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Registered AITI Tax Qualification Info and Questions

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  • Registered Users Posts: 80 ✭✭gallyer


    I think it is chargeable, but i think the credit available for tax paid in the UK should cover it, but presumably there will be a balancing charge also on the equipment etc, which will have to be paid.

    I thought S627 might give relief but on full reading i don't think so. The further I go the more I think it will be best to set it up as a subsidiary.

    On the exam, i missed the re-scheduled personal taxes lecture, were we told anything about the exam?


  • Registered Users Posts: 736 ✭✭✭Legend100


    missed that lecture too so don't know, sorry

    possibly a very stupid question but I re read the notes and legislation re the taxing of foreign dividends at 12.5% and it seems to me that this would be the case for the subsidiary or am i completely wrong

    This will be the worst effort i have ever made at an assignment i'd say :(


  • Registered Users Posts: 80 ✭✭gallyer


    yeah dats right re the dividends. will also get credit for tax paid in UK.

    Just after re-reading the question and totally missed about the losses being before loan interest, am i right in thinking that loan interest can be used to increase a loss?? I'm pretty sure thats right but can't find it anywhere.


  • Closed Accounts Posts: 5 Pinkypod007


    What is the general consenus on whether to set-up a branch or sub? I initially thought branch and then transfer to sub but now starting to question that after all my research... Do we need to consider an asset sale of sub as opposed to just share sale and S.626B?


  • Closed Accounts Posts: 1 Deanobambino


    Does anyone know if once the losses have been utilised in the subsidiary in year 3, are the excess seen as a trapped loss at that point?

    If so, can they then be offset against the Irish parent if within a 2 year period?

    If so, does this suggest that a sub should be set up from the start?

    Toing and froing with options, initially thought set up branch and convert to sub but would this point make sub more tax effective?

    Can the capital allowances in uk sub augment the losses carried forward. What rate is uk capital allowances?

    Any ideas - confused!!!


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  • Registered Users Posts: 129 ✭✭TheScriptFan


    Does anyone know if once the losses have been utilised in the subsidiary in year 3, are the excess seen as a trapped loss at that point?

    If so, can they then be offset against the Irish parent if within a 2 year period?

    If so, does this suggest that a sub should be set up from the start?

    Toing and froing with options, initially thought set up branch and convert to sub but would this point make sub more tax effective?

    Can the capital allowances in uk sub augment the losses carried forward. What rate is uk capital allowances?

    Any ideas - confused!!!

    I'm going with a subsidiary from the start. I had thought about changing from branch to subs, but changed my mind.
    As far as I know - the losses in subs can only be used against profits, so yes after year 3 would be trapped loss.
    In regards to the cap allowances - it does say 'tax adjusted losses' so I would have assumed any cap allowances were already included..could be wrong though!


  • Registered Users Posts: 21 heffelump


    Everyone seems to be changing their mind about starting with a branch and changing to sub and now are going with sub from the start. can any1 elaborate as to why. Im so confused. Am i missing a relief for a sub or is the idea not to utilise the losses?

    Does any1 think that this assignment was ridiculously hard for the amount of material we have covered so far this year?:(:(:(


  • Closed Accounts Posts: 5 garytm


    Nightmare...Just starting...24hr internet cafe and plenty of red bull for me... anybody know can TBL use losses in the branch in first two years and then the UK branch also use the losses forward against the third year profits against UK tax?


  • Closed Accounts Posts: 5 Pinkypod007


    Good luck if you are only starting it! Its a joke, theres so much to be covered.
    Yes is the answer I think to your question, as far as I know you can utilise the losses in TBL but also carry them forward for use in uk branch....You get double relief.
    I was going to convert from branch to sub in year 3, but given he plans on selling business I dont think we need to???


  • Registered Users Posts: 21 heffelump


    Good luck if you are only starting it! Its a joke, theres so much to be covered.
    Yes is the answer I think to your question, as far as I know you can utilise the losses in TBL but also carry them forward for use in uk branch....You get double relief.
    I was going to convert from branch to sub in year 3, but given he plans on selling business I dont think we need to???

