No one doubts we are in the grip of the third great age of innovation: the time of technology. but while the agricultural and industrial revolutions brought lasting and sometimes radical social change, technology is different. The rate of advancement we are experiencing is like nothing that has gone before, and it has the power to transform the lives of everyone on the planet. This brings an unprecedented level of optimism for solving global ills – but equally raises unique concerns. Artificial intelligence (AI) and a future that is approaching at breakneck speed were among several technology topics discussed at UHY’s Annual Conference in Ho Chi Minh City, Vietnam, in October 2016. UHY Global spoke to prominent AI and tech presenters at the event. AT THE LEADING EDGE Dr Long H. Vu is an IBM Research Staff Member in the Department of Exploratory Stream Analytics at the IBM T. J. Watson Research Center, New York. He spoke about current developments in AI and in particular the projects coming out of IBM Watson, the computer giant’s own technology platform that uses natural language processing and machine learning to reveal insights from large amounts of unstructured data. “We all know that computers are used to analyse large amounts of structured data, but 80% of the data available to us every day is actually unstructured in nature, and has up until now not been fully explored or understood by computers,” says Dr Vu. “This means as human beings we are trying to absorb multiple sources and types of data, such as spoken words, text, emails, photographs, social messaging, CCTV, audiovisual, documents, reports – all natural forms of communication – without much help. And every industry is now producing more and more new data, at an alarming rate. IBM Watson is a system that can process and categorise all of this material in huge volumes and at great speed. In terms of statistical analysis, it can use a whole universe of data, not just a sample. We call it a cognitive system – once it has understood its data, it can analyse and produce results in a reasoned way; it can weigh up and select the best answers. It is a thinking machine.” There are dozens of underlying open technologies that contribute to this artificial intelligence: text and language translation (IBM Watson currently provides full support for six languages with many more under development), tone analysers, visual recognition, image tagging, relationship extraction, facial recognition, and many more. But of equal significance to AI is machine learning, which never stops. Dr Vu explains that this is how a system develops expertise. “Like a person, Watson gets better and better over time. The more data it is fed, the more ‘reason’ it can apply and the more behaviour patterns and nuance it can learn. The result is exceptionally robust output, be it statistical or semantic insight, or even real-time conversation with a person, through a user interface like Nao.” RISE OF THE ROBOTS Built by global robotic specialists SoftBank Robotics, Nao is a humanoid robot which, powered by IBM Watson, can move, listen and understand human language, speak and interact with human beings and change his movement and behaviour, depending on the conversation context. For many people, Nao – and similar robot-like interfaces – bring to life the populist future where robots walk, talk and do the housework. For Dr Vu, they are one type of interface that humans may use to access AI systems; and the dystopian vision of robots taking control is far from where cognitive systems are headed. “In some sense, AI technology is no different to other scientific advances – nuclear, say, or genetics – where discovery comes with certain ethical dimensions. But the reality is that machines do not replicate our deepest human abilities. In our application of knowledge we may call on unique collaborations of empathy, creativity, humour, common sense, instinct and vision. We have morals, imagination, compassion. We can dream, we can abstract and we can generalise. What robots – or cognitive systems – actually give us is the ability to amplify our brainpower, not replace it. The benefits far outweigh the risks.” To illustrate his point, Dr Vu cites several applications that IBM has already developed for use in a range of industries. In healthcare, for example, Watson’s Oncology Advisor exemplifies the new partnerships that will be made possible between people and computers. “We trained Watson to develop diagnostic expertise in breast and colon cancers, by enabling the processing of over 15,000 hours of oncology expertise, six million articles, 20,000 clinical trial outputs and over one and a half million patient records. The application now supports real oncology consultants in real hospitals.” Similar developments are underway in genomics and diabetes. THE FUTURE IS BRIGHT Watson is also set to revolutionise other data-heavy sectors, including telecommunications, oil & gas, education and professional services – where automated analysis and insight from large volumes of financial or case data, for example, may free the professional from mechanical tasks and, as Dr Vu describes it, “enable deeper added-value advisory relationships.” This is good news for accountants like UHY who already strive to promote this kind of advisory culture. It is an exciting time for computer science specialists. Dr Vu believes that IBM Watson – and other cognitive platforms – will continue to grow and deliver applications that benefit individuals, businesses and the planet. “There are many talented people out there – professionals, specialists, entrepreneurs – looking for ways to meet our 21st century challenges,” he says. “It is good to be involved in providing them with some means to find answers.” Dr Long H. Vu holds a Ph.D. in Computer Science and has published 25 journal articles and conference research papers. He was the recipient of the prestigious Mark Weiser Best Paper Award in 2011, given by the IEEE International Conference on Pervasive Computing and Communications. He has also filed four US patents. To find out more about IBM’s AI platform, visit www.ibm.com/watson . Read the UHY Global Issue 3 ‘Greet The Future – Harnessing Tech For Better Service’ BE PREPARED FOR A TECHNOLOGY TSUNAMI According to scientists, futurologists