Registered AITI Tax Qualification Info and Questions

TaxStudent

there are no clawbacks under three party swap... that's its big selling point... exempt from cgt and stamp duty..... two party swaps have clawbacks and are rarely used in practice....

if the share holders are receiving the shares for the transfer of a trade then three party swap is most efficient...

Szewinska

TaxStudent wrote: »

there are no clawbacks under three party swap... that's its big selling point... exempt from cgt and stamp duty..... two party swaps have clawbacks and are rarely used in practice....

if the share holders are receiving the shares for the transfer of a trade then three party swap is most efficient...

Thanks and what about a share for share. it seems the final set up is different here as its a subsidiary set up after

TaxStudent

s.586 share for share relief is used where one company takes over another with the shares in the acquiring company being given to the shareholders of the target company.. the key here is the acquiring company must control the target company following the transaction...there is not transfer of a trade or an amalgamation....... stamp duty relief is also available.

Szewinska

TaxStudent wrote: »

s.586 share for share relief is used where one company takes over another with the shares in the acquiring company being given to the shareholders of the target company.. the key here is the acquiring company must control the target company following the transaction...there is not transfer of a trade or an amalgamation....... stamp duty relief is also available.

thanks for your help. Much appreciated

beeftotheheels

TaxStudent wrote: »

there are no clawbacks under three party swap... that's its big selling point... exempt from cgt and stamp duty..... two party swaps have clawbacks and are rarely used in practice....

if the share holders are receiving the shares for the transfer of a trade then three party swap is most efficient...

But watch the accounting and company law issues, you need reserves for the three party swap and the lawyers disagree whether that's reserves equal to the book or market value of the assets being transferred, accountants often take the position that the transfer itself creates the reserves but this is unclear.

The number of times I've seen these transactions being done in the real world involving offences under the companies acts or accounting disasters is not funny.

Remember as well that if an exceptional dividend is to be paid it may be wise to whitewash the transaction, and the dividend will be out of pre-acq reserves and thus not go through the P/L of Newco in accordance with s149(5) of the Companies Act, it will be a write down in the carrying value of the subsidiary on the balance sheet of Newco.

Stamp Duty clawback on the share for share two party is the main downside.

For any students reading I would think that reconstructions and amalgamations are the most misunderstood area of tax law even leaving aside the company law and accounting implications. If you read the Keane case http://www.bailii.org/cgi-bin/markup.cgi?doc=/ie/cases/IEHC/2007/H466.html&query=title+(+keane+)&method=boolean

you'll see that not only one, but two big four firms and presumably at least one SC (not clear if Bill Shipsey argued the case or just opined on the matter hence I say at least one) hadn't bothered reading Fallon v Fellows and didn't know the law in this area as well as Seamus Carey in stamps branch.

Once you work with these rules for a couple of years they become almost second nature but every time I'm relying on them I go back and read the legislation, go back and read the cases, check the company law and the accounting treatment.

Remember that you need to consider the tax position of potentially three tax payers in terms of reliefs/ cost etc

The shareholders in Oldco s586, s587 but you need a bona fide scheme of reconstruction so read the Keane case

Oldco s615 or s617 for an asset transfer, if s617 applies it trumps s615 and s617 has the claw back provision in s623 whereas s615 has no claw back Read NAP Holdings v Whittles and Westcott v Woolcombers here s312 for capital allowances, s400 for losses, and s89 for stock

Newco s80 but also s615/ s617 in terms of asset cost s312 for capital allowances, s400 and potentially s401 for losses, and s89 for stock

Finally check the mergers directive rules in 630 et seq as they can apply in scenarios where you might not be expecting and have alternative claw back rules and then think about the interaction with s626B (if appropriate)

Szewinska

Thanks for that

beeftotheheels

Oh, one more point on this. Valuations are key as you need substantially the same people have substantially the same interest in the trade going forward to constitute a scheme of reconstruction.

If someone else is doing a valuation exercise that's great, if not you need to sense check it to ensure that the right number of shares are being issued, especially if you're moving two companies under one, or moving two businesses in together.

If there's a lot of fixed assets then in an owner managed business something like the balance sheet values (although check there's not a 2008 property sitting there at cost) and 2 to 5 times operating profit is usually in the ball park.

For a larger business without the same key man issues a small business would have you'd be looking at a profit (often EBIT or EBITDA) multiple, maybe even as high as ten.

Ultimately your client should determine the value as they'll know their business best, but you need to think whether it is in a range that can be defended with the tax authorities.

The number of times I've seen the wrong number of shares being transferred because the tax adviser forgot entirely to sense check the values, putting two Oldcos under one Newco and issuing the "A shares" in respect of Oldco A at par, and the "B shares" in respect of Oldco B at a significant premium suggesting that there was a transfer of value from the B shareholders to the A shareholders...

...not a scheme of reconstruction or amalgamation, potential value shifting, CAT issues and the fact that there may be a gift that the B shareholders never meant to make to the A shareholders

These rules can be tricky and complicated, but if you get your head around them these transactions are about as much fun as a tax adviser can have :-)

Evelyn Forde's book on reconstructions is great (although pricey)

http://www.bloomsburyprofessional.com/1163/Bloomsbury-Professional-Taxation-of-Company-Reorganisations-in-Ireland.html

ElektroToad

Hi all I'm planning to start studying for Part 1s in October. I'm trying to register as a new student on the ITI website but it seems that the links don't work?