    I had originally planned on doing that and had most of the answer done that way but it gets complicated when you come to the sale I think because the assets belong to tbl so you have to do a reorginisation and then theres a possible cgt element for moving assets into new co (I think)

    Now im going with a sub all the way, granted itll take a few yrs to claim the loss relief as trapped losses but they will get them eventually, the sale will be straigtforward too using 626b.

    dont know what company should borrow the money though:confused::confused:


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  • Registered Users Posts: 129 ✭✭TheScriptFan


    heffelump wrote: »
    I had originally planned on doing that and had most of the answer done that way but it gets complicated when you come to the sale I think because the assets belong to tbl so you have to do a reorginisation and then theres a possible cgt element for moving assets into new co (I think)

    Now im going with a sub all the way, granted itll take a few yrs to claim the loss relief as trapped losses but they will get them eventually, the sale will be straigtforward too using 626b.

    dont know what company should borrow the money though:confused::confused:

    I have done similar to you, but how can they use the trapped losses? I thought they were just lost after year 3?

    I borrowed the money via Irish TBL and lent on, I thought at least TBL IRL will get a charge and get some kind of deduction. I restricted the interest to 90% allowable because of Thin Capitalisation and final 10% as a non-deductible distribution, but I have no idea if that is right or not!

    Almost finished, just doing the Step Plan, which is I have to admit being kept very brief!!


  • Registered Users Posts: 21 heffelump


    I have done similar to you, but how can they use the trapped losses? I thought they were just lost after year 3?

    I borrowed the money via Irish TBL and lent on, I thought at least TBL IRL will get a charge and get some kind of deduction. I restricted the interest to 90% allowable because of Thin Capitalisation and final 10% as a non-deductible distribution, but I have no idea if that is right or not!

    Almost finished, just doing the Step Plan, which is I have to admit being kept very brief!!

    OK Im not the best at this but from my interpretation a trapped loss is a loss that cannot be used in a prior current or subsequent year so on that basis its trapped and an application needs to be made to revenue to claim it. I could be waaaayy off the mark though.

    Ur doing really well Im still only typing in bits here and there as i find them. I cant find half the legislative references. Panic setting in!!!


  • Closed Accounts Posts: 11 Confused99



    Are you charging subsidiary interest on loan and having to pay tax on that in TBL?


  • Registered Users Posts: 21 heffelump


    I borrowed the money via Irish TBL and lent on, I thought at least TBL IRL will get a charge and get some kind of deduction. I restricted the interest to 90% allowable because of Thin Capitalisation and final 10% as a non-deductible distribution, but I have no idea if that is right or not!

    We dont have thin capitalisation rules though. So would it be best borrow through TBL and claim full interest relief under S247. If you borrowed through the sub the thin capitalisation rules would apply and there would be no relief for the interest??? If im wrong please tell me


  • Closed Accounts Posts: 5 Pinkypod007


    heffelump wrote: »
    We dont have thin capitalisation rules though. So would it be best borrow through TBL and claim full interest relief under S247. If you borrowed through the sub the thin capitalisation rules would apply and there would be no relief for the interest??? If im wrong please tell me


    Does anyone know if you borrow in TBL and its gets a deduction as a charge, does the sub also get a deduction i.e a double interest deduction?
    If not I think I would borrow in sub and get bigger deduction at 28% vs 12.5%....


  • Registered Users Posts: 23 ramacc


    Now that the tax assignment is done i am looking at doing something for the personal tax ne - is anyone studying the further reading detailed at the start of each chapter in the manuaks or just the manual and prereading :eek:


  • Registered Users Posts: 736 ✭✭✭Legend100


    Ah crap!!!

