BDO has extensive experience in conducting a range of assignments on behalf of private and public operators throughout the transport sector.
Dublin Bus & Bus Éireann
We have undertaken a number of assignments on behalf of both Dublin Bus and Bus Éireann which sought to examine the cost of traffic congestion on an annual basis to both companies. These studies involved conducting extensive examinations of the entire operations of both Bus Éireann and Dublin Bus and the building of a financial model which calculated the cost of congestion to both companies.
A key element of both engagements was the conducting of international benchmarking to compare the average speeds of international cities with the speeds being achieved by both Dublin Bus and Bus Éireann. This extensive benchmarking involved analysis of cities from 14 countries including Australia and the United States to develop an accurate estimate of the cost of congestion to Dublin Bus and Bus Éireann.
Irish Road Haulage Association
We have undertaken assignments on behalf of the IRHA which sought to assist and advise them in addressing the crisis in their sector attributed to the escalating fuel costs being experienced throughout the industry. BDO developed a tax rebate system as a tool to combating the escalating diesel prices being experienced by Irish haulers across the country. To successfully design this, the consulting team conducted an:
Extensive cost review and analysis of the Irish Haulage Industry to determine the economic effect of increases in diesel prices over the past 3 years to both individual haulers and the IRHA itself
Mapping of Irish diesel prices over the last 5 years as compared to European estimates
In-depth assessment of international rebate systems in both Europe and North America
Evaluation of all identified systems in operation internationally to determine the appropriateness of implementation of any system in Ireland
Assessment of the operation, cost and impact of rebate systems in operation abroad
In-depth determination of the European legal Requirements governing the price of fuel used for commercial use. This assessment involved interpreting the meaning of a number of Irish Statutes and European directives to determine the legality of any rebate system operation in Ireland.
Within a period of 10 weeks, the consulting team developed a model that addressed the fuel crisis in the Haulage Industry in the short, medium and long term, prepared a detailed cost-benefit analysis based on this model and the development of detailed financial projections and sensitivity analysis in relation to this proposed model.
Department of Public Enterprise- Airports Division
We were commissioned by the Department of Public Enterprise to assist with assessing the financial position of each of the six regional airports. The objective of this review was to assist the Department in determining the most appropriate means of allocating a fund to assist the six regional airports in Donegal, Sligo, Mayo, Galway, Kerry and Waterford with their marketing and promotional efforts.
The process involved a detailed examination of the financial statements of the regional airports and in-depth interviews with each of the General Managers and heads of finance function. In addition we isolated the various sources of revenue and provided ratio analysis of revenue and operational costs to aid comparability. Our report recommended a more transparent and objective means of assessing each airports needs and proposed an approach for allocating support to those airports with the greatest need and who have clearly demonstrated how they propose to use the support.
Following on from this assignment we were retained by the Department to carry out a review of the financial returns of Aer Arann for the first six months of operation of the Public Service Obligation (PSO) routes as a means of identifying an appropriate apportionment of operating costs between PSO and non PSO routes. This involved a detailed examination of all direct and indirect costs to establish the relevance and appropriation of costs. Our final report recommended a methodology for the appropriation of all direct, indirect and administration overheads
Tourism and Transport Council (CTTC)
We were engaged by Fáilte Ireland and the Coach Tourism and Transport Council (CTTC) to undertake a benchmark study of the Irish Coach Tourism Sector. The objective of this assignment was to consider the competitiveness of the Irish Coach Tourism sector and to examine and compare the operation of a coach tour business in Ireland with the operation of a coach tour business in other EU Countries.
As part of the analysis we examined the key factors impacting on the operation of coach tour businesses throughout Europe, with particular attention given to capital, labour, fuel and insurance costs. Consideration was also given to the economic, legal and regulatory environment within which coach tour operators operate and the impact on their businesses.
The research indicated that within an EU context and despite a more challenging and possibly expensive operating environment Irish coach tour operators do provide a service that compares favourably in price with operators in other EU countries.
By Derek Henry, Tax Director and Head of R&D team.
The Minister for Finance, Michael Noonan, in his budget speech re-affirmed his commitment to supporting Irish companies carrying on Research and Development (R&D) activities in Ireland by announcing a range of measures aimed at enhancing the regime and increasing its international competitiveness. While the legislation which was published last Wednesday does include the legislation in support of the announcement, some of the measures have a more limited effect than was hoped for.
