Dividends Certified Eligible Remuneration Cost for EU Funding

8th November 2016

By using approved CoMAv methodology, Whitings were successful in requesting that the European Commission reconsider their initial ruling that dividends are not eligible for reimbursement on FP7 projects.

 

Many businesses work on collaborative projects, funded by the EC. These projects are regulated by the notoriously complex EC grant funding agreements. The most recent round of such agreements, Framework Programme 7 (FP7), specifically disallows dividends as an eligible, and hence reclaimable, project cost. This creates a problem where dividends merely represent a tax efficient form of remuneration, which is common nowadays in many SME businesses.

Whitings represented just such a new client, which provides ICT services. Although FP7, by its very nature, is project funding, for this particular company, it represented approximately 70% of its annual revenue, so it was effectively core funding. Classifying the owners input into the business, represented financially by the dividend payments, as costs ineligible for FP7 reimbursement, would have left a black hole in the company finances, which could quite easily make the business insolvent and hence no longer a viable going concern. By using the EC approved Certificate of Methodology on average personnel costs (CoMAv) for SME businesses, Whitings were able to negate the ineligibility that attaches to dividends generally. After months of uncertainty for the client, the EC accepted this alternative format of claim and released the full funding.

Ian Piper, the Whitings partner who led the CoMAv procedure, commented ‘that this result is a huge relief to our client, who is now able to balance their books and continue business-as-usual. EC funding rules, and in particular FP7, are incredibly complex, providing funding for cost recovery, only. So denying reimbursement of the proprietor’s time input, seemed truly unfair. Thankfully, in a slightly unexpected result, common sense prevailed in the end’.



 
Other Blogs in Business Support
 
Richard Alecock
18th July 2017 Why a start up business should complete a business plan

A business plan is a written document that describes your business. By committing your thoughts to paper, you can understand your business better and also map specific courses of action that need to be taken to improve your business.   It covers objectives, strategies, sales, marketing and financial forecasts.   A business plan can help…

Read More »

Mark Burrows
13th July 2017 BREAKING: Changes to Making Tax Digital rollout timetable announced by Government

The Government has now set out a revised timetable for implementation of the Making Tax Digital (MTD) project.   Three million of the smallest businesses and landlords will be able to move to the new digital system for keeping tax records at a pace that is right for them, Ministers announced today as they set…

Read More »

Daniel Coleman
11th July 2017 Xero – Peace of mind with security

A potential worry to some businesses when contemplating cloud based accountancy software is how secure their information is. Today I am looking at the security measures Xero has put in place to give businesses peace of mind and protection. Xero implement a wide range of procedures to make sure your information is safe. Controlled Access…

Read More »

Neil Groom
27th June 2017 A taxing calculation

Calculate your own tax… The introduction of the so-called dividend and savings allowances from April 2016 was intended to reduce the tax liability for taxpayers with modest dividend and interest income, possibly removing them from the need to prepare a tax return altogether. For other taxpayers however, the interaction of these changes, together with the…

Read More »

Donna Gidney
5th June 2017 How to choose a business structure

Are you thinking about setting up a business?  If so, one of the first decisions you will need to make is that of business structure. The main business structures are: sole trader, partnership, limited liability company, and limited liability partnership (LLP). Sole trader – This is the easiest set up, with very little in the way of red…

Read More »

Daniel Coleman
30th May 2017 Cloud based Accountancy – Useful Apps to Make Your Life Easier – GoCardless

  This blog focuses on collecting payments for your business. There are many different payment apps available to use in parallel with either Xero or QuickBooks. The application under review is an app called GoCardless.   GoCardless is made by a company called Directli it allows you to take control of your payments, ensuring your…

Read More »