    I just saw in the notes at the end of the question that the interest would be deductible for the sub in the UK. I'm after writing (and researching) a load on the thin capitalisation rules in the UK. What a waste of time. Well i'm not changing it now :mad:


  • Registered Users Posts: 80 ✭✭gallyer


    heffelump wrote: »
    OK Im not the best at this but from my interpretation a trapped loss is a loss that cannot be used in a prior current or subsequent year so on that basis its trapped and an application needs to be made to revenue to claim it. I could be waaaayy off the mark though.

    Ur doing really well Im still only typing in bits here and there as i find them. I cant find half the legislative references. Panic setting in!!!


    I may be totally wrong but my understanding on the subsidiary losses is that they wouldn't be available to TBL if the subsidiary is sold because the losses belong to the subsidiary and can be used by it into the future. If thats wrong please tell me. Im sorry if this confuses matters further for anyone.

    Im either doing branch from the start or subsidiary from the start i dont think the switch from branch to subsidiary is tax efficient in the circumstances (Disclaimer - my calculations could be waaay off the mark!!)

    I cant decided whether to do it branch or subsidiary, the 626B relief for subsidiary is obviously huge advantage, but on my calculations any irish tax arising on the sale of the branch assets would be pretty much eliminated by double tax credits - am i missing something really obvious??


  • Registered Users Posts: 129 ✭✭TheScriptFan


    gallyer wrote: »
    I may be totally wrong but my understanding on the subsidiary losses is that they wouldn't be available to TBL if the subsidiary is sold because the losses belong to the subsidiary and can be used by it into the future. If thats wrong please tell me. Im sorry if this confuses matters further for anyone.

    Im either doing branch from the start or subsidiary from the start i dont think the switch from branch to subsidiary is tax efficient in the circumstances (Disclaimer - my calculations could be waaay off the mark!!)

    I cant decided whether to do it branch or subsidiary, the 626B relief for subsidiary is obviously huge advantage, but on my calculations any irish tax arising on the sale of the branch assets would be pretty much eliminated by double tax credits - am i missing something really obvious??

    Yes the tax advantages might not outweigh by a huge amount, but you would never sell a UK branch of an Irish company, it would be very impractical.


  • Registered Users Posts: 129 ✭✭TheScriptFan


    Legend100 wrote: »
    Ah crap!!!

    I just saw in the notes at the end of the question that the interest would be deductible for the sub in the UK. I'm after writing (and researching) a load on the thin capitalisation rules in the UK. What a waste of time. Well i'm not changing it now :mad:

    I don't think it is a waste - I have included thin capitalisation as I think it applies if the UK subs borrows from Ireland. On reading further, I don't think it needs to be restricted, as it says in an article in moneyterms that other factors are to be considered. If the company could borrow the funds at arms length. So I think it's okay. I know others disagree...

    What calcs is everyone including?


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  • Registered Users Posts: 129 ✭✭TheScriptFan


    ramacc wrote: »
    Now that the tax assignment is done i am looking at doing something for the personal tax ne - is anyone studying the further reading detailed at the start of each chapter in the manuaks or just the manual and prereading :eek:

    are you having a laugh?? I'll be hard pressed to study the manual! i can't believe its not open book this year!


  • Registered Users Posts: 21 heffelump


    ok i think im ready to start typing but i was just wondering is the general opinion that we should form a subsidiary, suffer the losses in yrs one and two and carry forward for offset in year 3. Sell the company and claim 626b?
    would the main reason for not using a branch be the admin?

    And on the interest borrow through irish company claiming 247 on the full amount as the interest deduction would be of no benefit because we're selling the uk sub at the end of the day?


  • Registered Users Posts: 21 heffelump


    ramacc wrote: »
    Now that the tax assignment is done i am looking at doing something for the personal tax ne - is anyone studying the further reading detailed at the start of each chapter in the manuaks or just the manual and prereading :eek:
    omg lucky you...itll be a late one here to try get it done.

    as for pt exam im sticking with manuals and praying for a pass

    +1 on the cant believe that we cant have the manuals......typical of ITI!! They'll be expecting us to sit them blindfolded yet!!!


