28


East Cork


by GERARD O’BRIEN Exit Strategies


Business for


Business Owners At a certain time in


the business cycle and as people approach a certain age, they must begin to plan for their exit from the business. Organising a successful exit from your business is a process, and one that needs to be planned carefully, whether


you


make your exit through a retirement, sale, trans- fer of assets, or liquida- tion.


Many large corpo-


rations and multina- tionals place a massive emphasis on succession planning, with many management specialists playing a role in pre- paring the business for


a change in key per- sonnel. Unfortunately, however, many SME business owners in Ire- land often do not rec- ognise succession as an issue and fail to make plans to hand over the reins. This can create difficulties for the own- er, staff, their family and the long-term viability business as a whole. I have noted 4 key considerations that an SME business owner should contemplate


as


they plan for their own future, and the future of their business. Plan for your Retire-


ment Many business own-


ers we meet view their business as their pen- sion. But it is worth con- sidering: how can you be sure that you will be able to sell your shares, or even the whole busi- ness, at the time you want to retire? That’s why we


rec-


ommend to our clients that they take control of their future and struc- ture their own retire-


the title of the true own- er.


by KAREN WALSH


SQUATTERS RIGHTS RECENT IRISH LAW Adverse possession, as it is known in le- gal terms, (otherwise known as “Squatter’s Rights”) allows a third party to claim a right over land which is reg- istered in the name of another person on the basis that


they have


occupied the land con- tinuously for over 12 years with the intention of excluding all others, including the true own- er. Adverse


possession


means possession of land inconsistent with


In order to bring a successful claim for ad- verse possession, the person making the claim needs to in sole and ex- clusive occupation and possession of the land for 12 years or more. The person making the claim must exclude oth- ers including the regis- tered owner from the land for over 12 years. An application for ad- verse possession can be made to the Property Registration Authority or through the courts. The law on Adverse


Possession was recently dealt with in the Irish Court of the Appeal in the


case


v ACC Loan Manage- ment Ltd and Others (2018). The facts were that in 1992 a Mr Hamilton Senior


died intestate,


leaving his wife and five adult children (includ-


of Hamilton


ment plan to meet with their


terms of: •


in retirement •


/ time horizon •


free lump sum •


requirements in desired income retirement age targeted tax risk profile


If you have a limited company structure, it will be more tax effi- cient for the company to be making pension contributions rather than the director tak- ing income and then putting the funds into a pension. This is because your income will incur tax, while the pension contribution from your company is an expense and the company re- ceives


relief. The contribution is also not a benefit in- kind on you. Retirement Relief Retirement relief is a


relief from capital gains tax on qualifying busi- ness assets. It is important to note


that to qualify for retire- ment relief, an individu-


ing the plaintiff, Patrick Hamilton, who was the only child with an inter- est in farming). A grant of letters of administra- tion (intestate) of the estate was taken out by Mrs Hamilton in 1993, and the 100 acres of farmland fell to be dis- tributed. Before


his father’s


death, Patrick Hamil- ton and his father had farmed the


relevant


lands together and he continued to do so following his father’s death. Mrs Hamilton trans-


ferred certain lands – including the “disputed lands” – to her son Sean. Sean had been granted a loan of €248,000 from the Defendant to assist with buying 6 acres of land, which had origi- nally been part of the farmlands owned by the Hamiltons. The security required was a mort- gage over 31 acres of


al does not have to actu- ally retire. Secondly, the individual does not have to dispose of the entire business. To qualify, the individual must be at least 55 years of age at the time of the disposal and must dispose of all or part of his/her quali- fying assets. Where all conditions


of the relief are fulfilled, the following relief may apply: •


For disposals


to children, where the business owner is be- tween 55 and 65 years of age, there is no limit on the amount of the relief; •


For disposals to corporation tax


children where the busi- ness owner has reached the age of 66, the max- imum retirement relief available is €3 million; •


Where the dis-


posal is to someone oth- er than a child, the max- imum retirement relief available


is €750,000


where the business own- er is between 55 and 65 years of age; •


Where the


land – 25 of which were the lands transferred to Sean by Mrs Hamilton. Following the


pointment of the ceivers by the


ap- re-


bank,


attempts were made on behalf of the receivers to take possession of the relevant lands and the receivers entered into a contract for the sale of these lands to third party.


In the High Court in 2016, Patrick Hamilton was granted a declara- tion that he is entitled to be registered as full ben- eficial owner of lands in Monaghan by virtue of his adverse possession since his father died in June 1992. Here the court looked


at two factors: 1.


Whether there


is a continuous peri- od of 12 years during which the plaintiff was in exclusive possession of the relevant lands to an extent sufficient to


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


disposal is to someone other than a child, and the business owner has reached the age of 66 years, the maximum re- tirement relief available is €500,000. Bearing in-mind that some of the


require-


ments of retirement relief can take up to 10 years to satisfy, prudent tax planning in advance is essential


to ensure


that the maximum re- lief can be claimed. Business Asset Relief This is a relief that applies to gifts or in- heritances of “relevant business property”, for example, transfers of business assets owned by a sole trader, shares in a trading company, etc. There


are strict


conditions to be satisfied in order for the relief to apply, including owner- ship and control tests for the beneficiary to satisfy following the gift or in- heritance. Where the relief ap- plies the taxable value of the relevant business property is reduced by


establish an intention to possess the land it- self rather than to fulfil some joint enterprise or other


Mrs Hamilton? 2. Was the


90%.


Example restrictions include: •


To avoid a


clawback of the relief, the beneficiary must retain ownership of the relevant business prop- erty for a period of 6 years; •


take


preparation and ex- ecution.


long-term plan should encompass all


many years of Ideally, your aspects


of the business, your family and your own lifestyle and retirement ambitions. Careful


planning is To qualify for


the relief, the relevant business property must have been owned for a continuous period of 5 years prior to the date of the gift and 2 years in the case of an inher- itance. Agricultural Relief This is a relief that


applies to gifts or inher- itances of “agricultural property”, located


in


Ireland. If agricultural


and the value relief


is successfully applied for


conditions are met, the market


agricultural property is reduced by 90% (sim- ilar


Relief). fer


Summary The successful trans- of a business can


agreement with in-


tended period of pos- session broken by an act of possession by Mrs Hamilton? The matter was then appealed by the bank to the Court of Appeal. In his judgment in the Court of Appeal, Mr Justice Peart stated no- body else was in pos- session of the land with Patrick Hamilton and he alone occupied the land. Evidence of this included the fact he had his cattle on the land and had his own herd number, he applied for various grants and pay- ments and that he was the only child with an interest in farming. It was concluded that


he treated the lands as his own lands and did so


for the required period of twelve years and that he had the necessary intention to possess the lands to the exclusion of all others and that this was not a case where his possession of the land was temporary or sporadic but it was per- manent and exclusive and that he had the nec- essary level of physical control over the lands. Mr Justice Peart then considered


whether


there was any act of possession by Patrick Hamilton’s mother during the period of twelve


years following


her husband’s death in 1992 which could be considered to have in- terrupted


Hamilton’s


otherwise exclusive and single possession of the land and concluded that there wasn’t. If you believe you


have a potential claim for adverse possession or that somebody may


eastcorkjournal


relevant of


to Business Asset the


required. Gerard O’Brien LL.B


LL.M CFP® QFA is a Certified Financial Planner and the Own- er of Heritage Wealth Management,


a Fi-


nancial Planning prac- tice based in 27 Cook Street, Cork. For more information, contact Gerard at gerard@her- itagewealth.ie www. heritagewealth.ie Disclaimer: All data and


information provided within this


article is for informa-


tional purposes only. Heritage Wealth Management Limit- ed makes no representations 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 dam- ages arising from its use.


be occupying your lands against your wishes,


it


is strongly recommend- ed you get legal advice from a solicitor. Karen Walsh, from a


farming background, is a solicitor practicing in Walsh & Partners, So- licitors, 17, South Mall, Cork (021-4270200), and author of ‘Farming and the Law’. Walsh & Partners also special- ises in personal injury claims, conveyancing, probate and family law. Email:


info@wal-


dpartners.ie Disclaimer: While


shandpartners.ie Web: www.walshan- every


care is taken to ensure ac- curacy of information con- tained in this article, solicitor Karen Walsh does not accept responsibility


for errors or


omissions howsoever arising, and you should seek legal ad- vice in relation to your par- ticular circumstances at the earliest possible time.


@eastcorkjournal / #eastcorkjournal


info@eastcorkjournal.ie


Thursday, 23rd


August 2018


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