By way of background under the R&D Tax Credit Regime, companies are entitled to a tax credit of 25% of the incremental R&D expenditure incurred in excess of the base year spend. The base year is 2003. In simply terms if you spend more on R&D in the current year than you did in 2003 a tax credit is available.
Since this credit is in addition to the normal 12.5% corporation tax deduction for the expenditure, in an effect those who qualify can receive an effective tax deduction of 37.5%. In addition, this credit can be offset against a company’s corporation tax liability or, where the company does not have a corporation tax liability, be claimed as a refund from Revenue over a three year period subject to certain limits.
Packaged together this has been extremely popular since its introduction and has been in certain cases a lifeline to cash strapped start-ups and early stage development companies. Interestingly, R&D is actually broadly defined and in this regard, qualifying activities can be found in a wide range of industries and sector, areas that may not be generally perceived as carrying on R&D.
So what has been changed by Finance Bill 2012 to bring more benefit to the scheme?
Use of Credit to reward employees
The first significant change has been to enable companies claiming the credit to reward employees for their part in the R&D process by passing the benefit of the R&D credit directly to the employees. Thus for the first time an employee involved in R&D can then use the credit to reduce their income tax liability for the year which should result in a refund from Revenue.
In order to qualify the employee must be a “key employee”. To be regarded as a key employee the individual:
Must not be, or have been, a director of the company or a connected company,
Must not have a material interest (greater than 5%) of the company or a connected company,
75% or more of the individual’s duties must be involved in the conception or creation of new knowledge, products, processes, methods and systems, and
75% or more of the employment cost for that individual must be eligible as qualifying R&D expenditure.
There are a number of other conditions that must be met, in particular; the amount of the credit available is limited to the extent that it cannot be used to reduce the individual’s effective tax rate below 23%., the amount which the company may surrender is limited to the amount of corporation tax payable by the company for the period and to claim the relief the employee must submit a tax return.
Any element of the credit unused in a particular year can be carried forward to future periods by the individual until they cease to an employee of the company, at which stage any unused credit is lost.
Importantly, if the relief is found not to apply to the employee any tax relief received may, in certain circumstance, have to be repaid to the Revenue by the employee.
The introduction of this concept into the legislation is welcomed. However, the stringent qualifying conditions means in practice that it will only be an option for rewarding some employees in some of the large multinationals. The problems with the mechanism for SMEs (and indeed some multinationals) are as follows:
In practice, given resource constraints, key staff in SMEs who are responsible for the R&D element of, for example product design, are also responsible for the post R&D phases, including commercialisation of the product, business development and other management functions. As a result, very few SMEs will have staff members who spend 75% of their time on the pure “knowledge conception and creation” side of the business. Also, it is typical that the key drivers of R&D in SMEs would be at the owner/director level of the organisation.
Many companies carrying R&D are in the pre-revenue phase of development and are therefore not paying significant corporation tax. The inclusion of the corporation tax related cap on the incentive will mean that many companies will not qualify even if they have qualifying employees.
The fact that the relief is limited to the extent that the employee’s effective tax rate cannot fall below 23% will also limit the effectiveness of this relief. Running some very quick numbers take a €80,000 salary for a single person (assuming basic personal tax credits), the maximum relief that can be achieved in a year is circa €4,212. If the individual has any tax deductible items such as medical expense, other credits (e.g. married credits) or other tax relief such as film relief or EIIS/BES then the amount of the relief reduces significantly. In order to ascertain the value of the relief for the employee, the employer is going to need to understand the employee’s full income tax circumstances, potentially, including that of their spouse. Some employees may be uncomfortable with sharing this information.
The idea behind this scheme is that the credit surrender would reward the employee in lieu of a bonus. However, given the fact that the credit could be lost at some stage in the future if Revenue find that the employee was not entitled to the credit it will be hard to convince employees that this is a viable alternative to a cash bonus.
Incremental base relaxation
As discussed above, the Irish R&D Tax Credit Regime is an incremental system. Under the new rules, a full volume base will apply to the first €100,000 of qualifying expenditure with the incremental base applying for amount in excess of €100,000. This will be beneficial to companies who are carrying on R&D activities but have a base year amount either greater or marginally less than current year expenditure. In such instances these companies will now be able to claim a minimum of €100,000 as qualifying expenditure where they would otherwise have been entitled to no credit.
Limit on outsourcing
Under current legislation, where a company outsources some of its R&D activities to third parties or universities, the amount of related costs eligible for the credit were limited to a percentage of internal R&D expenditure- 10% if paid to a third party or 5% if paid to a university. The new legislation provides that these limits will be amended to the greater of €100,000 or 10%/5%. These measures will be particularly important for SMEs who rely heavily on external resources and capabilities to assist their internal R&D functions.