  • Registered Users Posts: 23 ramacc


    heffelump wrote: »
    omg lucky you...itll be a late one here to try get it done.

    as for pt exam im sticking with manuals and praying for a pass

    +1 on the cant believe that we cant have the manuals......typical of ITI!! They'll be expecting us to sit them blindfolded yet!!!


    yeah i'll just be going for the pray for a pass option i think - apparantly its beacuse of the failure rate with people using the books last year that they are trying to get people to study for it :(:mad:


  • Registered Users Posts: 21 heffelump


    are you having a laugh?? I'll be hard pressed to study the manual! i can't believe its not open book this year!
    ramacc wrote: »
    yeah i'll just be going for the pray for a pass option i think - apparantly its beacuse of the failure rate with people using the books last year that they are trying to get people to study for it :(:mad:

    really....that doesnt make a lot of sense sure if they couldnt understand the book what hope have they of passing without it!!!

    ramacc what approach to your answer did you take if you dont mind me asking:confused:

    Ill be a terrible tax consultant Im too indecisive!!!


  • Closed Accounts Posts: 11 Confused99


    gallyer wrote: »
    I may be totally wrong but my understanding on the subsidiary losses is that they wouldn't be available to TBL if the subsidiary is sold because the losses belong to the subsidiary and can be used by it into the future. If thats wrong please tell me. Im sorry if this confuses matters further for anyone.

    Im either doing branch from the start or subsidiary from the start i dont think the switch from branch to subsidiary is tax efficient in the circumstances (Disclaimer - my calculations could be waaay off the mark!!)

    I cant decided whether to do it branch or subsidiary, the 626B relief for subsidiary is obviously huge advantage, but on my calculations any irish tax arising on the sale of the branch assets would be pretty much eliminated by double tax credits - am i missing something really obvious??

    Do you mean even if you get participation exemption in Ireland there is still UK CGT?


  • Registered Users Posts: 80 ✭✭gallyer


    Confused99 wrote: »
    Do you mean even if you get participation exemption in Ireland there is still UK CGT?

    No i was referring to the UK tax on the sale of the branch assets, Uk tax would arise on them too and my working showed that the tax credits for the tax paid in the UK would pretty much eliminate Irish tax arising, did anyone else find this?

    But i assume UK tax would arise on the sale of the subsidiary as it is a UK resident company, but we aren't asked for the UK tax consequences of the sale so its not something to worry about I wouldnt think, other than to give it a passing mention. Again I may be wrong, im entirely confused after trying to do this assignment, nearly there now though (bad and all as it is)!


  • Registered Users Posts: 736 ✭✭✭Legend100


    i got all confused trying to do the calcs on the disposal of the assets of the branch and the UK credit for CGT so gave up and said we would need more details on individual assets to give an accurate answer and am leaving it that.

    ....half way through the letter and then the step plan, if i got 5/15 in this i'd be amazed!


  • Registered Users Posts: 21 heffelump


    Legend100 wrote: »
    i got all confused trying to do the calcs on the disposal of the assets of the branch and the UK credit for CGT so gave up and said we would need more details on individual assets to give an accurate answer and am leaving it that.

    ....half way through the letter and then the step plan, if i got 5/15 in this i'd be amazed!


    The whole thing has me confused. just when i think im getting somewhere i find something else and doubt what i have written. I gave this assignment to a newly qualified man and he couldnt even advise me on how to aproach it really. :eek:
    i dont even know what calculations to put in im considering leaving them out at this stage......actually at this stage im tempted to pack it all in:mad::mad:

    Im thinking that 5/15 would be fantastic at this stage.


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  • Closed Accounts Posts: 5 garytm


    the remittance of branch profits is a given and taxed at 12.5% and the remittance of subsidiary divs is also taxed at 12.5% with no DWT. Is there any advantage to remitting in one way or the other?

    somebody mentioned CGT on the remmitance of divs? How does this occur?

    is the interest paid to TBL taxed at 25% or 12.5%?

    I'm pulling my hair out at this stage!


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