Seen & Heard: State-backed funds using Section 110 to slash tax bill

What the Sunday papers say: Cardinal Capital and BlueBay use controversial structure

Both Cardinal Capital and BlueBay Capital have made debt repayments of €27.9 million and €19.9 million but it is not clear who the beneficiaries of these payments are. Photograph: Thierry Roge/Reuters

Both Cardinal Capital and BlueBay Capital have made debt repayments of €27.9 million and €19.9 million but it is not clear who the beneficiaries of these payments are. Photograph: Thierry Roge/Reuters

 

Private equity firms working with the State are using a tax minimisation structure to reduce their tax bills to just €250 a year, according to a report in the Sunday Business Post.

The firms, Cardinal Capital and BlueBay Capital, are co-investors with the State-backed Irish Strategic Investment Fund (ISIF) in SMEs and property funds currently lending into the Irish market.

Company records filed for the special purpose vehicles of the two entities show that both had corporation tax liabilities of €250 for 2015. Accounts for BlueBay show the same figure for 2016 while Cardinal Capital has not yet filed.

According to the Sunday Business Post, the companies are using the controversial Section 110 structure, the same one used by so-called vulture funds here that bought toxic property debt to reduce their tax liability. The Government moved to close off misuse of the section in last year’s Finance Bill.

Both Cardinal Capital and BlueBay Capital have made debt repayments of €27.9 million and €19.9 million but it is not clear who the beneficiaries of these payments are.

Varadkar signals further tax cuts for squeezed middle

Is Taoiseach Leo Varadkar about to make good on his pledge to help those who “go to work early in the morning”? According to the Sunday Independent, he is planning to unveil cuts to the Universal Social Charge in the next budget aimed at hard-pressed workers.

Despite a string of calls for greater budgetary caution amid signs the economy may soon begin to overheat, Mr Varadkar told the paper his first budget would have a particular focus on reducing income taxes, with particular emphasis on cutting USC.

Ministers are, however, worried the benefit of tax cuts may be undone by the prospect of higher bin collection charges.

The Taoiseach’s comments were echoed by Minister for Finance Paschal Donohoe at last week’s National Economic Dialogue, who signalled tax reform and specifically tax reduction would be a key part of the Government’s budgetary agenda.

Mr Varadkar also revealed to the Sunday Independent that he would allow ministers spend savings found within their own departments rather than control additional funding centrally.

New Chinese suitor for Oisín Fanning’s San Leon

The Sunday Times reports a fresh approach for San Leon, the London-listed oil and gas explorer run by telecoms entrepreneur Oisín Fanning. Mr Fanning says the company has received a cash bid worth between 67p and 76p per share from Chinese oil company China Great United.

He told the London Stock Exchange on Friday that the offer was conditional on due diligence, and a final decision was expected within 45 days.

San Leon said late last year it had received an 80p-per-share indicative bid from a little-known Chinese company called Geron Energy Investor, which would have valued the company at £360 million (€422.3 million) – almost double its market capitalisation at the time.

Kerr to quit Bang to focus on Insomnia expansion

Coffee impresario Bobby Kerr is reported to be selling his stake in popular Dublin restaurant Bang to fund an expansion of his coffee chain Insomnia into the UK, according to the Sunday Business Post.

Kerr, along with Joe and Anne Barrett, acquired Bang in 2010 after the company behind the venue, run by Simon and Christian Stokes, collapsed owing creditors €2.4 million.

Now that the business is back on its feet, Kerr wants to exit and divert the money to funding his Insomnia chain’s expansion into the UK. It currently has outlets in Debenhams, Primark and Spar but is opening its first UK store in Belfast International Airport soon.

Kerr added the company will generate turnover of more than €30 million this year.