and science fiction writers, we are on an exponential technology curve which, they predict, will shortly consume us in a tidal wave of disruption and change. And there is enough evidence to suggest they are right. It does seem more probable than possible that the technological revolution will change the way we live forever. Technology that at first empowered people has already started to replace them in areas of high volume low skilled work. Smart factories deploying robotic process automation are transforming manufacturing and logistics. Driverless cars – inconceivable to mainstream thinking a few years ago – are now on our roads. Drones are set to disrupt conventional distribution. DNA is mapped. The first wave to break was the internet, from which a new order emerged – technology start-ups that are today’s new household names: YouTube, Netflix, eBay, PayPal, Wikipedia, Skype, TripAdvisor, Flickr, Spotify, Facebook. They brought innovation and disruption to the old ways and many corporate giants were caught sleeping, to their eventual cost. Now, we have the Internet of Things, where connectivity infrastructures – mobile, satellite, the cloud – are enabling connectedness with few limitations. At the same time, many see the current decade as the time of robotics and artificial intelligence. The exponential trends are hard to deny. According to entrepreneur and technology practitioner Juan Martinez-Barea, all companies and industries will become high-tech ones. “Technology will be present for everyone,” he says, “the only question is which technology? Business managers must ask themselves: what technology is going to disrupt my industry?“ The auto industry is one which typifies the rate of change brought about by technology advancement. “In ten years the car industry will be very different,” says Juan. “It is likely that all new cars will be electric, and autonomous (driverless) vehicles will be commonplace. New competitors will own the customer relationship – not the automakers, but companies like Apple, Google or Microsoft. The ownership model will change and car transport as a service could become ubiquitous. And none of this prediction relies on anything that is not already either under development or in commercial use. “We have a tsunami coming,” he says. But Juan remains optimistic that it will be a force for good. “Every sector has dozens, if not hundreds, of entrepreneurs working hard at solving problems using different technologies. This swarm of start-ups is the most powerful force on earth.” His own bioinformatics start-up is focused on developing and commercialising a universal test for early detection of cancer, aiming to saving millions of lives. “We have been working on this for four years,” he says. “Will we make it? I don’t know. I hope so. But I am sure that by 2020, someone will.” Juan Martinez-Barea has worked with more than a thousand start-ups, has advised and coached hundreds of entrepreneurs, and has helped to launch more than 100 high-tech new ventures. Find out more at www.juanmartinezbarea.com . #2016

Innovation in technology opens up new and better ways for accountancy and professional services firms to help businesses. But how can those clients make the most of the benefits on offer? “When accountancy firms make technology work for them, they help clients more strategically, more quickly and at a lower cost,” says Olivier Boutellis-Taft, CEO of the Federation of European Accountants. As his organisation prepares to issue a paper on how cloud computing can help professional accountants better serve their SME clients, they are certainly not alone in recognising that technology has the power not just to streamline existing tasks, but to gather and analyse data in a way that transforms business decision-making. Lee Bryant, co-founder of Postshift and Shiftbase, works with leading professional services firms and bodies on technology adoption. He sees a future in which firms will operate their own platforms with many self-service tasks, but in which accountants will have an enhanced role as advisors and consultants. “These platforms will cover collaboration, communication, project and relationship management, but later expand to include real-time data analysis and hosting of accounts information, and will perhaps also make available artificial intelligence or smart tech that can help find hidden patterns in client data,” says Lee. Technology, of course, already enables member firms in the UHY network to stay closer together, sharing expertise and breaking down borders, especially for those businesses with multinational interests. WELCOME TO THE CLOUD Innovation always aims to enhance and expand the range of services, provide real-time reporting and make communication seamless. To that end, there has been a rapid increase in cloud accounting and it is something that features highly in UHY’s five-year 2020 Vision strategy. Delivered over the Internet and securely accessible from any web browser, wherever the user happens to be, cloud-based services can substantially cut overheads and IT costs compared to investment in servers and software that needs constant updating. Many firms now use a blend of ‘traditional’ IT and cloud. In a study by the IBM Center for Applied Insights1, using the cloud in the IT mix was found to help firms reduce expenses by shifting from fixed costs to the ’pay-as-you-go’ cloud delivery model. As well as being scalable and flexible enough to support dynamic needs, adopting a hybrid approach means organisations can selectively combine the use of the cloud with parts of their traditional IT infrastructure, thereby best meeting their needs in terms of functionality, speed, resilience, security and regulatory requirements. Michael McCoughtrey, managing partner, UHY Haines Norton in Sydney, Australia, has seen the benefits that cloud computing can offer. “For accounting and professional services, access to accounts and documents is made simpler. Businesses can provide and see information more quickly and we can respond at lightning speed,” says Michael. “Problems are more visible and can be solved without the delay that might make things harder to tackle. Internal fraud, for example, can be spotted promptly. Businesses also benefit from spending less time on low-value