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Mortgage Arrears Resolution Process

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Mortgage Arrears Resolution Process (MARP)

Under the Code of Conduct on Mortgage Arrears (CCMA), lenders must operate a Mortgage Arrears Resolution Process (MARP) when dealing with arrears and pre-arrears customers. This requirement was introduced in January 2011, but the rules changed in July 2013 with the introduction of the Personal Insolvency Legislation.
There are 4 steps involved in the MARP:- Communication, Financial Information, Assessment and Resolution.

The area of Communication sets out the information that the lender is required to inform you of in writing and includes details on:

  • The status of the mortgage account.
  • Full details of the payment(s) missed and the total amount now in arrears.
  • It must also explain that your arrears are now being dealt with under the MARP; the importance of cooperating with the lender; the consequences of non-cooperation; and the impact of missed repayments/repossession on your credit rating. The potential for legal proceedings and loss of your property, and an estimate of the costs to you of such proceedings
  • The importance of taking independent advice
  • That even if your property is sold, you will remain liable for any outstanding debt, including any accrued interest, charges, legal, selling and other related costs.
  • For as long as you are in arrears, the lender must give you a written update of the status of your account every 3 months.

Financial Information and Assessment
In order for lenders to identify the best course of action for a mortgage holder in arrears, they must get and assess the financial position of the borrower. You will be given a “Standard Financial Statement” (SFS) to complete. When you get the financial statement to complete, the lender must make sure that you understand the MARP process. They should offer to help you to complete the SFS as well as let you know about where you can get independent advice. You should be given enough time to gather the information you need to complete the SFS and they must give you a copy of the completed statement. You may need to provide supporting documentation to verify the information in the SFS.

Assessment
The SFS is then passed on to its own Arrears Support Unit (ASU) for assessment. The ASU must assess the completed SFS in a timely manner and examine your case on its individual merits. The ASU must base its assessment of your case on your full circumstances. When the assessment is complete, the lender must consider all options for alternative repayment arrangements.
These options may include:
• Paying interest only, or interest and part of the capital, for a period
• Permanently or temporarily reducing the interest rate
• Deferring repayments (or part) for a period
• Extending the mortgage term
• Changing the type of mortgage
• Adding arrears and interest to the principal
• Equity participation (reduction of principal, with transfer of part of your equity)
• Warehousing part of the mortgage (including through a split mortgage)
• Reducing the principal
• A “deferred interest” or other voluntary scheme

The lender may require you to change from an existing tracker mortgage to another mortgage type if it concludes that none of the options that include keeping your tracker are appropriate or sustainable for you.

Information and advice on alternative arrangements

As part of the Mortgage Arrears Information and Advice Service, your participating lender will pay €250 for a consultation with an accountant of your choice drawn from a panel. CACM Accountants are on this panel of Accountants.

When the lender is offering an alternative repayment arrangement, they must give you a clear written explanation of the arrangement. As well as the basic details of the new repayment amount and the term of the arrangement, the lender must explain its impact on the mortgage term, the balance outstanding and the existing arrears.

What happens of an alternative arrangement is not agreed

In some circumstances, it may not be possible to for you and the lender to reach an agreement on an alternative repayment arrangement. A lender may not be willing to offer an alternative arrangement or they may offer you an alternative arrangement, but you may choose not accept it.

If this happens, you will now be outside the MARP, and repossession proceedings can start after three months. The three months will give you time to consider other options, such as voluntary surrender, voluntary sale or a Personal Insolvency Arrangement. You can also appeal the lender’s decision under the CCMA’s appeals process. Independent financial and legal advice should be sought.

The information contained above is intended as a general guide to the subject matter, it should not be used as a basis for decisions. For this purpose advice should be obtained which takes into account all the individual’s circumstances from suitably authorised professionals. Every effort has been made to ensure the accuracy of the information. We are unable to accept liability for any errors or omissions which may arise.

CPA Practitioners’ Conference 2012

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I am delighted to have been invited to speak at the 2012 CPA Practitioners’ Conference the notification to members  is as follows:

‘Best Practice in Practice’ Conference                                                                             

Do you want to discover the tools, information and expertise needed to achieve best practice in practice?

Do you want to make your practice a success?

Discover how at the 2012 Practitioners’ Conference

The Heritage Hotel, Killenard, Co Laois

Friday 21st and Saturday 22nd September 2012

As Practitioners’ struggle to stay afloat and grow business in this time of economic crisis our expert speaker Carla Manning ADCA CPA will highlight the tools and activities Practitioners’ can undertake to make their Practice the best in practice. Bringing her wealth of experience, skill and knowledge developed over the last 15 years working with a diverse range of clients across a variety of industry sectors Carla will address the following crucial issues:

–          Managing Cash-flow – Do you have an airtight cash management system in place? Are you collecting what you are owed? Are you effectively managing your cash-flow?