I'm clicking the "New Registration (AITI)" link and nothing happens. I've tried using Internet Explorer, Chrome, Firefox etc.

It is just me? Or is the registration page just not working?

gerrykeegan

ElektroToad wrote: »

Hi all I'm planning to start studying for Part 1s in October. I'm trying to register as a new student on the ITI website but it seems that the links don't work?

I'm clicking the "New Registration (AITI)" link and nothing happens. I've tried using Internet Explorer, Chrome, Firefox etc.

It is just me? Or is the registration page just not working?

It does not seem to be working. Email registrations@taxinstitute.ie and they will be back to you fairly quickly.

NEWBIEGRL8

PART 3 - CORK OR DUBLIN FOR LECTURERS?

Hi

Can anyone tell me what the lecturers in Dublin are like for the Part 3's?

Did Part 2 in Cork and the lecturers were not up to scratch.
As Part 3's are significantly harder than Part 2, i'm willing to go to dublin if the course delivery is better, especially for ADV Personal Tax & Business Tax.

Any feedback on the dublin lecturers for part 3 very much appreciated

bluebell27

Has anyone received their Part 3 books yet?

Last year they came within a few days of registering but I registered last week and haven't received them yet.

gerrykeegan

bluebell27 wrote: »

Has anyone received their Part 3 books yet?

Last year they came within a few days of registering but I registered last week and haven't received them yet.

About 10 minutes ago

TaxStudent

results out next week for part 3....think the institute would release results early if they knew you had a performance review Friday? could mean an extra few shillings

TaxStudent

TaxStudent wrote: »

results out next week for part 3....think the institute would release results early if they knew you had a performance review Friday? could mean an extra few shillings

well the extra shillings didn't materialize

julio arca

I have a brand new edition of the Institutes Law of VAT as well as the Part 2 Indirect Taxes manual available for sale if anybody is interested.

TaxStudent

Hello All

Can anyone fill me in on the Conferring ceremony and protcol?

Is it black tie or just turn up in the auld work gear?

How long it runs for etc - will the Lidl wine be flowing?


Cheers

Run Forest! Run

Does anyone else think that this blackboard thing is hard to navigate. The professional skills workshop for part 3 was not on in Cork last weekend and i cannot find it on blackboard.

can anyone help?

NEWBIEGRL8

The new blackboard system is a disaster.

I cant find the "expert lead" guest lecturers at all on it?
They have a week by week planner up and these guest lecturers are highlighed in purple.

But i've searched all over blackboard and can't find them.

Also , anyone finding the home assignment for Part 3 very tricky?

Anneb158

Part 3 Assignment very tricky, how are others getting on

walshing

Hi,

Just wondering is anyone out there in the same boat!

passed my FAE's few week ago and decided(a moment of madness) to sign up for the tax exams. Now I feel a bit snowed under!

Doing this professional skills assignment, missed the lectures as only joined last week and they had been on previously. Tired to watch online but my internet aint great, must try in work at lunch or something.

Any one have any advice on the professional skills?

for the file note am I right in saying that I just look at the legislation, reference it, write down the bits that apply to the case? if I copy bits for the legislation, as long as i have them referenced I will be ok for plagiarism ? Will I?


Any advice part 2's much appreciated

NewApproach

Any initial thoughts on the Part 3 assignment?

Anneb158

Yes, It is hard !!

Started week before last on research etc, have written a bit, but it confusing

Szewinska

Yep iv just signed up for p3...assignment is a shocker.....anyone any initial thoughts.....Buying the assets more efficiently anyway Id say to avoid the CGT group clawback

dustyrip

Is a re-org even taking place? Not sure if all the main reliefs are available for the 'NewCo' company being established.

Anneb158

Regarding CSL, Asset Purchase, or, just buy CSL, get the cork group to take back CSLSubco with building as holdco not want building, I looking at both options,

cfd

I approached CSL in the same way looking at both share purchase and asset purchase. Just wondering how people approached GFL?

Anneb158

I suggested they form newco and holdco buy that as opposed to holdco forming new co and buying asssets of gfl, but overall it not matter I think if structure stays the same, as is only losses missing out on and costs involved other way may mitigate

inforequired1

Hi All

Have you treated the CSL purchase as an asset purchase or share purchase?

Thanks a mill

Anneb158

I treated as share purchase but csl only gave back cslsubco to cork group, do not know if that best way to go, I know a couple have treated it as asset purchase

dustyrip

I treated CSL as a share purchase as HoldCo is looking to expand and the share purchase would be more suited here (acquire customers, suppliers etc) and stamp duty of 1%.

There is argument though for the asset purchase as HoldCo does not want CSLSubCo but I think when you weigh up all the options and why HoldCo is acytually acquiring CSL i.e. expansion outside of Dublin, then the share purchase is the way to go.

For the disposal of SWCo I am treating this as S626b, there must be more to this and I feel like I am leaving something out!