High Court has 'serious concerns' about survival scheme for Aer Arann

A HIGH Court judge has expressed “serious and significant concerns” about a proposed survival scheme for Aer Arann and has adjourned to next week the company’s bid to secure the court’s approval of the scheme necessary to exit examinership.

The Revenue Commissioners have objected to the scheme, alleging they are being treated unfairly as they will receive a smaller dividend than other creditors.

Yesterday, Ms Justice Mary Finlay Geoghegan said she had “great concerns” over the scheme of arrangement put together by Aer Arann’s examiner, Michael McAteer of Grant Thornton, which was before the court for approval. Issues around proposed new investment needed to be clarified and there was also insufficient information about the terms on which creditors were to be paid, and when this was to happen, the judge said. She was also concerned that a statement of affairs, listing the airline’s assets and liabilities, had not been included in the proposals put before the court.

The issues she was raising were “very, very serious” and needed to be addressed because the court could not approve the scheme unless it was satisfied the airline has a reasonable prospect of survival as a going concern, she said.

The scheme, which has secured the approval of nine of 12 classes of creditors, will see some creditors receive all the money owed to them while other creditors, including the Revenue, will receive no more than 22 per cent of what they are owed. The airline’s creditors are owed some €29.5 million, with Allied Irish Banks, the largest creditor, owed €5.2 million

As part of the survival scheme, €3.5 million from a group comprising UK transport company Stobart and Galway businessman Pádraig Ó Céidigh, the airline’s owner, is to be invested in the company.

Of that initial investment, €1.8 million will be paid to creditors, €400,000 will go towards fees for the examinership process and the balance will go towards working capital.

Ms Justice Finlay Geoghegan said there were a number of uncertainties in the scheme as proposed, including about investment and payments to creditors.

Jennifer O’Connell, for the Revenue, said its concern was that other creditors, such as Aer Lingus and the Dublin Airport Authority, were being paid all they were owed while Revenue was to receive considerably less.

Revenue is owed €436,842 as a super preferential creditor and €685,000 as a preferential creditor in PAYE and PRSI payments. Under the terms of the scheme, it would get €181,000, counsel said.

Rossa Fanning, for the examiner, said his client would address the issues raised by the judge on Monday. If the modifications sought by Revenue were put in place, it would effectively put the airline into liquidation. The case was adjourned to Monday.

Taken from the Irish Times website on


Preliminary tax in the first year of trading

This is a common question from entrepreneurs starting their own business and worried about tax.

The notes below are taken from the revenues statement of practice.

There is a special provision for the year of assessment in which taxpayers commence to be chargeable persons. Basically, this is that, in applying the 100 % rule, the tax payable for the preceding year can be taken to be NIL. Taxpayers will not, therefore, incur an interest charge by reason of not paying Preliminary Tax for the year of assessment in which they become chargeable persons. if no Preliminary Tax is paid, the full liability for the first year of assessment will have to be paid within one month of receiving an assessment; otherwise interest will arise.

While a taxpayer who becomes a chargeable person will not incur an interest charge if no Preliminary Tax is paid in the first year of assessment, it is recommended that taxpayers pay Preliminary Tax as near to their final liability as they can estimate. It is considered that this is in taxpayers’ best interest Otherwise, the following payments will have to be made within a short period, which may cause cash flow problems for taxpayers:

–  Preliminary Tax for the second year of assessment, on 1 November in the second year of assessment.

–  Preliminary Tax for the third year of assessment, on 1 November in the third year of assessment.

–   Full liability for the first year of assessment and the balance of any liability for the second year of assessment,  February/March of the third year of assessment.

A taxpayer who is already a chargeable person but commences another source of income in a year of assessment cannot rely on the “NIL” rule. Preliminary Tax must not be less than the minimum 100% or 90% rule in such a case.