–          Reviewing Your Clients – When did you last step back and analyse your client base? Do you know who is making you money and who is costing you money?

–          Strategic Planning – What do we do? Who do we do it for? How do we grow, succeed, excel? Key questions you need to ask yourself when it comes to strategic planning.

–          Being Proactive with Clients – Do you proactively bring business ideas to your clients? Are you missing cross-selling opportunities with existing clients?

–          Paperless Office – Sick of paper cuts? Do you aim for a paperless office? What alternatives to paper are available?

Carla Manning ADCA, CPA is the owner of CACM Accountants and Registered Auditors, a proactive and innovative accountancy practice based in Cork, established in 2009.

In 2011, Carla launched a new on-line business – IrishFormations.ie which provides a fully on-line company incorporation service to individuals as well as being an out source solution for Accountants and the legal profession.  The website provides live limited company name check and is the first in Ireland to work with the Companies Registration Office to bring this to market through technology called “Open Services”

Carla teaches on new business start up programmes. Carla currently holds the position of Treasurer in Network Cork and is a member of the Board of Cork Midsummer Festival. She was recently invited to join the steering group for the Economic Development Plan for the Northside of Cork.

Protecting your business.

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Planning & Budgeting

A well-run business will have controls and procedures in place to monitor the business as well as providing means of gathering relevant information in order to monitor the business on its way to achieving its goals and objectives. Controls also provide an early warning that something maybe wrong.

Most people would associate such procedures and controls with very large organisations, however, planning, budgeting and forecasting are vital tools for SMEs as well.

Strategic Plans & Business Plans

Every business should have a strategic business plan which is vital to developing a long-term view of where business is going and how it plans to get there. When a business is considering raising finance, the plan for finance providers needs to include a significant amount additional information in order to provide new parties with a better understanding of the business. It usually contains information about the history of the business, the owners/managers and key personal, range of products and services as well as financial information (historical and projected).The purpose of the plan is to enable the business to sell itself to potential investors and finance providers.

Budgeting

Now, more than ever it is vital that all businesses prepare an annual budget to decide a plan for the business in the following years. It is important that the budget is reviewed on a regular basis in order to measure progress and monitor as to whether the business is achieving its targets and if not, then why not.

 

If an SME does not have the resources in-house to prepare the information, accountants can help to devise a simplified system of planning, budgeting and forecasting which summarises key performance indicators and provides a feedback mechanism. After all, it is of no benefit to have set targets and budgets if they are not being reviewed regularly and actions agreed where significant variances arise.
Contact CACM Accountants for further information.

How to turn your financial goals into reality!

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Register To Attend This Free Seminar Here

Date: Tuesday 29th May 2012

Venue: Imperial Hotel

Time: 6pm to 8pm

An evening seminar held in the Imperial Hotel Cork, on Tuesday 29 May will address many key issues relating to your personal and professional financial security whilst providing advice on good planning and how to make the most of your financial advisor.

•Do you clearly understand your personal and professional financial goals?
•Is your Financial Adviser or Accountant aware of these goals?
•Do you know what questions to ask when enquiring about financial options?
•Are you protecting your business interests?
•Do you want peace of mind knowing your loved ones are taken care of financially?
•Do you have a Pension?
•Are you saving for retirement?
•Have you recently carried out a Financial Health Check?

These questions and many more will be addressed on Tuesday, 29 May by guest speakers, Ms Carla Manning, Owner, CACM Accountants and  Sandra Maher, Managing Director, Inspire Financial.

Financial reviews are becoming more and more important in the current climate. It is advisable to put good plans in place which in the long-run will save money and ensure tax efficiency. Anyone interested in learning more about protecting their future financial well-being and gaining peace of mind should come along to this event on the 29 May. Light refreshments will be served at registration.

About The Speakers

About Carla Manning:

Carla Manning ADCA, CPA is the owner of CACM Accountants and Registered Auditors, a proactive and innovative accountancy practice based in Cork. As well as providing general accontancy services such as accounts preparation, audit and taxation services, we provide a full service for new business start ups. Carla has continually seen the areas where small and medium sized businesses struggle to develop and grow their business while also trying to maintain proper books and records and assess the financial affairs of their business. We pride ourselves in working closely with our client’s through the year so as to ensure that our client’s have the necessary support and advice needed in these clallenging times.