tasks and more time on value-creating opportunities.” Having launched its cloud-based service at the end of August 2016, the UHY Hacker Young group in the UK point to the benefits smaller clients gain from being able to provide the firm with a real-time view of their accounts. “One example where we have improved productivity for clients is in enabling the use of mobile and tablet devices,” says managing partner Laurence Sacker. “Clients can simply photograph an invoice, upload it into the cloud to software like Receipt Bank or Basecone, and then have this automatically posted directly into their ledgers using OCR technology.” Syful Islam, managing partner, UHY Syful Shamsul Alam & Co in Dhaka, Bangladesh, is also a fan of data analytics tools and the power they give to dig deeper into clients’ data, both financial and non-financial, to find the elements that have an impact on profitable growth. “During audits, we can test complete sets of data, rather than just testing samples,” he says. “These tools aid in risk assessment by identifying anomalies and trends, and point auditors toward items they need to investigate further. A firm’s data can also be compared to industry data.” TIME AND COST SAVINGS Many small and medium-sized businesses simply do not have the time to manage and assemble the information needed to report and measure the performance of their business. The improved workflow enabled by cloud computing and shared applications not only leads to timely information, but also faster and more informed decision-making. In Norway, where UHY member firm RevisorGruppen has offered electronic filing and cloud-based services since 2014, the cost benefits to clients have been tangible. “We have been able to show businesses the comparison between ‘traditional’ accounting handled externally and a cloud-based system, where many basic tasks are handled in-house but value-creation services are provided by the accountancy firm,” says Kirsti Armann, CEO, RevisorGruppen. “It has been important, though, for us to work closely with clients as the systems are set up and they start their first transactions to ensure people are comfortable and competent with the processes.” TRUSTED ADVISORS Although cloud accounting should never be a way of devolving responsibility, it creates a new way for professional services firms and clients to work together. As the emphasis on client self-service increases, the role of accountancy and professional services firms is evolving. The accountant becomes a trusted advisor, acting as consultant at the planning and adoption stage, then adding value through analysis and strategic guidance. “We have helped customers achieve updated and more effective accounting systems,” says Kirsti Armann. “It has certainly been easier for businesses to make changes when led by someone they trust, rather than having to search and set up solutions on their own.” In Argentina, Roberto Macho, managing partner of UHY Macho & Asociados and UHY Board Director, is firm in his belief that clients need to adapt and adopt. “Anyone who pulls away from technology will ultimately be expelled from the market for lack of competitiveness,” he says. “We know that some clients face IT barriers, which is why it is now so important for us to help them with the technological options – whether it is advising and implementing a full-blown enterprise system or enabling standalone services.” His firm has worked closely with multinational clients to integrate processes and reporting seamlessly across borders. “For three firms, we have provided the technology that allows them to have their admin office in one country and operate in six or seven others. It has reduced back office costs by 60% on average,” says Roberto. Syful Islam recognises that many clients need support that goes beyond traditional accounting and into the realm of business automation. “Considering the challenges of today’s business environment, high efficiency and productivity are critical,” he says. “Clients often need help with strategies to automate processes that keep costs under control. It is a question of integrating applications, restructuring labour resources and using applications such as human resource information systems, computerised accounting and payroll software, supply chain management and fixed asset management tracking.” READY FOR THE CLOUD? Because failing to plan is planning to fail, documenting existing on-premises software and internal work processes is key. Areas where businesses lose the most productivity or have the greatest problems with technology should then become the first areas to move to more efficient cloud applications. Clients who are still heavily dependent on paper-based systems and their own server-based accounting packages can be daunted by the prospect of converting to cloud software. However, this should not preclude the use of new data analytics tools. Businesses often have separate centres or silos of data around the organisation, which are typically managed with spreadsheets. The risk of embedded errors can be high and productivity held back. “In these instances,” says Laurence Sacker, “we recommend clients move to new data analytics packages that can later accommodate automated data feeds from cloud applications. They get the immediate benefit of aggregating the dispersed web of spreadsheets into an integrated whole.” Clients can also position themselves to take advantage of new technology through having a local champion, dedicated to sharing the benefits and providing a link between the business and external advisors such as accountants. TECHNOLOGY FUTURES Despite undoubted productivity gains through workflow improvement and cloud accounting, data use remains an issue, with many firms still spending a lot of time extracting or downloading data from various sources and re-inputting it elsewhere to upload in another application. The solution could come in the form of application programming interfaces (APIs), which allow different software and databases to communicate with each other effectively. In the European Union, a new directive on payment systems requires banks to develop open APIs and let third-party developers link into their systems by 2017. The result could be that bank statements will automatically upload each day for