revenue Archives - P F Power & Co. Accountants

Hotels’ costs rising faster than revenues, says report

Hotels’ costs rising faster than revenues, says report

HOTEL insurance rates are rising by 10pc per annum, prompting some operators to rethink how their leisure facilities in particular are used, according to Aiden Murphy, a partner with accountancy and advisory firm Crowe Ireland.

He said one of the options for hotel operators is outsourcing the management of their leisure facilities.

“For most hotels, insurance is up 10pc year-on-year in terms of cost,” said Mr Murphy. “It’s a significant increase and it’s twice the increase hotels have seen in revenue terms.

“It’s growing at a level that is a problem for hotels, and a cost they have to focus more and more on,” he added.

“You could very well see that hotels might outsource their leisure centres on the basis that the insurance premium for that facility may actually fall to a third party, and it may allow the core hotel to bring down its own premium to a more manageable cost,” said Mr Murphy.

Releasing its annual analysis of Ireland’s hotel sector today, Crowe Ireland said that labour costs also remain a significant cost issue for hotels.

“For the second year in a row, payroll costs have also increased at a greater rate than total revenues, placing added pressure on hotels across the country,” the report states.

“Increasing costs relate to salaries and benefits, higher turnover levels and increased training and development in a highly-competitive arena. This will continue to be one of the most challenging areas facing Irish hoteliers in the coming years.”

Utility costs for hotels also rose by 8pc last year, according to the analysis.

“It is becoming harder for Irish hotels to increase profit levels despite reasonable revenue growth, as many costs are now increasing faster than the underlying growth in revenues,” claimed the Crowe Ireland report.

Last year, the firm said an additional 11,000 hotel rooms would be needed in Ireland over the next seven years as tourist numbers continue to increase.

Mr Murphy pointed out that Dublin’s hotel occupancy rate, at 84pc, is the highest of any European city.

If the occupancy level in Dublin eased to 80pc or 81pc due to additional rooms entering the market, he believes, then it might give the capital a “more competitive offering”.

That might also iron out instances where hotel rates spike when certain events are on in the city, claimed Mr Murphy.

“Average room rates in Dublin have grown very strongly – much stronger than in other European cities,” he said.

Crowe Ireland’s report shows the average room rate in Dublin last year was €145.82, which is 6.5pc higher than in 2017.

Nationally, the average nightly room rate also rose – to €118.27 last year – an increase of 6.3pc compared to 2017.

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Revenue intensifies Brexit engagement with businesses

Revenue intensifies Brexit engagement with businesses

Officials from Revenue will be contacting 92,000 businesses around the country as preparations for Brexit continue.

Businesses will receive letters and phonecalls from officials outlining the steps necessary to prepare for Britain leaving the European Union.

The head of Revenue’s Brexit Policy Unit said while businesses should register for an Economic Operators Registration and Identification number, that is only part of the process.

Lynda Slattery said business should also carry out an impact assessment to identify how Brexit can affect their company and supply chain.

She also said that companies should understand who will do their customs declarations and how import duties will affect the commodities they import.

Ms Slattery said that while officials will contact 92,000 businesses over the next eight weeks, this does not mean that all of these companies have not engaged in the Brexit preparation process.

“The 92,000 is the figure identified who had some level of trade with the UK in 2018. Some are registered, some are not. We’re not taking any chances and are contacting everyone. We’ve written to them all and will be ringing them all,”Ms Slattery stated.

Ms Slattery also said that while there is ambiguity about Brexit, Revenue are operating on the basis that Britain will leave the EU on October 31.

She added that Revenue can provide absolute certainty that customs formalities will apply when Brexit happens.

Ms Slattery also said there is support for businesses available through the Revenue and Enterprise Ireland websites, as well as via the Department of Business.

Revenue said that based on the most up to date information available, it is estimated that 33% of businesses in the wholesale and retail trade, and 15% of businesses in the construction industry, who trade with, or perhaps buy supplies on an ad-hoc basis from, the UK have not yet applied for an EORI number.

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Revenue owed €40m in tax, fines and interest by defaulters

Revenue owed €40m in tax, fines and interest by defaulters

More than €39.82m remains unpaid to the Revenue Commissioners in taxes, penalties and interest from published tax defaulters in 2017 and 2018.