What expenses can I claim for (Sole Trader / Partnership)

What expenses can I claim for?
You can claim for any business expense, which you have incurred in order to earn your profits. These expenses are normally referred to as revenue expenditure. Revenue expenditure is your day to day running costs and covers such items as:
 Purchase of goods for re-sale, Wages, rent, rates, repairs, lighting and heating, etc., Running costs of vehicles or machinery used in the business, Accountancy fees, Interest paid on any monies borrowed to finance business expenses/items, Lease payments on vehicles or machinery used in the business.

If you are registered for VAT the expenses you claim should be exclusive of VAT.

What about Food and Subsistence Expenses?

It is a long established principle that the cost of meals taken at the place of business is not allowable for tax purposes. In addition, expenses incurred on meals consumed away from the place of business are, in general, not wholly and exclusively laid out for the purposes of the trade or profession since everyone must eat in order to live. Costs of meals may be allowable where a business by its very nature involves travelling, as in the case of self-employed long distance lorry drivers, or where
occasional business journeys outside the normal pattern are made.

This post is taken directly from revenues guide IT48

If you require any assistance with taxation please do not hesitate to contact Ralph for further advice

ralph@domybooks.ie or phone 091-442882

Thesaurus Payroll Software

We are fast approaching the end of the payroll tax year where the ugly P35 will raise its evil head again. Women look forward to February 14th for all the romantic trappings; men and women who are employers dread that date because of what comes next. In case you didn’t know February 15th is P35 filing deadline. For employers the P35 has become a thing of dread but fear not we have the answer!
Thesaurus Payroll Manager offers a simple, cost effective and user friendly method of managing your payroll needs. It will make your life easier, we promise! Whether you are a small one employee business or a payroll practioner Thesaurus has the solution for you.
Payroll Manager can be used for weekly, fortnightly or monthly payroll. Product features include:

• Unlimited employee numbers
• Free telephone support
• Payroll stationery available
• Supports weekly, fortnightly and monthly payroll
• Enables instant setup of employees from prior year ROS P35 or ROS P2C file
• Password protected
• User friendly automated PRSI class selection
• Supports net to gross calculations
• Automated Benefit in Kind calculations
• Automated handling of disability benefit
• Ability to set user level passwords
• Includes taxable and non taxable additions, allowable and non allowable deduction headings
• Pensions – Facilitates flat rate or percentage pension deductions including employer contributions
• Automatic entry of CWPS deductions
• Automatic adjustment of deductions for holiday weeks
• Payslips can be previewed on screen prior to processing and printing
• Payslips can be output to HTML format for ease of email
• Supports electronic payments (e.g. Paypath, IBB, Bankline)
• Full backup and restore functions included
• ROS enabled for P35,P45,P45 Part 3 & P46 submissions
• Calculates holiday entitlements
• Staff holiday/leave planner
• Produces coin analysis
• Full range of reports included
• On screen help and user friendly screens eliminate the need for a manual
• Enables recording of monthly payments to Revenue
• Facilitates password protected PDF payslips for automatic email
• Various reports can be output in HTML format
• Recording of HR information
• Includes section on employment legislation
• Includes foreign language helpsheets
• Additional unlock codes attract a 50% discount
• Full integration with our accounts package – Solutions Plus
• Irish language payslip
• Alphabetical sorting of reports
• PAYE exclusion orders
• Optional Works number
• New ROS specifications
• Central Statistics Office EHECS & NES returns can now be prepared and submitted online
• Facility to import hours from a CSV file
• Ability to FTP backup to remote internet location
• Vista compatible help
• Interactive Health & Safety Toolkit included

DoMyBooks.ie now offers the Thesaurus Payroll Manager solution to suit your needs. Whether it’s just the standalone software, basic or advance training we have the option. Packages start from just €140 plus vat.

To order please email ralph@domybooks.ie or call us direct on 091-442882

KPMG to be investigated by AADB over BAE Systems audits

By Rhys Jones and Mohammed Abbas

LONDON, Oct 26 (Reuters) – KPMG [KPMG.UL], one of the world’s biggest accountancy groups, is being investigated by UK regulators over its audits of BAE Systems (BAES.L) relating to commissions paid by the defence firm to secure contracts.