The legislation also includes a requirement that the company outsourcing the R&D activities write to the third party provider to inform them that they will be claiming a credit on the cost. This is to ensure that the third party provider does not also receive a credit in relation to that work.
Expenditure incurred by the company on the management of outsourced R&D activities will not now regarded as qualifying R&D expenditure.
Where R&D activities are funded by EU or EEA grant assistance, the expenditure will not now qualify as R&D expenditure. A similar provision was already in place where companies received grant assistance relating to the activities from the Irish State so these new provisions simply extend this to grants received from other EU/EEA jurisdictions.
Amendments included now permit any unused credits of a dissolved company to be carried forward into a successor company when certain conditions are met.
The new legislation also details various penalty and interest measures aimed at ensuring companies only claim an appropriate level of R&D credit under the regime.
In general, the new legislation is effective for accounting periods commencing after 1 January 2012, however, the increased limit for outsourced R&D applies to accounting periods ending after 1 January 2012.
It is encouraging that the Minister is continuing the focus on this valuable relief for corporate and attempting to enhance the regime. This ongoing commitment is essential to ensuring that the Irish R&D Tax Credit Regime continues to be internationally competitive. The relaxation in the base year and the increase in the limit on outsource activities are very welcomed, however, in terms of the employee reward scheme the legislation needs to be revisited in advance of the Finance Act to make it more broadly applicable, in particular to SMEs.
BDO Consulting were engaged to consider the market opportunity for a proposed nursing home development approximately 4 miles outside Cork City.
The study examined the local market where the nursing home would operate and the likely market demand for the project.
Given the positive outlook for the project, we are currently working with the promoter to assist them in developing a master plan for the development. We also plan to initiate and facilitate discussions with potential development and operations partners.
We were engaged by the developers of a multi-million euro mixed development in the South West region of Ireland.
We were commissioned to consider the market opportunity and financial feasibility of the hotel and marina elements of the development.
Our team met with and interviewed representatives of the local Urban District Council, Chamber of Commerce, tourism bodies, other interested parties and likely demand generators in order to determine the market demand for the project.
On the basis of our research and findings, we were able to reach conclusions regarding the feasibility of the hotel and marina elements of the development and presented the business plan based on the information gathered.
Strategic business planning is not an everyday task for most businesses. As such many managers may feel they lack either the experience or time, to address their strategic planning requirements.
Working closely with our clients, BDO Consulting can help firms make lasting changes through the strategic planning process. We can advise you on how to avoid the most common pitfalls of planning. We can also help you overcome any strategic issues which need to be addressed in order to ensure the future growth and development of your business.
Our services range from assistance with developing business plans, to assistance with the entire corporate strategic planning process, such as identify growth options and new business development planning.
Our methodology has been used to assist several local authorities and private sector clients in their application to secure grant funding at a regional and national level.
Our Strategic & Business Planning Services include:
The Construction and Property Industry has played a hugely important role in the development of Ireland over the last two decades. At the same time, these industries have played an even greater role in the development of BDO and the Consulting team. Working both independently, or with our other service specialists, we have been advising clients from across the construction and property industry for over a decade.
Our interest in the development industry developed naturally from our experience in the tourism and hospitality industry which has brought us into contact with a number of major Irish and International developers. We now advise a wide range of clients on the development of major hotel, spa and nightclub developments. We also assist developers and promoters of nursing home and private hospital/clinic developments, conducting 'best use' studies on behalf of a variety of clients.
We work very closely with many of the major banks to advise on the feasibility and viability of large scale developments that they are funding.
We advise clients in relation to the development of:
Best Use Studies
Feasibility and Viability studies.
Our Clients include:
Bank of Ireland
Anglo Irish Bank
A number of Nursing Homes
Charities - 'Best Use' studies
Dun Laoghaire Harbour Company
Taramacadam and Concrete Company.
To learn more about our services to the Construction and Development Industry and how we can help you, contact a member of our consulting team.
When you are responsible for the future success of a business either solely, or as part of a management group, there are many circumstances that can have damaging and lasting consequences for your business.
Have you considered the following:-
How would your business survive the death of one of your fellow directors or partners?
What would happen to their share of the business?
Would control of your business fall into other hands?
If you die what will happen to your share of the business?
How will your family survive financially?