That is according to figures provided by Finance Minister Paschal Donohoe which show €15.5m remains unpaid by published tax defaulters in tax, penalties and interest from last year.

In a written Dáil reply to Labour’s Joan Burton, Mr Donohoe confirmed that a further €24.2m remains unpaid in taxes, penalties and interest from the 2017 lists of published tax defaulters.

The figures show that of the 265 tax settlements agreed last year with defaulters, the numbers that remain unpaid amount to 79 or 30pc of settlements.

This compares to 289 settlements agreed for 2017 where 101 settlements remain unpaid or 35pc of the overall total.

Ms Burton said: “I’m very shocked at the level of non-payment of tax settlements.” She said: “It is very unfair on the hard-pressed taxpayer that some of these tax defaulters can seemingly walk away from their obligations.”

A spokeswoman for Revenue said while Revenue vigorously pursues collection/enforcement of unpaid settlements “in some cases, the collection/recovery of the full amount unpaid will not be possible”.

“In some instances for example, a company may have gone into liquidation, while a number of the unpaid settlements in the Tax Defaulters List are as a result of the taxpayer claiming ‘inability to pay’,” she said.

Documentary evidence of inability to pay must be submitted to Revenue, with each case then considered on its own merit, as to whether an ability to pay exists or not.

Revenue currently has 500 people employed in all aspects of debt management.

The spokeswoman said: “In 2018, we collected €211.6m as part of our debt collections and enforcement actions. We can, and do, work very successfully with businesses and individuals who engage early with us to resolve their payment difficulties.”

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Revenue collected 26% more corporation tax last year

Revenue collected 26% more corporation tax last year

The amount of corporation tax collected by the state last year increased by 26% to €10.4 billion, according to the Revenue Commissioners’ annual report.

The increase was driven by higher payments from manufacturing companies and increased payments from big multinational companies.

The report also shows that the share of corporation tax paid by the top ten corporate taxpayers now accounts for 45% of all the corporation tax paid, up from 40% the year before.

Almost €1 in every €5 of tax collected by the Revenue Commissioners came from corporation tax last year – an extraordinarily high proportion by international standards.

The amount paid surged by 26%, underlining again the volatile nature of this tax head and how vulnerable the public finances have become to the risk of a sudden downturn in corporation tax payments.

There are 164,000 companies in Ireland, but just 100 of them pay almost three quarters of the corporation tax collected. Foreign owned companies paid 77% of last year’s corporation tax take.

In total, Revenue said it collected net Exchequer receipts of €54.6 billion for last year, up €4 billion on 2017.

There were increased receipts for almost all taxes and duties including Income Tax, up 6.6%, VAT up 7% and Corporation Tax.

Niall Cody, Revenue’s chairman, said that continued strong levels of timely, voluntary compliance rates of over 90% across all taxes confirm the reality that the vast majority of individuals and businesses pay the right amount of tax, on time.

Mr Cody acknowledged taxpayers’ engagement, and that of tax practitioners and agents, in achieving the very strong compliance rates seen again for 2018.

Today’s report also reveals that 400 additional customs officers have been hired of the estimated 600 required for Brexit duties.

Revenue said the delay to Brexit has enabled them to complete additional training, adding that as Customs and Revenue is an integrated service, staff can be redeployed from one are to another rapidly.

This means that in the event of a sudden Brexit, additional staff can be redeployed to cope.

The Commissioners appealed once again to firms that have not applied for an EORI number – which is free and facilitates customs declarations when trading with the UK after Brexit – to do so.

They warned that Brexit could happen suddenly before the 1 November deadline.

Revenue also said it it was “confident that our systems will successfully handle the increased transaction levels arising as a result of Brexit”.

Last year the authority processed 1.6 million customs declarations through their electronic systems.

It said it believes customs import and export declarations could rise to as many as 20 million a year after Brexit, due to the amount of trade the country has with the UK.

Looking ahead, Niall Cody said that it is very important that Revenue supports compliant taxpayers by identifying risks and tackling non-compliance in all its forms.

“We continue to be alert to, and pro-actively respond to, the risks arising from the changes in economic and business environments both nationally and globally,” he added.

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Revenue officials meeting hauliers in Brexit preparations

Revenue officials meeting hauliers in Brexit preparations

Revenue officers have begun engaging with hauliers at ports in Dublin and Wexford as part of preparations for a no-deal Brexit.