instant reconciliation. While Syful Islam already sees his clients benefiting from faster communication, enhanced reporting and reduced cost, he believes the next generation of technology can offer firms even more. “International auditing standards require meticulous attention. In Bangladesh, we are looking at audit applications that will allow us to extract data, identify exceptions and unusual transactions, and generate reports. For clients, that will mean the reassurance of continuous monitoring, fraud detection and tracking of key performance indicators.” Lee Bryant agrees that moving away from spreadsheets and non-integrated models is essential if businesses are to take advantage of the more advanced data analytics capabilities of accountancy and professional services firms: “Until clients have some kind of consistent data storage for financial information, it is very hard to use the big data capabilities that the larger firms are building out.” As technology changes, the role of accountancy and professional services is changing too. Ultimately it is the clients who will benefit, as the firm they trusted to look after their books becomes a business management advisor, helping them build a picture of their business needs and steering towards the technological advances that will lead to greater efficiency and profitability. For more on the impact of technology and its relationship with professional service providers, check out our interview with IBM Watson’s Dr Long H. Vu, who talks about the future of artificial intelligence in the profession (this issue, page 8), and our feature on cybersecurity (this issue, page 10). For more information about UHY’s capabilities, email the UHY executive office, info@uhy.com , or visit www.uhy.com . 1 IBM report: Growing Up Hybrid. Accelerating Digital Transformation. www.ibm.com/ibmcai . #2016

From 1 January 2017 the National Minimum Wage will increase to €9.25 per hour. The changes in National Minimum Wage are represented in the table below. [table id=13 /] For the purposes of the Act, the following payments are regarded as wages: normal basic pay, as well as any overtime shift allowances or other similar payments any fee, bonus or commission any holiday, sick or maternity pay any other return or payment for work (whether made under the contract of employment or otherwise), any sum payable to an employee in lieu of notice of termination of employment. The following payments are not regarded as wages: any payment of expenses incurred by the employee in carrying out his/her employment any payment by way of a pension, allowance or gratuity in connection with the death, retirement or resignation of the employee or as compensation for loss of office any payment referable to the employee’s redundancy any payment to the employee otherwise than in his/her capacity as an employee any payment in kind or benefit in kind. For further information or assistance with processing your payroll, please call Niall on +353 42 933 9955 or email niallclarke@fdw.ie . #2016

Special Assignment Relief Programme (SARP) The new Special Assignment Relief Programme (SARP) was introduced in 2012 to assist Irish companies and multinational companies in attracting key talent to Ireland. The relief was initially introduced for tax years 2012, 2013 and 2014. In the Finance Act 2014 under Section 15 the relief was extended to include individuals assigned to work in the State during any of the tax years 2015, 2016 and 2017. In Budget 2017 it was further extended by 3 years to 2020. SARP provides for income tax relief on a proportion of income earned by an individual who is assigned by his or her relevant employer to work in the State. What are the qualifying conditions for SARP? In order to avail of the relief, the individual must meet the following conditions: Relevant income exceeding €75,000 per annum Relevant income for the purposes of SARP is defined as the individual’s total earned income from that employment, excluding the following payments; Reimbursement of expenses subject to Revenue guidelines Bonus payments, contractual or otherwise Share options or any other share based remuneration Notional value of BIK (benefit-in-kind) Restrictive covenant payments Termination payments Be a full-time employee of a company tax resident in a country with which Ireland has a Double Taxation Agreement (or information exchange agreement) for 6 months* immediately prior to arrival, it does not apply to organisational “new hires”. The assignment must be for a minimum of 12 months The individual must become tax resident in Ireland and not due to pay tax in another country The individual must not have been tax resident in Ireland for the five tax years immediately preceding the year of arrival. How the scheme works? The relief operates by allowing a 30% deduction from employment income in excess of €75,000. The relief may be claimed real time through the PAYE system or alternatively after the year end via a tax return (Form 11). The formula used to calculate the specified amount is as follows: (A – B) x 30% Where A is the amount of the individuals income which is subject to tax in the State after deduction of a qualifying pension contribution to a Revenue approved occupational, personal, PRSA or overseas scheme, and is no longer subject to a maximum threshold.** B is €75,000 Example A qualifying individual earns a base salary of €250,000 together with a company car (BIK) of €10,000 and makes contributions of €20,000 into a Revenue approved scheme. Solution [table id=10 /] The overall value of the relief is the specified amount calculated at the individual’s marginal tax rate, in this case: €49,500 x 40% = €19,800 Note: Relief is from income tax only – PRSI*** and USC are not relieved under SARP What other benefits are available under SARP? Where an individual qualifies for this relief, they may also benefit from the following payments free of tax: One “home leave” trip per year for the individual and their family. School fees up to €5,000 per child, per annum (primary or post-primary education) What are the reporting requirements? Employee: Form 11 self-assessment tax return (by 31st October each year) Employer: SARP(1a) application form (within 30 days of the individual’s arrival) SARP employer return (by 15th February each year) *Previously 12 months prior to 1st January 2015 ** Previously a threshold of €500,000 applied prior to 1st January 2015 *** Where an individual holds a Form E101, Form A1 or a Certificate of Coverage issued from another country, no PRSI is payable in Ireland. Click here to find out more about UHY FDW’s Executive Payroll Service #2016