Audits covering the 10 years between 1997 and 2007 will be investigated, as well as “commission payments paid by BAE”, Britain’s Accountancy and Actuarial Discipline Board (AADB) said in a statement posted on its website on Monday.

“The AADB has begun an investigation under its accountancy scheme into the conduct of KPMG Audit plc as auditors to BAE Systems plc,” the regulator said.

Europe’s largest defence contractor in February reached a deal to pay about $450 million in fines to settle long-running corruption investigations in the United States and Britain over payments made to clinch arms deals.

A KPMG spokesman said “the firm does not believe there has been any act of misconduct” and that “it will be cooperating fully with the AADB to ensure that the matter is brought to a swift conclusion.”

AADB said it would investigate KPMG’s advice to BAE on the operations of three of its offshore companies, Red Diamond Trading, Poseidon Trading Investments and Novelmight.

“The regulator is looking specifically at the audit of commissions paid by BAE to outside agents, any tax advice given by KPMG on commission payments and the status of three offshore companies linked to BAE … penalties could include an unlimited fine for KPMG,” said Credit Agricole analyst Thomas Mesmin.

The fines ended years of corruption investigations by Britain’s Serious Fraud Office and the U.S. Department of Justice into BAE deals to sell Tornado fighter jets to Saudi Arabia and radar systems to Tanzania.

“The AADB has not indicated to BAE Systems that it has any basis for reaching a view that there is any material inaccuracy in any of the company’s accounts,” BAE said in a statement.

Shares in BAE, which have risen 12 percent in the last three months, were 1.2 percent down at 350.10 pence by 0820 GMT, underperforming the broader market and valuing the company at around 12.2 billion pounds ($19.20 billion).

Kashflow iPhone App

Today on his twitter stream Kashflow founder Duane Jackson made this announcement

Being the geeky accountant I am I was quite excited to see this. Xero’s policy seems to be to stay away from working with a particular operating system they just use a mobile website which causes problems due to the iPhones not supporting flash. There is other unsupported Kashflow apps for the iPhone which I will review at a later date. This is the first official accounting SAAS iPhone app I have used.

Installing and logging into the App is as simple as it should be.

The home screen seen here shows a simple financial overview in basic non accountants terms. For some reason that loading message stayed on the screen

Kashflow Online Accounts Ireland

Kashflow Homescreen

The app its self is relatively basic but covers everything a small business owner would need while out and about.
An unpaid invoice list

Kashflow online accounts

Unpaid Invoice List

and the ability to add invoices

Kashflow online accounts Ireland

Add an invoice

When I exited the app and reopened it I did get this error message which seems to be a problem with multitasking but other than that seemed stable for V1.1

The Kashflow iPhone app is available from the app store here

PayPal co-founder Peter Thiel to invest $4 million in Xero online accounting software

PayPal cofounder Peter Thiel is to invest around $4 million in New Zealand online accounting software provider Xero to enable the Kiwi firm expand into the United States. The San Francisco based technology entrepreneur and investor will be injecting the amount in aide of the Kiwi firm’s planed foray into the US market.

Peter Thiel is also a director with Facebook and will be joining Xero’s US advisory board. According to Xero, Thiel’s investment will be made through his New Zealand investment firm Valar Ventures. The capital raising, to be made via a placement, was expected to close next week, with shares at $1.4918.

Thiel, who helped set up online payments company PayPal and later sold it to eBay for US$1.5 billion, will buy about 2.7 million shares in Xero in a private placement to help support the company’s expansion into the US, giving him about 3 per cent ownership. The shares climbed 3.6 per cent to $1.54 in trading Friday, and are down 8.6 per cent this year.

With the support of Peter and his team, Xero reiterated its believe that it is now sturdily placed to enter the US and capitalize on the opportunity that this market presents, chief executive Rob Drury said in a statement.

Access to PayPal’s extensive networks will provide a major boost as Xero takes on Quickbooks in the vast US small business market. Xero entered the US market last year when it appointed Dell executive Andy Lark to be its first member on the company’s US Advisory Board.