About Sandra Maher:

As Managing Director of Inspire Financial Options Sandra Maher has a proven history of giving Financial Advice in a wide range of personal and business situations. Having worked in Permanent TSB for twenty five years, Sandra has forged strong relationships within the industry. In her role as Senior Assistant Manager at permanent tsb she gained extensive expertise in risk assessment, lending, debt analysis, budgeting and customer relationship management. Sandra left the bank in 2006, setting up her own business as an independent financial adviser in Cork City.

Get more information

Register Here Now!

 

Health check for your business

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Some easy things for you to check

Whether you are just starting out in business or whether you’ve been around for sometime, it is always worth taking time out to make sure you are claiming all deductions for allowable business expenses. When trying to figure out if an expense is allowed as a business expense or not, remember the basic rule – in operating your business, you are entitled to claim a deduction for any business expense you have incurred in order to earn your profit. There are many items that are clearly regarded as a business expense and include such items as:

-Purchase of stock for re-sale
-Wages and salaries
-Rent and rates of business premises
-Repairs and maintenance
-Light and heat
-The running costs of vehicles used in the business (service costs, motor tax, insurance)
-Accountancy fees
-Legal and Professional fees
-Advertising and marketing costs
-Interest paid on any monies borrowed to finance business expenses/items,

This list is not exhaustive – so it is worth checking all your outgoings regularly to make sure you are including all relevant business expenses.

Expenses Not Allowed

Unfortunately, there are certain expenses that cannot be claimed as a business expense at any time. You cannot claim for any private expenses or any expense, not wholly and exclusively paid for the purposes of the trade or profession. Such items include:

– Any private or domestic expenditure, e.g. your own food and clothing (except protective clothing)
– Income Tax
– Business entertainment expenditure which includes the provision of accommodation, food, drink or any other form of hospitality. Staff Christmas parties are allowed.

Confusion often surrounds the area of Food and Meal Expenses. The rules relating to food and meals are actually quite clear – the cost of meals taken at the place of business are not allowable for tax purposes. Meals consumed away from the place of business are, in general, not regarded as being wholly and exclusively laid out for the purposes of the business. Revenue’s view point on this is that everyone must eat in order to live and so whether you are working or not, you would still have to eat. However, where the nature of a business involves travelling or where occasional business journeys outside the normal pattern are made, then the cost of meals maybe allowed as an expense.

The cost of work clothing such as business suits are not allowable business expenses either. Again, the view point has been taken by Revenue that an individual has to wear something for heat, warmth and decency and so it has been held that any expenditure on clothing is not wholly and exclusively for the purposes of the business. The cost of any protective clothing is fully deductible.

Pre Trading Expenses

If you have only recently set up in business, you may have spent quite a bit before you ever started trading. The good news is that whether you are a limited company, sole trader or partnership, you can claim for certain pre-trading expenses. A deduction is allowed for pre-trading expenses which are incurred
in the three years prior to commencement of the trade or profession and would not normally be allowable, but would have been allowable if they had been incurred after the date of commencement of the trade or profession.
Examples of pre-trading expenses might include accountancy fees, advertising costs, costs of feasibility studies, costs of preparing business plans, rent paid for the premises from which the business operates. The allowable amounts are treated as having been incurred at the time the business commences.

Expenses Part Business, Part Private

When an expense is incurred and it relates to both business and personal/private use, then only the amount that relates to the business portion is allowed as a deduction. An example of such an expense would be telephone costs or light and heat costs where a business is operated from a home office. The total costs should be split between business and private and only the business portion is allowed as a deduction. For light and heat, the easiest way to apportion the cost is as a percentage of the total floor area of the house. It is worth bearing in mind though that if you sell your home (the profit from which is normally exempt from capital gains tax) the portion that was used for business purposes will be subject to capital gains tax.

The above is an outline of the principles surrounding business expenses and is intended for general guidance only.

Budget 2012

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With a €3.8 billion fiscal adjustment needed in 2012 it’s no wonder the budget had to be rolled out over a two day period this year. With Day 1 concentrating on Social Welfare, Health and Education and Day 2 concentrating on taxes, there is quite a lot to take in.

We are delighted to provide you with our compliments, full details of all the budget in our attached Budget Highlight’s PDF which you can download for your information and reference.