Concerns have been raised about the number of companies trading with the UK that have not yet registered for customs.

Lynda Slattery, head of Revenue’s Brexit unit, said that before Christmas they identified 84,000 companies that may be impacted by Brexit.

However, less than half of those have registered for customs so far. Speaking at Dublin Port this morning, Ms Slattery said they are “really concerned” by these figures.

Revenue officers were at Dublin Port and Rosslare Europort providing information to truck drivers on the impact of Brexit.

Officers are also on board some ferry sailings between Ireland and the UK offering information on the documentation that truckers will be required to have before arriving at ports, as well as the customs routes that they will have to take.

Speaking to RTÉ News, a number of truck drivers at Dublin Port said that this is the first time they have been provided with this information.

One driver, who works for what he said was a small UK firm, said “because we are so small we can’t really afford to just put things in place”.

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New Revenue system to hit SMEs for unpaid tax

New Revenue system to hit SMEs for unpaid tax

The Revenue Commissioners will chase more small companies for unpaid tax following the launch of a new high-tech debt management system.

Revenue’s Debt Management Services (DMS), which was brought in last week, uses technology to deal with a wider range of taxpayers.

This will include those who previously may have been too costly to identify and pursue.

A Revenue spokesman said that it would deliver “improved profiling of cases and deliver significant increased capacity to manage and support compliance and tackle non-compliance”.

“The new debt-management system will enable Revenue to review customers with lower turnovers on a more regular basis.”

Debt to revenue includes annual taxes, such as self-assessed income tax and corporation tax or taxes paid on a periodic basis such as Vat or PAYE.

The technology also offers more flexibility for phased repayments, however.

“The new system is fully online, allowing documentation to be uploaded electronically. It provides much quicker turnaround times for clarifications.

“It also gives customers greater flexibility to manage their payment schedule and make certain alterations to suit their circumstances,” said the spokesman.

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Revenue sets sights on value of private shares

Revenue sets sights on value of private shares

Revenue is plotting a crackdown on shareholders of private companies who undervalue their stakes in tax returns.

The rules on valuation apply to all unquoted companies – whether it is a large entity operating on a grey market, or a local sweetshop owned by a company.

Without an open market, one senior accounting industry source said valuing the shares is an art rather than an exact science.

The tax authority is now looking to establish a panel of experts to help it “enhance” its capabilities in assigning values to so-called “unquoted shares”, stakes held in unlisted companies.

“To assist in the full and proper application of the various taxation codes, particularly with regard to the market valuations of private companies, Revenue is seeking to enhance its valuation service in respect of all forms of unquoted shares,” it says in a tender document seeking expressions of interest.

“Revenue is forming a panel of suitably qualified share-valuers. Revenue will select valuers from this panel as required to provide Revenue with independent expert advice in relation to the valuation of unquoted shares,” the document says.

One area where valuations of shares in private companies matter is capital acquisitions tax; for example, when a person inherits a stake in a family business.

Submitting a value for those shares to the taxman is up to each individual, but Revenue has traditionally carried out audits to ensure valuations reflect reality.

It has said the audits are designed to “deter evasion and avoidance by detecting under-valuations and taking appropriate action”.

Multiple factors will be considered in valuations, including whether the shares are part of a majority or minority stake (a reflection of how much influence the shares will have), the profitability of a business, and its future prospects.

A Revenue spokesman said: “It is prudent that Revenue has access to independent valuers for various assets (such as property or shares), so that tax implications of those assets can be assessed correctly. For example, the sale of an asset will potentially raise a Capital Gains Tax liability based on the value of that asset. These panels have been in place for many years, and are refreshed annually.”

The spokesman said the valuers’ role will include providing evidence on Revenue’s behalf before courts and arbitration hearings.

In results for 2018 published earlier this year, Revenue chairman Niall Cody said there had been “continued strong levels of timely, voluntary compliance by taxpayers”.

“The vast majority of individuals and businesses pay the right amount of tax, on time. We support voluntary compliance by making it as easy as possible, and we are focused on optimising our service to taxpayers,” Mr Cody said.

At the same time, Revenue completed 572,785 audit and compliance interventions that yielded €572.6m, settled 22 tax-avoidance cases yielding €5.7m and secured 17 criminal convictions for serious tax evasion and fraud in 2018, Mr Cody added.

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