / #eastcorkjournal


supply and fitting of kitch- ens, bathrooms and built-in wardrobes; fitting of win- dows; garden landscaping; plumbing, tiling, rewiring, plastering and painting. The


qualifying work


must cost at least €4,405 be- fore VAT at 13.5%, which comes to a total of €5,000 with VAT included. You will only get the tax credit in relation to a maximum of


€30,000 (before VAT)


during the period covered by the HRI. The minimum credit


is


€595, based on the mini- mum qualifying expendi- ture of €4,405. The max- imum is €4,050, based on the maximum qualifying expenditure of €30,000. You can claim the HRI tax credit after the end of


the tax year if your qualify- ing expenditure has reached the minimum amount of €4,405 before VAT (a to- tal of €5,000) and you have paid income tax. Any un- used tax credit can be rolled over into the following year.


Expenses incurred prior to setting up a business If you have set up your


business, you may be able to claim a tax deduction for certain qualifying expenses incurred in respect of the business in the three years before the commencement. For tax purposes, these


expenses are treated as if they had been incurred at the time that the trade start- ed.


These may include busi-


ness-related leasing costs, legal fees and the cost of preparing business plans, feasibility studies and train- ing.


ject conditions,


All of the above are sub- to relevant qualifying please


with your Accountant O’Brien


discuss in further detail. Gerard


speak to


LL.B


LL.M CFP® QFA is a Certified Financial Planner and the Owner of Heritage Wealth Management, a Fi- nancial Planning practice based at 27 Cook Street, Cork City. For more infor- mation, contact Gerard at gerard@heritagewealth. ie www.heritagewealth.ie Disclaimer: All data and


information provided with- in this article is for informa- tional purposes only. Her- itage Wealth Management Limited makes no rep- resentations as to accuracy, completeness, suitability, or validity of any information and will not be liable for any errors, omissions or delays in this information or any losses, injuries, or damages arising from its use.


Thursday, 20th


April 2017


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