Where chargeable assets are disposed of and realise a gain, capital gains tax (CGT) is payable on the gain. For disposals made between 1 January 2008 and 30 September 2008 the CGT is payable on or before 31 October 2008. Where disposals are made between 1 October 2008 and 31 December 2008, CGT is payable on or before 31 January 2009.

Budget 2009 introduced changes to the payments dates for CGT. The new payment dates will be effective from 1 January 2009. CGT relating to disposals during the period January to November will be payable by mid December. While the tax payable on chargeable gains made in December will not be due until the following October.

In certain transactions there can be some ambiguity as to when the disposal actually takes place. To that end Revenue have recently released guidance notes to help ascertain when the disposal occurs. The notes are summarised as follows:

• Where a chargeable asset is disposed of by way of contract, the time of disposal is at the date of making the contract, not when that asset is transferred.

• In the case of a conditional contract, the disposal is deemed to be made when the condition is satisfied. (For example where as asset is sold subject to planning permission, the date of disposal is the same date as when the planning permission is obtained).

• Where land is acquired under a Compulsory Purchase Order (CPO), the time of disposal is the earlier of the date of the agreement or the entry by the authority onto the land.

• Where farm land is acquired under a CPO for the purposes of road making, the date of disposal is deemed to be when the consideration is received by the landowner.

Revenue has warned that delays in closing contracts will not be accepted as a reason for not paying CGT on time. Any late payment of CGT may be subject to interest by Revenue.

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Interest incurred on personal borrowing for the following purposes may be eligible for relief against income tax:

• interest on loans to acquire shares in companies
• interest on loans to acquire a share in partnership
• mortgage or home loan interest (usually applied at source by the lender)
• bridging loan interest

Where loans are used partly for the above purposes and partly for other purposes they do not qualify for tax relief. However Revenue has previously stated that in practice tax relief will be allowed on the portion of interest paid on the loan that was used for one of the above qualifying purposes. Revenue went on to say that where a dual purpose loan (i.e. a loan used for qualifying and non-qualifying purposes) was topped up or consisted of amounts borrowed at different times, tax relief on the interest paid on the entire loan would not be allowed. To that end where an individual has a dual purpose loan he should not borrow any further amounts under the loan agreement but rather apply for a second loan.

Following a recent ruling issued by the European Court of Justice (ECJ) the treatment of VAT on cancelled deposits and cancellation charges has been changed by Revenue.

VAT is chargeable on deposits received by VATable businesses. Previously where orders were cancelled, it was not possible to reclaim the VAT on the deposit. Revenue have recently announced that where a deposit paid to a business is retained by the business owing to a cancellation by the customer and

• a supply does not subsequently take place
• the cancellation is recorded as such in the books and records of the business
• the deposit is not refunded to the customer
• no other consideration or benefit is provided to the customer in lieu of the amount the business may reclaim any VAT already paid over to Revenue.

Taxpayers are entitled to reclaim VAT on similar transactions over the last 4 years. Interest will be payable by Revenue on the VAT refunds up to the date of the refund. If a taxpayer wishes to reclaim VAT for previous years, the refund applied for must be net of any income tax or corporation tax liabilities arising from the change in figures in the last four years. Revenue has stated that they do not want to reopen prior year of assessments so in this instance they will accept calculations of refunds as follows

VAT Refund
Plus Interest
Less Corporation Tax/Income Tax Liability

What are the options for tenants who want to leave before the lease is up?

In modern times a large proportion of property is leased as opposed to owned by its occupiers. In commercial situations there are many advantages to being a tenant as opposed to an owner, not least the avoidance of having to come up with funds to purchase a property outright. It is therefore very common for business premises to be leased, usually for a period of years. The tenant purchases a leasehold interest which entitles him to lease the property for the agreed period, and then also pays rent periodically throughout the leasehold.

But what happens when a tenant wants to end the lease before the expiry of the leasehold interest? Much will depend on the lease agreement itself but generally speaking the tenant will remain liable for the rent for the duration of the lease, unless he can come to an alternative arrangement with the landlord.

One way in which the tenant can vacate the premises, without remaining liable for the rent, is to surrender the leasehold interest back to the landlord. The landlord may agree to buy out the remainder of the interest or simply agree to release the tenant from future rent obligation. Once the interest is surrendered the landlord is free to locate a new tenant and sell the leasehold interest to him. It must be noted though that unless the leasehold agreement provides otherwise, the landlord is under no obligation to allow the tenant to surrender the lease. The market can be decisive in the Landlords decision here.

The tenant can also vacate and find a third party who is interested in renting the property and sublet the premises . When the tenant sublets, the third party must pay the tenant rent but the tenant remains liable to the landlord.
Subletting and assignment can be particularly good options for a tenant who wishes to leave a premises. There is nothing to prevent a tenant from making a profit by setting a higher rent for the sublease.

The only issue which the tenant need concern themselves is whether the landlord’s permission is required. Most leases will require that the landlord approves of the sublessee or assignee, as obviously the landlord must ensure that the party is suitable to occupy the premises. Usually the landlord will concern himself with the kind of business that will be carried out, the financial solvency of the party etc. However, an important issue to note for all tenants is that such permission may not be unreasonably withheld. Therefore if the tenant finds a party who is in fact suitable, the landlord may not refuse to agree to the assignment or sublet unless he has good and valid reason for doing so.

ISME, the Irish Small and Medium Enterprises Association, has called on the Government to instruct the Irish banks to lend to small businesses.Many of the small to medium companies may go under unless the banks lend to them, as many don’t have working capital. The ISME feel that this is the “the final hope” for many companies who were destined to close due to the failure of the banks to provide the vital funding needed by many struggling businesses.

With the banking crisis as it is, there has been real evidence that the banks have stopped funding companies. Many companies have recently had their facilities reduced or have failed to secure much needed extensions to their loans.

Many businesses are experiencing late payments, and thus are failing to meet their payments to their suppliers. This is having a critical knock on affect for normally profitable businesses. Statistics show that 43 per cent of small businesses are waiting longer than normal for payment. Ireland is already at the highest average payment period in Europe. 12 months ago the payment period stood at 65 days. Right now 35 percent of companies have to wait 90 days to be paid. This is a crisis according to ISME.

The Minister for Finance in his budget speech announced a major change in the way in which a tax deduction for medical expenses will be calculated from 01 January 2009 onwards. A deduction for medical expenses incurred in a tax year were usually relieved at the marginal rate of tax, (i.e. 41% for high earners).