In January, Xero entered into an arrangement with American online banking services provider Yodlee Inc. to offer its accounting system. PayPal is an e-commerce business allowing payments and money transfers to be made through the Internet. PayPal serves as an electronic alternative to traditional paper methods such as checks and money orders.

Thousands of individuals use PayPal to process their finances online. A PayPal account can be funded with an electronic debit from a bank account or by a credit card. The recipient of a PayPal transfer can request a check from PayPal, establish their own PayPal deposit account or request a transfer to their bank account.

With such an existing client base and network, the Kiwi firm is hopeful of increased business as it intends to use such established networks to garner additional business in the US market.

Single Business Number

In our home market of New Zealand we’ve been dialing up the awareness of a Single Business Number (SBN). An SBN is a public unique identifier for each small business.

Single ID number for firms

Australia already has a Single Business Number (called the Australian Business Number – ABN) as does Canada, the US (Employer Identification Number – EIN) and a number of other countries. Where a Single Business Number exists, these have normally been created by Government departments for the purpose of making it easier to collect information from small business.

In a cloud computing environment, a Single Business Number comes alive for the small business owner and is a key building block for a number of new services.


One of the key differences between cloud computing compared to desktop software is your data can be linked to other information. Take for example entering a new customer. You have to know their name and address and if they move you may not know for several months. In the cloud it would be great to be able to connect to that customer and have their latest address details load automatically into your system, and if these ever change, have them automatically updated.

If a new customer approaches you with a large order, wouldn’t it be great to do an immediate credit check. If they come back with a less than clear bill of health then you still might do the business but insist on a cash payment up front. Both parties win.

Another example is sending electronic invoices. It seems crazy that a small business creates an invoice in its own accounting system with structured data, then flattens that data into a paper invoice, which is essentially a picture, and then the customer has to retype that invoice back into structured data in their accounting system. (We’ve started on this at simpleubl.org)

Wouldn’t it be useful to have as the last page of your monthly management accounts an anonymous benchmark of similar companies in your space. You can see how well you are doing against your competitors and peers. That 1% growth you’re achieving might compare with an industry average of -2%, showing that your strategies are working and you are gaining market share in a tough market.

The Single Business Number is a key building block for all these scenarios.

What number?

So what could the Single Business Number be? In New Zealand it’s likely to be the GST (Goods and Services Tax) number as it’s already a number that each business uses to interact with our Inland Revenue Department. There may be a suffix or prefix to make it match other international numbers like the ABN. There is some Government policy work required to enable the GST Number to be used for this purpose.

But that may be a too literal interpretation of a Single Business Number. Another candidate identifier might be the physical address of head office. Essentially this is a physical key that already exists for many businesses and can be easily populated using a geo interface like Google Maps.

Another alternative is the Companies Office record. In New Zealand the Companies Office has recently implemented a new Companies Register which could generate a unique url for each business. (e.g. business.govt.nz/company/xero2006). The problem is the Companies Office does not have a register of sole traders and partnerships and is therefore missing the majority of small businesses. A policy option might be to allow sole traders to (initially at least) voluntarily register themselves to obtain a validated listing in the Companies Register. We believe that providing certainty over who you are trading with is an accelerator for most businesses.

Start the ball rolling

As anything involving Government can take a while, the industry can potentially just get started with some of these candidate keys and match them up later, but that is not as powerful as having certainty. We believe the traction cloud computing vendors are achieving creates the business case for businesses themselves to get interested in SBN. That leads to a massive opportunity for productivity gains and increased commerce for small businesses. We think that’s important.

Let us know what you think.  We’re keen to understand if there is any resistance to SBN so we can talk through those issues.

Peter Thiel to Invest in Xero

Part of our US strategy is to work with the best people in the Industry.  Over the last few months we’ve had the opportunity to connect with some of our heroes – a group of people that we believe are the global leaders in Internet. We’re really proud that they are enthusiastic about our business, understand what we’re doing and that they want to help us.