 
Day 1 of the budget included the news that while the weekly social-welfare payments would remain unchanged, lone-parent family payment, child benefit for third and subsequent children, fuel allowance and job seekers benefit will all face cuts. For employers, redundancy and insolvency changes will reduce employer rebate from 60% to 15%

The health sector sees extra charges on private treatment in public hospitals, an increase in the threshold amount for the Drug Payment Scheme and a 2% cut in disability, mental health and children’s services. Meanwhile in education we saw a 2% cut in Higher Education funding an increase of €250 in third-level student registration fees, a doubling of the primary-school transport charge and cuts to trainee and apprenticeship schemes.
Day 2 didn’t come as much of a surprise given the amount of leaks in the past few weeks. As was previously confirmed, VAT will increase from 21% to 23% from 1st January 2012 and there were no changes to the income tax rates of 20% and 41%, the tax credits and tax bands. The universal service charge exemption was increased to €10,000.

Our transport costs are going to increase with a 1.4 cent increase in petrol and 1.6 cent increase in diesel with effect from midnight 6th December 2011, with further increases in fuel oil and gas coming into effect in May 2012. Motor Tax changes to apply from 1st January will see increases ranging from €28 to €69 in the three bands.

Some relief for first time buyers will at least be welcome with  mortgage interest relief  of 30% to apply to first time buyers (between 2004-2008), decreasing to 25% for first-time buyers in 2012. Relief of 15% will apply for non-first time buyers. The sting is we are now all faced with the €100 household charge next year.
Stamp Duty on commercial property has been lowered from 6% to 2%. Capital Acquisitions Tax and Capital Gains Tax is increasing from  25% to 30% and DIRT is increasing from 27% to 30%. Corporation tax is to remain at 12.5% and the corporation tax exemption for new start ups is being extended – small offerings in an otherwise bleak budget.

Expences – Getting it right.

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In light of the taxation issues, the most prevalent method in respect of payment of employee expenses is by the re-imbursement of vouched expenses i.e. repayment to the employee of expences actually incurred for which they have appropriate receipts for. When such payments are made to the employee and the payment is no more than reimbursement of a receipted expense, it is not treated as pay for tax purposes.
Other methods of dealing with employee expenses include:-

Flat rate employment expenses.

A standard flat rate expenses deduction is set for various classes of employee’s. The amount of the deduction is agreed between Revenue and representatives of groups or classes of employees in advance (usually the employees are represented by trade union officials). Such groups of employees that are entitled to this flat rate expense include nurses, teachers, firemen, journalists, certain professions/trades employed by the civil service and local authorities, shop assistants to name a few. A detailed list is available on the revenue website.
Round Sum expenses.

This is where the employer agrees to pay an employee an agreed amount each pay period in addition to normal salary to cover expenses. The expense amount agreed is treated as “Pay” and is taxable in the same way as if it were part of the normal salary payment.
Meal allowances: In the same way as agreed flat rate expenses, where employers pay a sum towards the costs of employee’s meals, it is treated as taxable pay.

Meal Vouchers.

Where an employer provides luncheon or meal vouchers to employees, the value of the voucher (excluding the first 19 c per voucher) must be treated as pay and appropriate PAYE/PRSI deducted in the normal manner.

Canteen Meals.

Where an employer provides free or subsidised meals in a staff canteen for staff generally, the value of the meals provided to employees are not treated as pay for tax purposes. However, the facility must be available to all employees in the company. If the facility is only available for certain employees, then the exemption will not apply and tax will need to be deducted on the value of the meals to the employees entitled to the facility.

Consumer Sentiment improved again in February 08/03/2011

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The overall KBC Ireland/ESRI Consumer Sentiment Index rose in February to 50.3. This compares to a figure of 48.7 in January, and a value of 59.4 in February 2010. The February reading remains above the all time low of 39.6 in July 2008 but it is still considerably lower than the all time high of 130.9 in January 2000.

Commenting on the results David Duffy, ESRI, said

  • “Consumer sentiment improved in February, due to an improvement in the forward looking expectations index which rose to 37.8 in February, from 31.5 in January. In contrast, the index of current economic conditions weakened to 68.9 in February from 74.2 in January.”
  • “Although sentiment has improved, the underlying figures suggest that any recovery in confidence remains tentative. Part of the improvement in sentiment is due to a move from a negative to a neutral outlook by respondents, suggesting a cautious outlook by consumers. The underlying message from the analysis is that consumers remain cautious in the present circumstances.”