Can the business survive the death or serious illness of key employees?
What would be the cost of replacing one of your key people?
Whether you are a shareholder/director in a private company, partner in a professional practice or a sole practitioner, the consequences of the above can have far reaching implications.
Adequate business protection cover is the only way to ensure funds will be available to alleviate these difficulties and ensure the continuity control and survival of the business while also providing financial security for your family.
Securing life cover is a simple and effective way to financially provide for your dependents on your death.
By paying a premium to an insurance company, each month, over a specified term, you can ensure that your dependents receive a lump sum benefit should you die during the term of the policy. This is important considering that the state contributory pension for widows under 66 and for each dependent child is €209.80 and €26 per week respectively.
We have a dedicated team who can provide you with advice on and arrange a life policy that suits your individual needs and circumstances:
We have agencies with all insurance companies and can shop around for the most cost efficient and most suitable quote for you.
We offer one-to-one meetings in our city centre offices or at a location most convenient for you.
More importantly, we do not charge you fees for our services.
Our range of life policies include:
Level term assurance
Convertible term assurance
Whole of life
Personal pension term assurance (particularly beneficial for self-employed individuals where tax relief is available on premiums paid)
Serious illness cover
Group death in service benefit
Group permanent health insurance (PHI) benefit
For further information on Income Protection/ Disability Cover and/or to receive a quote specific to your individual needs, please contact a member of our wealth management team.
Have you ever considered how you would pay your bills or loan repayments if you became seriously ill and were not earning income?
Disability cover, also known as Income Protection or Permanent Health Insurance (PHI), provides a regular ongoing income, after a deferred period, in the event of mental or physical disability/illness which prevents you from working. The benefit is paid until the ceasing age or the insured person returns to work.
Given that the current state disability benefit is €204.30 per week, securing appropriate income protection is important.
Our specialised team can help you secure the protection cover you need:
We have agencies with all insurance companies and can shop around for the most cost efficient and most suitable quote for you.
We offer one-to-one meetings in our city centre offices or at a location most convenient for you.
More importantly, we do not charge you fees for our services.
The benefits of Income Protection include:
Less worry if you are unable to work due to illness or disability
Benefit continues to be paid until you return to work or reach retirement age
Tax relief on premiums
Proportionate benefit if returning to work on a lower salary
The premium is waived while you are receiving benefit
For further information on Income Protection/Disability Cover and/or to receive a quote specific to your individual needs, please contact a member of our wealth management team.
Managing your pension scheme properly can result in two major cost saving initiatives. Firstly, the actual cost of administering the pension scheme can be greatly reduced in almost every case and secondly, improved investment performance can reduce funding costs significantly over the years.
Our dedicated team can help you control costs by negotiating competitive cost charging structures with providers. Recent experience has resulted in savings of up to 40% for some clients.
Our team of Investment Specialists can also assist Trustees formulate an appropriate investment strategy and with our range of investment strategies on offer, including alternative investment products, Trustees can further diversify and manage investment risk.
Full details on each of our services:
Plan Design Ensuring your employee benefit package is compliant with current legislation is essential. We will advise you with all the necessary requirements along with market place comparisons to ensure that your plan meets the needs of your employees.
Important factors to consider which affect the scheme design include:
Investment style & approach
Life Assurance & Disability Benefit
Defined benefit Guidance through the difficult areas associated with Defined Benefit is crucial to Trustees and Employers. We have an extensive knowledge in the area of Defined Benefit Pension Scheme. A review of such arrangements is commonplace, but seldom does such a review take into consideration all of the aspects which are affected.
Our dedicated team of advisers can provide a review service for defined benefit arrangements for MBOs, acquisitions, succession agreements and cost-cutting exercises.
Defined contribution Our team can provide advice to employers wishing to introduce a defined contribution scheme to employees. We also provide efficient, cost-effective administration of such schemes.
Actuarial We provide external independent actuarial services for the following requirements:-
Triennial actuarial reviews
FRS 17 requirements
Third party funding & scheme analysis
Pensions due diligence for mergers/acquisitions
Legal services We will ensure that the Trustees and Employer are compliant with all of the legal requirements, both at the initial design stage and continuously throughout the schemes lifetime. This will include the drafting of Trust Deed and Rules along with Scheme Booklets and all member communications.
Individual retirement planning We understand that the needs and aspirations of each member are different. Each and every member will have the opportunity to carefully plan his or her future retirement and will be supplied with the right information and advice necessary to do so.
