Speaker

Dermot Reilly
Partner
Private Company Services
dermot.reilly@ie.pwc.com
The tax dimension

Agenda

• Cashflow
− Utilising losses
− Maximising deductions
− Availing of tax incentives
− Falling asset values
• Property issues
• Preparing for the upturn
− Share freezing
− Management incentivisation
• Owner/Personal

How to be the breakaway company in the upturn 29 April 2010

PricewaterhouseCoopers Slide 2
The tax dimension

Utilising losses

Company losses
Total income
plus gains
2008

Trading Other income

losses 2009 plus gains
2009

Trading income
2010 et seq

Offset on value basis

How to be the breakaway company in the upturn 29 April 2010
PricewaterhouseCoopers Slide 3
The tax dimension

Maximising deductions

• Relief on payments basis (interest, pensions, share payments)

• Convert general provisions to specific

• Borrowing funds
− Interest relief @ 25% (companies)
− Refinancing between group companies
− Refinancing between spouses

How to be the breakaway company in the upturn 29 April 2010

PricewaterhouseCoopers Slide 4
The tax dimension

Availing of tax incentives

• Research and Development

• Patents

• Accelerated capital allowances for energy

efficient equipment

How to be the breakaway company in the upturn 29 April 2010

PricewaterhouseCoopers Slide 5
The tax dimension

Falling asset values - Opportunities

• Crystallising losses

• Is now the time to gift?

• Extracting assets from companies

How to be the breakaway company in the upturn 29 April 2010

PricewaterhouseCoopers Slide 6
The tax dimension

Property issues

• Leases

− Variation

− Escape

• Values

− Gains/losses

• Property extraction

• 80% tax rate

• Refinancing e.g. spouse

How to be the breakaway company in the upturn 29 April 2010

PricewaterhouseCoopers Slide 7
The tax dimension

Prepare for the upturn - housekeeping

• Share freezing technique

• Management incentivisation

How to be the breakaway company in the upturn 29 April 2010

PricewaterhouseCoopers Slide 8
The tax dimension

Share freezing

(1) (2)
Existing New
Shareholders Shareholders Shareholders

A shares B shares
Company
Company

• Freeze value of A shares

• Future appreciation in B shares

• Control retained by A shares

How to be the breakaway company in the upturn 29 April 2010

PricewaterhouseCoopers Slide 9
The tax dimension

Management Incentivisation

• Aim – secure CGT rate (25%)

• Share schemes
• Convertible shares – F.A. 2008

But,
Convert which shares?
No conversion – Hurdle arrangements
Share freezing
“Clog” on sale

How to be the breakaway company in the upturn 29 April 2010

PricewaterhouseCoopers Slide 10
The tax dimension

Owner/Personal

• Balance: personal financial security and future

of business
• Pensions
• Cash extraction
• Realisations
• Negligible value claims
• Business/wealth succession
• Family
• Wills

How to be the breakaway company in the upturn 29 April 2010

PricewaterhouseCoopers Slide 11
The tax dimension

Summary

• Maximise tax opportunities

• Get house in order

How to be the breakaway company in the upturn 29 April 2010

PricewaterhouseCoopers Slide 12
Dedicated To Your
Long-term Success
John Dunne
Partner
Private Company Services
john.a.dunne@ie.pwc.com
Phone: 01 792 6856

Dermot Reilly
Partner
Private Company Services
dermot.reilly@ie.pwc.com
Phone: 01 792 8605

PwC
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