Income taxes fall for high earners by 9 percentage points – faster than European average GDP growth outperforms global average over last 30 years Ireland’s high net worths are among those who have benefitted the most from global reductions in income taxes over the past two decades, according to a new study by UHY, the international accounting and consultancy network. The research reveals that the effective income tax rate for Ireland’s high earners with a salary of USD 1million has fallen at a faster rate (down 8.6 percentage points – from 47.5% in 1996 to just 38.9% today) than the global average (down 5.6 percentage points from 41.4% to 35.8%) in the last twenty years. Income tax cuts in Ireland have also been more substantial than in most other European economies, which have seen average reductions of 8 percentage points since 1996 – from 49% to 41%. This puts it within the top half of the fastest income tax cutting countries in UHY’s study. UHY studied tax data in 26 countries across its international network, capturing the effective income tax rate for higher and lower income workers*. UHY notes that each working citizen in Ireland is entitled to a personal tax credit of €1,650, and an employee tax credit of €1,650. This study does not include social insurance or other taxes impacting people’s net income. Ireland’s workers on lower incomes – those earning USD30,000 – also benefitted from significant tax reductions. They have seen their tax rates fall 25 percentage points, from 33% twenty years ago to 8% today. Russia has seen the biggest cuts of any major economy for higher earners, who have seen their income tax rate fall by nearly two-thirds (from 35% to 13%). The UK imposed the biggest increases of any major economy in the study (see table below) – one of the few countries to do so. British workers earning USD1million saw their tax bills rise by 4 percentage points over the period, from 39% to 43%. Comments Alan Farrelly, Partner at UHY Farrelly Daw White Limited: “Many governments around the world have tried hard to ease the tax burden on take home pay in the past twenty years – and Ireland has been leading the way.” “By making bold cuts to income tax rates, policymakers have sought to bolster consumer spending power, improve their country’s attractiveness to an increasingly internationally-mobile workforce and boost economic growth.” He adds: “It’s an approach which has contributed to Ireland’s robust GDP performance in recent decades.” “While this study did not take account of social security and other taxes such as USC impacting individuals’ net income, the reduction in USC rates in consecutive budgets and the 2016 decrease in the higher rate of income tax from 41% to 40% are positive steps in increasing the net income of individuals that we would encourage the Government to continue going forward.” UHY’s data also reveals the extent of global economies’ GDP growth in the last thirty years, since the UHY network was founded in 1986. Their figures show that Ireland’s GDP has grown by 278% in the past thirty years, outstripping the global average of 135% GDP growth (see third table below). The European average was 74%. Income tax rates for higher earners (USD 1 million) [table id=9 responsive=scroll responsive_breakpoint=device /] Income tax rates for lower earners (USD30,000) [table id=7 responsive=scroll responsive_breakpoint=device /] Change in Gross Domestic Product (GDP) since the UHY network was founded in 1986 [table id=8 responsive=scroll responsive_breakpoint=device /] GDP data from the United States Department of Agriculture. Fill in your email to your right and download the full study now. #2016

Application to Court for an Order Extending Time to File an Annual Return Following the commencement of the 2014 Companies Act on 1 June 2015, a company which has missed, or knows that it will miss the deadline for filing its annual return with the CRO, may make an application to the District Court for an Order to extend the time for delivery of its annual return. The Application can eliminate the need for a company to pay late filing penalties and also allows the company to retain their Audit Exemption which is otherwise lost for 2 years. The company must put the Registrar of Companies on notice that it is applying to the court and must deliver the applicable Court Forms to the CRO at least 21 days before the Court hearing. The CRO will issue a Letter of Acknowledgement which the Applicant must provide to the Court. Under section 343 of the 2014 Act, applications for an extension of time to file an Annual Return may be made to the District Court (or to the High Court). The Court may, if it is satisfied that it would be just to do so, make an Order extending the time in which the annual return of the company, may be delivered to the Registrar of Companies. An application to the Court can only be made in respect of an annual return which has not already been delivered to the CRO. Only one Order may be made in respect of a particular year. The Order may, at the discretion of the Court, be granted to include multiple years for which returns are outstanding. The extension of time to file an Annual Return does not alter the Annual Return Date (ARD) of the company. If the company delivers the annual return for the year in question to the CRO within the extended time period specified by the Court, the annual return will have been delivered on time and company will not have to pay late filing penalties or lose its audit exemption (if applicable). In other words, the annual return will be treated by the CRO as having been delivered on time and the consequences of late filing will not apply to that annual return. How does the process work? The company cannot represent itself so it must have the appropriate legal representation in Court. The main steps of the procedure can be summarised as follows: An application for a Court date must be made to the District Court in which the company’s registered office is situated. A copy of the above notice of application and a copy of the Affidavit must be served on the CRO. The application and a declaration of service to the Registrar are then filed with the Court no later than four days before the date fixed for the hearing. Upon completion of the hearing, if the Order is granted it should be filed at the CRO (usually within 28 days) and the B1, accounts and standard filing fee should be delivered to the CRO no later than the date to which the extension has been granted. Frequently Asked Questions? [accordions id=”2930″] Please contact Richard Windrum, in our Corporate Compliance team, who would be happy to assist you further. richardwindrum@fdw.ie +353 42 933 9955 #2016

