Brendan Burgess
Founder
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The Sunday Business Post has a very good article by Ian Kehoe and Jack Horgan-Jones in today's paper about how a Revenue clampdown has recovered a lot of tax from medical consultants.
Apparently, on the advice of their accountants, they were doing the following.
1) They would set up a company for the income from their private practice. (Their salary from public practice was not affected.)
Apparently, that is fine. And if it had stopped there, there would have been no problem.
2) They sold the goodwill of their practice to the company for €750,000.
This would be subject to CGT but many paid no CGT as they had losses forward or used the Retirement Relief.
3) The company paid 12.5% Corporation Tax
4) The company used the after-tax profits to pay for the goodwill.
(There were other problems as well - e.g. not making any Corporation Tax returns or claiming false expenses in the company or paying their children a salary.)
One of the firms of accountants behind the scheme, Houlihan Cushanan, is being sued by many consultants.
Eddie Hobbs makes a good point in that medical consultants would be too busy to study these schemes for themselves. They tend to follow their peers - if everyone else is doing it, it must be ok.
The Revenue is now moving on to other professions who may have used the same scheme.
Brendan
Apparently, on the advice of their accountants, they were doing the following.
1) They would set up a company for the income from their private practice. (Their salary from public practice was not affected.)
Apparently, that is fine. And if it had stopped there, there would have been no problem.
2) They sold the goodwill of their practice to the company for €750,000.
This would be subject to CGT but many paid no CGT as they had losses forward or used the Retirement Relief.
3) The company paid 12.5% Corporation Tax
4) The company used the after-tax profits to pay for the goodwill.
(There were other problems as well - e.g. not making any Corporation Tax returns or claiming false expenses in the company or paying their children a salary.)
One of the firms of accountants behind the scheme, Houlihan Cushanan, is being sued by many consultants.
Eddie Hobbs makes a good point in that medical consultants would be too busy to study these schemes for themselves. They tend to follow their peers - if everyone else is doing it, it must be ok.
The Revenue is now moving on to other professions who may have used the same scheme.
Brendan