Technical update

Sustainability guidance

The government has published guidance on the sustainability reporting requirements. The FAQs on the Corporate Sustainability Reporting Regulations 2024 clear up a number of issues that were a source of uncertainty. Although the FAQs are not intended to be a legal interpretation, they provide useful guidance, with the following clarifications being of particular interest.

• Not-for-profit companies do not fall within the scope of the Corporate Sustainability Reporting Directive (CSRD). This will come as a significant relief to large charities.
• EU subsidiaries of a third-country undertaking may report on a consolidated basis at EU level.
• Companies are only required to report information on the value chain if it is material. For the first three years of reporting, this is on a ‘comply or explain’ basis.

More information can be found at the Department of Enterprise Trade and Employment CSRD resource page and the ACCA sustainability reporting hub. ACCA also offers a professional diploma in sustainability.

Sustainability assurance

In the UK the Financial Reporting Council has published initial feedback on its market study into the assurance of sustainability reporting. The study has been designed to explore how the sustainability assurance market is functioning and developing in the UK. The findings suggest most UK companies report having sufficient choice of provider of sustainability assurance, although some have raised concerns that the market may begin to consolidate around a small number of large audit firms, limiting choice and effective competition in the future.

Carbon allowances

With companies targeting net zero initially shrinking their carbon footprint as much as possible and then bridging the gap by purchasing carbon credits, the reporting on these credits has come to the fore. The European Securities and Markets Authority (ESMA) has issued a 2024 EU carbon markets report, and ACCA recently hosted a CPD webinar on the voluntary carbon market, available on demand.

EU cybersecurity

The Network and Information Security Directive (NIS2) along with the European Cyber Resilience Act, the Digital Operational Resilience Act and the EU Cybersecurity Act are a suite of requirements designed to strengthen cybersecurity in the EU. Under NIS2, which member states were required to adopt by 17 October 2024, companies and state bodies must boost their cyber defences or risk heavy fines.

Reporting enforcement

ESMA has published the European common enforcement priorities for 2024 annual corporate reports.

Funds sector

The report of the Department of Finance’s Funds Sector 2030 review makes a number of recommendations including aligning the tax on investment funds and life assurance products with that of direct equities, and reforming the regimes for Irish real estate funds (IREFs) and real estate investment trusts (REITs). ACCA’s response to the review in September 2023 was made through the Consultative Committee of Accountancy Bodies Ireland.

Pension assumptions

The Pensions Authority has updated its guidance for determining the assumptions used in pension benefit statements. The annual maximum gross investment return assumptions to be used include:

• equities and property 6.65%
• fixed interest securities 3.40%
• cash 2.65%.

Tax refunds

Some Irish tax compliance franchise chains and some small accountancy practices operate the ‘A2’ process, whereby they complete a tax return for a client and any tax refund is paid directly to the tax agent’s bank account; the tax agent then deducts their fees and pays the balance to the taxpayer. Typically, this is done for PAYE taxpayers claiming back, say, rent credit, medical expenses or home carer credit; it is also done for subcontractors claiming back excess relevant contracts tax.

After reviewing the A2 process, Revenue has said it will be withdrawing the facility for any new clients who sign up with an agent after the end of this year. The facility will also be withdrawn for existing clients from 31 December 2025.

The guidelines for agents or advisers acting on behalf of taxpayers have been updated to reflect the changes. The only change proposed is how tax refunds are remitted to the taxpayer – the new process will not affect any other part of the tax agent and client engagement process. Given that anybody, including a criminal, can obtain tax agent status, the existing system was open to abuse, and the change will be welcomed by taxpayers and accountants.