Blockchain Technology will eliminate the need for centralised institutions like banks or governments to facilitate trade, evolving age-old models of commerce and finance into something far more interesting: a distributed, transparent, autonomous system for exchanging value. What is Blockchain and how will Blockchain Technology impact us? Bettina Warburg, a blockchain researcher, entrepreneur and educator spoke at the TED summit this year, answering key questions you may have. Watch the clip below to find out more… #2016

Reward your employees with up to €500 tax free under the “Small Benefit Exemption Scheme” Are you looking to reward your employees with a bonus this Christmas? Did you know under the existing Benefit-in-Kind arrangement, an employer can provide an employee with a single “non-cash” benefit up to €500 without it being subject to PAYE, USC and PRSI. “This is effectively a saving to an employer of up to €700 ” Conditions: The treatment does not apply to cash payments, which are taxable in full. No more than one such benefit given to an employee in a tax year will qualify for such treatment. If more than one benefit is given in a tax year only the first benefit will qualify under the Small Benefit Exemption Scheme, even if it is less than €500. The maximum value for this benefit is €500 (up from €250 since 22nd October 2015). Where a benefit exceeds €500 in value the full value of the benefit is to be subjected to PAYE, USC and PRSI. The benefit cannot form part of a “salary sacrifice” scheme. For more information about this please feel free to contact me using the details to your right. #2016

Reduce Risk & Grow Your Cash Flow A healthy cash flow is the lifeblood of every business, particularly in light of recent times, where the current economic climate is uncertain, cash collection is sporadic, and the sourcing of credit can be challenging at the best of times. The implementation and the effective use of a good cash flow management system is a must for all businesses, as the day to day cash flow requirements of a business must be met, in order for the business to survive. Key considerations: 1. Does your business have a cash flow management system in place? 2. If there is a cash flow management system in place, is it effective, up to date, and being monitored regularly? 3. Are your cash flow forecasts and assumptions realistic? 4. Are monthly cash flow statements being produced, and if so, are they being fully utilised to their best potential? 5. Do you have a structured cash collection procedure in place? 6. If so, do you have a designated staff member in place to deal with cash collection, a person who is suitably qualified, and experienced in this role? 7. Is there a clear record of correspondence being kept between you and your customer? 8. Do you have a process for debt recovery where payments are not received? The businesses collection strategies will also have to be borne in mind, considering many factors such as issuing invoices for payment at the appropriate times, follow up contact, or for example, making a note in your diary to contact customers say one week before the month end, particularly customers with large balances due. Regular contact with your customers is a must, in order to reduce any arguments or disputes that you may have with your customers in the future, and to reduce any possibility of “excuses” being made by your customer, which may result in a delay of payment. Other matters for consideration would include the credit terms agreed with customers, the payment profile and history of your customer, and particular attention should be paid to high risk accounts, preferably at the earliest opportunity. Managing Cash Outgoings & Overheads: The managing of cash outgoings / overheads also need some close consideration. Business owners do feel that they have a level of “control” when it comes to decisions regarding expenditure items relating to their business. It is advised that all business owners review their overhead costs “line by line” as potential savings can be achieved in key expense areas such as utility costs, wages & salaries, and purchasing costs, due to the availing of bulk buying discounts. The key to avoiding any cash flow problems is to identify potential problems early, and to take appropriate action immediately! At UHY FDW, we work with businesses to ensure you have cash flow visibility and the most suitable cash flow system in place to meet your cash flow requirements. Contact one of our business experts now using the form provided to have your cash flow issues resolved. #2016

FRS 102 & Tax Implications Irish and UK generally accepted accounting practice or GAAP was completely overhauled in 2012-13 when three new financial reporting standards were published to replace a reporting regime that had been pieced together over many decades. The three new standards were FRS 100: Application of Financial Reporting Requirements, FRS 101: Reduced Disclosures Framework and FRS 102: The Financial Reporting Standard Applicable in the UK and Republic of Ireland. The new Irish and UK GAAP became effective for accounting periods commencing on or after 1st January 2015. It will affect most non listed companies. This article will focus on the tax accounting requirements of FRS 102. First the good news- what has not drastically changed as a result of FRS 102? The majority of the tax accounting requirements of FRS 102 are comparable to the old Irish and UK reporting standards FRS 16: Current Tax and FRS 19: Deferred Tax. CURRENT TAX Current tax is still the Corporation Tax payable to the Revenue Commissioners or HMRC. Similarly, current and deferred tax (see below) should be computed in accordance with the substantially enacted tax rate that prevails in legislation at the relevant reporting date. DEFERRED TAX The timing difference approach largely remains. However, FRS 102 has introduced some additional requirements. This approach is based on the inherent differences between the accounting profit or loss in the financial statements and the subsequent calculation of taxable profit or loss for the purpose of a Corporation Tax return. Therefore, timing differences can arise in one accounting period but can be taxable or deductible in another period. The recognition criteria for deferred tax assets in accordance with FRS 102 are also similar to FRS 19. Both standards approach recognition of same from the point of view of the “probability” of future taxable profits against which deferred tax assets may be offset. “Probable” is defined as “more likely than not”. Finally, deferred tax assets and liabilities can be still be offset provided that that they arise in the same taxable entity and as a result of being levied by the same tax authority. What major changes in tax accounting have occurred as a result of FRS 102? We mentioned above that the recognition criteria for deferred tax assets largely remain unaltered but FRS 102 has introduced a number of additional requirements. FRS 102 has introduced the timing difference ‘plus’ approach in respect of deferred tax calculations. This requires that deferred tax is calculated for three additional types of transaction. Deferred tax should be calculated; For any revaluation gains or losses on non-monetary assets like property, plant and equipment (PPE) and investment properties. On the differences between the fair value of the assets acquired in a business combination (for example, where one company purchases another) and the values subsequently recognised for tax purposes. On accumulated profits sitting in overseas subsidiaries or associates that have yet to be remitted to the parent company by way of a dividend. However, where the parent has the capacity to control the dividend payment capacity of a subsidiary deferred tax should not be recognised. Changes in respect of the useful economic lives (UEL) of intangible assets and goodwill have been among the most noteworthy in the transition to the new GAAP. The old FRS 10, “Goodwill and Intangible Assets” permitted indefinite UELs for intangibles and goodwill. FRS 102 prohibits indefinite UELs and where an entity cannot make a reliable estimate of UEL, these assets must be written off to the profit or loss account or amortised over a period that cannot exceed five years (or ten years for periods commencing on or after 1st January 2016). Consequently, intangibles and goodwill must be amortised. Tax deductions are generally not available for goodwill and intangible assets and this should be borne in mind during the transition to the new GAAP as previously unamortised intangibles and goodwill are written off to the profit and loss account. However, tax deductions are available in respect of capital expenditure on certain intellectual property intangible assets and their associated goodwill. Tax deductions are available in line with the amortisation of such assets in the financial statements or over fifteen years provided an election is made in the period in which the capital expenditure is incurred. FRS 19 permitted the discounting of deferred tax balances to take into account the time value of money. FRS 102 prohibits the discounting of any deferred tax balances. The old FRS 17 standard “Retirement Benefit Schemes” required that the associated deferred tax be presented in the balance sheet with the relevant pension asset or liability. Timing differences arise in this area because tax deductions that are available for pensions are based on cash payments rather than amounts charged to the profit or loss account. However, there is no such requirement in FRS 102. Therefore, deferred tax that arises as a result of these timing differences should be included in the overall deferred tax figures. Disclosure requirements of FRS 102 Finally, the major tax accounting disclosures required by FRS 102 are: The old FRS 19 required a reconciliation of pre-tax profit or loss for the year as per the financial statements multiplied by the statutory tax rate to the current tax expense. FRS 102 requires a reconciliation to the total tax expense, including deferred taxation and taxation payable in another jurisdiction, from an entity’s continuing operations. Deferred tax liabilities are presented in the balance sheet within provisions, and deferred tax assets are presented in debtors. FRS 19 required similar presentation. The total current and deferred tax relating to items that are recognised as items of other comprehensive income or equity. An explanation of changes in the applicable tax rate(s) in comparison to the previous reporting period and any adjustments to deferred tax because of changes in accounting policies or material errors. FRS 102 requires disclosure of estimates relating to the amount of net reversals of deferred tax assets and liabilities expected to occur during the following accounting period. At UHY FDW our dedicated tax team aims to minimise your tax exposures and deliver the best advice for your situation. Contact Us now for any questions you have relating to FRS 102 and the changes in Irish and UK GAAP. #2016