Members will be provided with actuarial calculations of the expected retirement income, the impact of additional funding through AVCs along with the funding cost of early retirement if required.
Administration We will provide complete administration services to all types of pension arrangements including defined benefit, defined contribution, hybrid schemes and executive retirement plans.
Most aspects of a company’s business are regularly audited and potential risks and liabilities identified. A company’s pension scheme is rarely subjected to such scrutiny.
Scheme Analysis We have developed a pension audit service which reviews in detail all of the related aspects and reports back to the Trustees / Employer with the results and recommendations.
Service level agreements We have Service Level Agreements with a number of insurance companies which is monitored by our clients and ourselves. If the service to our clients is not as agreed in the Service level Agreement a penalty will be applied to the supplier. Fixed turnaround times are agreed for standard administration procedures etc. Further details will be made available at a later date.
Trustee training Trustee Training courses are held periodically during the year and invitations in this regard will be issued. The Trustee Training courses are designed to make new or existing Trustees aware of their obligations in line with current legislation.
To find out how you can make significant cost savings and broaden your investment portfolio, contact a member of our wealth management team.
When much of your time is spent developing your businesses and/or careers, you don’t always have the time or expertise to grow and manage your personal wealth to its maximum potential.
Similarly you may have adopted an ad-hoc approach to financial planning seeking advice from different sources and at different points in time. Whilst this advice may have been appropriate at that time, a financial makeover may now be needed to reflect any changes in your personal circumstances.
Our team can help you determine what type of financial makeover you may need.
We provide a service designed to assist you maximise your personal wealth and achieve your personal financial objectives. In essence, our aim is to assist individuals with achieving a level of personal wealth in the future so that work becomes an option, not a necessity.
We begin by examining your personal objectives and family situation. We can then help you devise a customised personal financial plan to be implemented over time. This plan is designed to be a blueprint that covers your entire future financial planning.
The second briefing in our 2011 business breakfast series.
Katharine Byrne, Partner, BDO Corporate Finance and Recovery.
(L-R) Andrew Ware, National Head of Corporate Finance, BDO UK; Katharine Byrne, Partner, Corporate Finance and Recovery, BDO Dublin; Peter Crowley, FL Partners; Padraic Clarke, Creganna; and Stephen Hegarty, Arthur Cox.
BDO is running a programme in Spring 2011 to advise clients on how to achieve their business objectives but with a focus on maximising the position of the shareholders.
Our business advisory and tax professionals have a wealth of experience and presently assist our clients with:
Shareholder plans for the business
Strategies for the growth of the business
Review of tax structures of the ownership of assets and the draw down of value from the business.
Working together we will tackle the following key questions:
How do I rebuild my business?
What growth strategies can I use?
How can I deal with my personal debt?
How do I use my shareholding to build my personal wealth and be independent of the business?
How do I plan for retirement?
How do decide whether to pass on the business and how would I do it?
The programme will be headed up by BDO Director Michael O’Leary, who is a tax planning expert with specific expertise in dealing with SME companies. Michael has advised all types of businesses in this sector, in particular advising on business restructuring, tax aspects of business decisions and the sale and purchase of companies, all done with a focus of the individuals behind the business. In addition, Michael has huge experience is advising many families on how to implement a succession strategy.
Read more about the benefits of the shareholder advisory programme.
Identifying the true value of a business, whether for the purposes of an acquisition or a fundraising requires considerable experience and measured, independent judgement. We have a depth of knowledge and experience in this area which allows us to provide objective and balanced valuations that endure both commercial and regulatory scrutiny.
Our valuations experience covers a wide range of transactions, purposes and sectors. This experience has been developed in providing regular and once off valuations for a range of clients of all sizes.
Our valuations team is lead by Katharine Byrne who draws on the appropriate expertise from within other departments such as Corporate Finance & Recovery, Litigation Support, Tax and Real Estate.
Our team have provided valuations to support the following:
Outsourcing Service Provider of the Year – EOA Awards 2012 WINNER International Tax Adviser of the Year – IAB Awards 2012 WINNER Best Collaboration Across International Frontiers – MPF Awards 2012 WINNER
BDO is a firm of registered auditors and is registered to carry on audit work in Ireland and the UK by the Institute of Chartered Accountants in Ireland. Details about our audit registration can be viewed at www.auditregister.org.uk under reference number 223876. BDO is also authorised to carry on investment business in the Republic of Ireland by the Institute of Chartered Accountants in Ireland. BDO, a partnership established under Irish Law, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent members firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms.