Newsletter November 2022

Welcome to our November newsletter. The clocks have gone back, the days are short and … Christmas beckons.

 

Warning – Constant use of
Sub Contractors

A number of years ago Revenue issued a directive that confirmed a company could not continuously use a sub-contractor. They deemed continuously to be in the region of 12 months. This has now arisen again that Covid is over and as far as we are experiencing Revenue are back with a bang, issuing more and more warning letters. A number of clients have had PRSI inspections, and they have deemed subcontractors to be employees, and have levied Employers PRSI @ 11.1% on the monies paid to the sub-contractor.

In the most recent case, a builder had used an electrical contractor over a 3 year period, on a number of different sites without break other than holiday periods. The contractor had no other customers in that 3 year period, and even though he provided and charged for materials, Revenue deemed him to be an employee.

Our advice is to review your arrangement with contractors and to ensure: (1) they have other customers, (2) they take several weeks breaks from their work with you not just “normal holidays”.

 

The Good News – Increase in the Small Benefit Exemption
(ie. vouchers)

Well finally the budget 2022 introduced some good news. As you are aware, it is permitted for an employer to give to an employee an amount of up to €500 once per year, so long as it is not in the form of cash, or an item that may be convertible into cash. The budget has increased this amount to €1,000 from now, so go ahead and start ordering the vouchers. We find pre-paid credit cards such as Allgo, very easy to use (www.allgo.ie).

 

 

Second piece of good news

The budget also gave an increase in Personal tax credits (€50 per person), and in the standard rate cut off (€1,500 per person this will save €300 net in tax). Its not huge but every little helps. Remember, this is per person, so its double for a married couple/ partners where both are working.

 

Debt Warehousing –
more Good News

In reaction to pressure from business groups, Revenue have extended the debt warehousing facility by a further year. This means most companies need not now address these taxes until January 2024 at the earliest, and in some cases, it is extended out to April 2024. If you wish to consider your options, and hear our recommendations as to what you should do. Please just get in touch.

 

Year End and Pension

As we approach the end of 2022, remember that in order for a company to claim corporation tax relief on company pension contributions, the contribution must be made before 31st December 2022.

If you are unsure of how you are doing in 2022, we can prepare a set of Management Accounts to November for you, to assist you in deciding how much you could put in to your pension tax free, and reduce your Corporation tax bill at the same time.

 

Electric Cars – consider secondhand

Electric cars have always attracted a premium price above their petrol and diesel counterparts. With the increased demand now, the manufacturers are further increasing prices. This in conjunction with Revenue reducing the value that is BIK free, is now eroding the tax benefits of company electric cars.

However, as BIK is based on the “Original Market Value” of a car, we have found a number of clients are buying 2021 VW ID4’s that had a list price of €47,000 at that time, and this is reducing this negative impact. There are a number of other comparable cars such as the Tesla 3, Nissan Leaf, etc that are all looking more attractive than waiting 6 months for delivery and buying at 2023 list prices.

 

Help with rising energy costs

Business Energy Support Scheme (BESS)

A relief for businesses due to rising energy costs is now in operation.

In summary:
Relief of up to 40% due to a rise in energy costs where the rise is greater than 50%.
• Covers the period from September 2022 to February 2023 and may be extended beyond that.
• Business have to register to avail of this.
• For more information search Business Energy Support Scheme (BESS).

Date Posted: 14 November 2022