In addition, Austin Hughes, KBC Ireland, noted:

  • “The slight rise in consumer sentiment in February is surprising in the light of a lot of bad news during the survey period. The run-up to the election focussed heavily on Ireland ’s economic problems and we also saw downward revisions to growth forecasts as well as further increases in energy and food prices. In these circumstances, the marginal increase in sentiment hints that Irish consumers have prepared themselves for a lot of bad news. They may also have responded to evidence of stronger global growth as well as tentative signs of improvement in a variety of domestic economic indicators.“
  • “It should be emphasised that even after the slight improvement seen in February, current sentiment readings are far below the long term norm. So, it is clear that Irish consumers are fairly gloomy at present and, of course, they face further problems. In particular, looming ECB interest rate increases could take a further toll on confidence in the months ahead. That said, February survey results hint at some resilience in sentiment which might suggest spending may not be quite as weak as feared.“

Note:- Since May 2008 the KBC Ireland/ESRI Irish consumer sentiment survey was prepared using a slightly different methodology.   While this may have a minor impact on the precise numerical estimates of various survey components, it should not have any significant effect on the broad trend reported.

Published with the permission of David Duffy of the ESRI

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How should I claim for my motor expenses?

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Following on from the post – Can I claim for my lunch expenses – let’s look now at clearing up the sometimes grey area of motor expenses, mileage rates and who can and cannot claim them. The prevailing schedule of Civil Service rates orAny other schedule with rates not greater than the Civil Service rates

The payment of motor expenses relates to an employee of a business (including company directors) and not to sole traders – where the actual motor running costs incurred are claimed as a business expenses in the financial accounts. Motor expenses can be paid to an employee where the employee uses their own private car for business purposes. For example, where an employee is required to travel to a client or customer’s place of business in order to carry their job.

Where an employee uses their own private car to make this journey, the employee may be paid an expense by the employer. The payment is designed to cover the additional costs of fuel, wear and tear etc of the employee in having to use their car for the business purpose. This payment is generally a tax free payment (although there are some exceptions, so be careful). In the case of company directors, the expense payment can only be made where the directors use their own personal vehicle, not any vehicle owned by the company. In all cases, travel to and from an employee’s home and place of employment is not allowed for tax purposes. Any payment made to an employee in this regard needs to be treated as taxable pay.

There are a number of ways for calculating motor expenses to be paid and the method adopted by the employer will generally depend on the nature of the business, frequency of travel and length of stay away from the normal place of business. The different methods may also have different tax treatments, so make sure you take this into account when deciding on the most appropriate method.

1. Re-imbursement of Motoring Expenses by Flat-Rate Kilometric allowances.There are two types of kilometric schemes which are acceptable for tax purposes, if an employee bears all the motoring expenses:

This is probably the most common method used as it is not difficult to administrate and the payments are calculated by predefined rates.

For any rates to be paid to employees that are greater than the prevailing civil service rates, an application must be made to Revenue for approval to use any such increased rates.

2. Expenses claims submitted to RevenueAnother option is for the employee to submit a claim to Revenue for an expenses deduction (and any wear and tear allowance in respect of the motor vehicle). Where the employee this type of claim, any payment of motor expenses by the employer, including any scale allowances, must be treated as pay and taxed accordingly.

3. Round Sum Expenses:Where the employer agrees to pay an employee an agreed amount each pay period in addition to normal salary to cover expenses. The expense amount agreed is treated as “Pay” and is taxable in the same way as if it were part of the normal salary payment. Any round sum motor expense paid by the employer to the employee

It is good to remember that the above specifically relate to motor expenses and do not include reimbursement for other expenses that maybe incurred as a result of having to travel for work purposes.

Can I claim for my lunch expense?

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We are all familiar with the expenses that we are allowed to claim a tax deduction for in our accounts. They typically include items like rent, insurances, print and advertising costs, wages and salaries, to name but a few.  However, there are items that often cause much debate as to whether they are tax deductible or not. The main culprits I have found that can cause confusion are food and meal expenses and entitlement to claim mileage and subsistence allowances.

For self employed individuals, the rules relating to food and meals are actually quite clear – the cost of meals taken at the place of business are not allowable for tax purposes. Meals consumed away from the place of business are, in general, not regarded as being for the purposes of the business. This may seem a bit unfair – after all we’re not necessarily talking about expensive lunches in fine dining establishments on a daily basis. Who has the time, budget and metabolism for that anyhow? Most of us are more likely to opt for a quick take away sandwich from the shop/cafe closest the office, so why is it not a business expense? Well, Revenue’s view point on food and meals is that everyone must eat in order to live, so whether you are working or not, you still have to eat. If you think about it, for anyone that is a PAYE employee, you have to pay for your own lunch/food costs and cannot claim any tax credit/relief for having to do so, so why as self employed individual would this same cost now be regarded as a business expense? The Revenue do recognise that obviously, where the fundamental nature of a business involves travelling  – an example they give is that of a long distance lorry driver, or where occasional business journeys outside the normal pattern are made, then the cost of meals maybe allowed as an expense.

 So, what about civil service mileage rates and subsistence allowances? Well that’s for the next blog post.