6 Key Strategies to drive up your Motor Dealer Profit Margin Are you getting full value from your Dealer Management System? Your dealer management system should be providing you with accurate and timely metrics across all departments in your dealership. From stock turn analysis to labour recovery rates most dealership systems produce these reports if configured fully. When is the last time your system provider upgraded your system or advised you of enhanced reporting options? Schedule a meeting with your provider to explore if the system can be used more efficiently. Increase your Stock Turn This applies to both car and parts stock. A number of surveys have revealed that the average stock turn is 8 times per annum. The surveys however also revealed that the top performing dealerships had a stock turn of 16 – double the average. Increasing your stock turn on cars involves ensuring that you retain the correct stock profile at the right price. For increasing your parts stock turn consider regular stock checks and system stock reconciliations to avoid over ordering or stock becoming obsolete. Analyse the cost and contribution of different parts lines to identify fast moving and profitable lines of stock. Focus on Warranty and Bonus Accounts Make sure your service and parts team know the specific criteria and process for claiming service warranties and warranty parts for return. Significant revenue can be lost by performing work under warranty that isn’t covered or the claim is not submitted carefully. Warranty return parts should be carefully monitored to ensure that they are returned and a subsequent credit note is received. Encourage your parts manager to avoid the temptation to stock pile or even discard parts that could be returned for warranty credit. Focus on Labour Costs Efficient and economical buying of parts can improve your margin however focusing on controlling labour costs results in much greater increases in profit margin. Profit margins on parts can range between 20 and 30 per cent while labour margins can be in excess of 50 per cent. Consider reducing the benefits (and therefore time commitment) you provide, increase your labour charge out rates or reduce the wages payable. Other strategies could be to add hours to the service timetable and availing of any opportunity to avail of vendor provided training programs. Purchase ledger review and order processing When is the last time someone other than the accounts team reviewed the purchase ledger? Are invoices checked for correct quantities received and agreed pricing or discount structures? Do not assume that you have received a correct invoice from a supplier – this can be a huge source of margin erosion. Implement a robust system of invoice checking and payment approval procedures. Supplier ledger accounts should also be reconciled regularly to supplier statements to not only ensure your month or period end accounts are accurate but also to gauge the level of unallocated payments or unapproved invoices on the system. Another reason for purchase ledger queries is due to errors in ordering. Ordering the wrong part and arranging returns or replacements increases costs and reduces margins. Ensure staff and trained for accuracy and if necessary incentivise to reward accurate stock ordering and management. Encourage departments to Cross Sell Can or does your top salesman recognise an opportunity to sell a car service or an incremental parts sale? Does the service team have an up to date list of new or used car stock for the service customer who finally accepts it is time to replace? Each of the above are opportunities for one department to boost revenue for another. Evidence suggests that for each additional euro of service income, an extra 50 cents of parts revenue can be generated. In addition, encourage staff to build retail business, such as seasonal driving accessories or kits, servicing kits, batteries or fast fit parts such as wiper blades. These can generate additional revenue at a good margin. Do you want to improve your Motor Dealership profits? UHY FDW have been providing relevant hands on business advice to motor dealers, as well as a range of accountancy and taxation services, for many years now. Our focus is to improve your motor dealerships business performance. Talk to us about your motor dealerships business objectives and we will work with you to achieve them. Contact Richard @ richardberney@fdw.ie or dial +353 1 849 1633 , for a no obligations consultation. #2016

Anyone who works for an employer with a regular wage has a contract of employment whether it is in writing or not.  An employer is required under the Terms of Employment (Information) Acts 1994 – 2014 to provide an employee with a written statement of terms and conditions of employment within the first 2 months of commencement of employment. Key things to consider It can be a costly exercise not giving your staff contracts. The easiest way to protect your business is to give staff what they are entitled to under employment legislation. The penalty for not providing a written statement is compensation to the employee of up to 4 weeks salary. There are bigger concerns to consider. Defending claims of unfair dismissal or constructive dismissal are very difficult without written statements of terms and conditions of employment. [one_half] What should be in the statement? The full name of employer and employee The address of the employer The place of work The title of job or nature of work The date the employment started If the contract is temporary, the expected duration of the contract If the contract of employment is for a fixed term, the details Details of rest periods and breaks as required by law The rate of pay or method of calculation of pay The pay reference period for the purposes of the National Minimum Wage Act 2000 Pay intervals Hours of work That the employee has the right to ask the employer for a written statement of his/her average hourly rate of pay as provided for in the National Minimum Wage Act 2000 Details of paid leave Sick pay and pension (if any) Period of notice to be given by employer or employee [/one_half] [one_half_last] [/one_half_last] Further things to consider It is important to seek advice if you are implementing written statements of terms & conditions of employment for the first time.  There are key steps that will ensure the successful implementation of the terms of employment, which if followed will then protect the company against claims down the line. Remember, it is vital the company adheres to its policies and procedures to avoid losing cases based on procedural fairness.  Contracts should be signed and a copy kept on file.  An employer must be able to prove that they have given staff a copy. Any changes to terms and conditions should be documented on file by the employer and signed by the member of staff. If you would like to know more about putting employment contracts in place and your HR obligations as an employer contact UHY Farrelly Dawe Whites Expert HR Consultant, Áine Fox on 086 3807206 . #2016