Today we have a big announcement …

US Technology Guru Peter Thiel to Invest in Xero

Leading online accounting software provider Xero Limited [NZE:XRO] today announced that Peter Thiel, the San Francisco based investor and Silicon Valley authority, has agreed to invest NZ$4 million to support Xero’s expansion into the US market. He will also join Xero’s US Advisory Board.

Mr Thiel co-founded and led PayPal, the online payments company, which was acquired in 2002 by eBay for US$1.5 billion. He was also the first external investor in Facebook, and serves on its board. He is currently President of Clarium, a San Francisco based global macro fund manager.

The investment in Xero will be made through Valar Ventures LP, Mr Thiel’s New Zealand investment firm. Valar Ventures focuses on helping New Zealand companies in the post-revenue phase move into global markets. The Xero placement is the firm’s inaugural investment.

The capital raising, made via a placement, is expected to close next week and will be priced at NZ$1.4918 – the volume-weighted average share price of Xero over the thirty trading days prior to 20 October 2010.

“Millions of small and medium-sized businesses need an online accounting solution, especially in this time of increasing regulatory and tax complexity,” said Peter Thiel. “Xero’s tight focus, robust product, and strong team should enable it to expand tremendously in the United States.”

“We are delighted to welcome Peter and his team at Valar Ventures as strategic investors in Xero,” said Xero CEO Rod Drury. “Access to their extensive networks will provide a major boost as we take on Quickbooks in the vast US small business market. We have taken a measured approach to our US market entry so far. With the support of Peter and his team, we believe we are now strongly positioned to enter the US and capitalise on the opportunity that this market represents.”

UK Bank Feeds – a new way of working

Henry Ford, the pioneer of what we recognise today as Lean Manufacturing, introduced a revolution centred around the elimination of wasteful processes more than a century ago. In his autobiography he explained the essence of it as:

“I believe that the average farmer puts to a really useful purpose only about 5% of the energy he expends. Not only is everything done by hand, but seldom is a thought given to a logical arrangement…his whole idea, when there is extra work to do, is to hire extra men. He thinks of putting money into improvements as an expense. It is waste motion – waste effort – that makes farm prices high and profits low.”

While I wouldn’t suggest that Ford’s farmer is perhaps the best proxy for accounting, take a moment to look around your desk and office. Aside from the odd PC, I’d bet that paper still rules the roost. But more than that, repetitive paper based processes and workflows still dominate the world of accounting and bookkeeping.

We love a challenge

So, in a few weeks we’ll be rolling a new capability to our UK customers which securely imports daily banking transactions straight into Xero. While we’ve had this running for over twelve months for the hundreds of Xero UK customers who bank with HSBC, the UK bank feeds release will enable this ability for most UK banks, credit cards and financial institutions. Around eighty new UK feeds will be added all told.

So, why is this such a big deal for small businesses?

Cash is king. Providing the capability to check your live bank balance and cash transactions from within Xero not only means there’s one less website to visit every morning, it also means that cash based businesses have a fully automated mechanism for loading, analysing and reconciling their cash. Instead of sitting down once a fortnight – if you’re lucky – with a paper bank statment and then repeatedly manually keying, matching, marking and reconciling payments and invoices for each statement line, Xero will will enable you to do a bank rec in minutes every day. Not only do you save time but, critically, you get the benefit of complete, up-to-date visibility of cash.

So, why is this such a big deal for accountants?

Eliminating the need for accounts staff to manually capture, key and reconcile their clients’ accounts not only benefits the clients, but the internal practice efficiencies are multiplied many times over.

Is bank feed data capture a silver bullet, should all my data now come in from my bank statement?

No. While every business will benefit from automated bank feeds, it stands that the more cash based your business is the more you will benefit. But we believe that loading and coding with automated bank feeds, coupled with the full accrual accounting capabilities already present within Xero, will eliminate huge amounts of wasteful re-keying of cash movements, as well as providing hyper realtime management reporting that is sourced from the real, current cash position – not what it was weeks ago when you last did a full bank rec – could be transformational for many small businesses.

We are really excited about finally bringing this service comprehensively to the UK market, stay tuned for more insight as we get closer to launch.