Inside the world of business

Reliefs plan not home and hosed

BRIAN LENIHAN is trying finally to drive a stake through the heart of property-based tax reliefs in Budget 2011.

Many of the reliefs are already abolished. But there are still what Lenihan describes as “legacy issues”. One aspect of this has already got lawyers and tax advisors talking, the plan to limit section 23 reliefs to rental income from actual section 23 properties, rather than rental income as a whole, from next year.

At the moment, if you have a section 23 property (or properties) but are getting no income from it, you can still claim the relief from rental income earned on other properties. The proposed change means you will no longer be able to do this. The relief will have to be claimed against the section 23 property, nothing else.

Some professional advisers believe a change of this nature could be legislating retrospectively, with the result that people will effectively be penalised for acting within the law, and could be unconstitutional.

It’s one of a number of measures experts believe could be dropped between now and the Bill’s publication, but dropping it in advance could lead to claims that the Government is caving in to vested interests. So, in all likelihood it will be left in. In any case the breathing space could allow time to come up with an airtight means of making it work. Nevertheless, it’s one of a number provisions that look like they were dreamt up in haste, and could have the rest of us repenting at leisure.

Eircom to ring changes at the top once again

TWO SENIOR members of Eircom’s management team have departed the business in the past week, leaving others in the company wondering why.

Andrew Haire’s decision to step down as director of corporate affairs is particularly surprising given he only took on the role in June. He previously worked for the telecoms regulator in Singapore.

His appointment was regarded by many as having been influenced by majority shareholder STT of Singapore.

Conor Carmody was the man who led eMobile, Eircom’s fledgling mobile phone business. He was front and centre at the launch at the end of September with group chief executive Paul Donovan.

Of course, their departures – announced to staff over the past week – could be a coincidence.

They might also have other and better career opportunities that they want to pursue. But it leaves an untimely gap in the senior management ranks of Eircom.

The company is trying to restructure itself to avoid a breach of its financial covenants on its near €4 billion debt. Ratings agency SP and Moody’s have both downgraded Eircom’s debt recently.

Donovan has devised a new business plan which involves a €90 million reduction in labour costs. But many wonder about the growth strategy. Donovan appears to be banking on eMobile and its investment in next generation broadband services to deliver the goods at a time when fixed-line and Meteor are under pressure.

EMobile appears to have had a decent launch while faster broadband speeds will be trumpeted next week. This is to be welcomed but won’t deflect from the bigger picture.

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