Government planning PAYE crackdown on contract workers
Thousands of contract employees will be brought into the PAYE net for the first time as the government moves to close a loophole in the tax system.
The move is designed to ensure that contractors who are de facto employees cannot avoid PAYE by being paid through limited companies they establish. The changes will also apply to certain professionals, such as doctors and pharmacists, who carry out locum work but avoid PAYE due to their status as short-term contractors.
More at [broken link removed]
Hi,
Would all income from a contract then be liable for PAYE. At the moment I have a business loan which I need to service for two years. Would the UK model, if Revenue adapted that, allow me to pay PAYE on the income - Business Loans? Or would I have to service those business loans after I have paid tax/prsi?
PAYE claw back on doctors’ locum work
The Revenue Commissioners are seeking to force doctors who carried out locum work to pay PAYE taxes for the past four years.
The tax authority has written to GPs across the country, stating that locum doctors must now be treated as employees for tax purposes. Traditionally, locums have been regarded as self-employed and have not been obliged to pay PAYE.
The Revenue has told GPs that it intends to claw back PAYE for the past four years.
more at [broken link removed]
Revenue Commissioners to get extra powers in new Finance Bill
...
New rules designed to bring contract workers in the PAYE net will also be outlined.
...
More at [broken link removed]
SECTION 7 - TAX TREATMENT OF COMPANY DIRECTORS
Section 997A of the Taxes Consolidation Act, 1997 to be amended to confine the amount of the credit
available to any individuals to a maximum of the actual amount of tax deducted from that individual.
Tax squeeze on high-paid TV stars
Top media stars as well as building subcontractors are among those set to face paying more tax under new examinations of their status by the Revenue Commissioners, the Sunday Independent has learned.
Revenue is now examining the tax status of many of those involved in "outsourcing" to see whether they should or should not be classified as employees.
http://www.independent.ie/national-news/tax-squeeze-on-highpaid-tv-stars-2052069.html
Have there been any developments on this in the last year? I haven't seen anything in the media.
Going by http://www.deloitte.ie/tc/ a self-employed worker on, say, 80k, pays MORE tax than a PAYE worker on 80k, so how could revenue apply any extra tax/penalties if they found you working as a self-employed contractor, but not meeting the criteria?
Or would the employer take a hit, because they are avoiding employers PRSI?
What do you mean by this?You can't do a straight comparison though, as contractors will always have a certain amount of expenses, legitimate or otherwise, that will act to reduce their taxable income.
It's important to note in this regard that:So what you would find is the PAYE employee with taxable salary of 80k would probably be paying tax (somehow or other) on 60k - 70k if they were a contractor... hence the loss to the exchequer.
What do you mean by this?
The implication is that that somehow self employed are better off than regular employees, when in fact the opposite is the case.
Either the expense is legitimate, and will withstand an audit, or it is not. This holds for both employees and self employed.
What do you mean by this?It is unfortunate that the Irish Revenue has such a nasty attitude towards self-employed.
True enough, but in my experience this inequality creates an immediate incentive to fudge the expenses to rebalance things in the mind of a lot of people...It's important to note in this regard that:
- contractors forego the PAYE credit so much of the supposed 'tax loss to the exchequer' is illusory.
I think only a fairly ignorant person, Revenue official or otherwise, could fail to distinguish between turnover and profit... !- traders are taxed on income, not turnover. Revenue don't seem to understand that a contractor with 70k turnover and 15k overheads is only as well off in gross terms as their counterpart who earns 55k income from employment.
I presume you're referring to a case where a contractor's net/taxable profit is the same as an employee's. But again, it varies from case to case, contractors are often in a position to negotiate a much better hourly rate than employees. Or not, in others.In terms of after-tax income the contractor will actually be a good bit worse off.
As for contractors deductions, I don't know many employees who claim a portion of home L&H, phone, broadband...- contractors' deduction entitlements under the Irish income tax code are hardly generous, a lot less lucrative for example than the tax-free expense allowances enjoyed by civil servants and other employees, so the conspiracy theory that hordes of employees are trying to pretend to be contractors is largely unfounded.
Absolutely, but again, that is contingent on the overheads claimed being legitimate. My earlier post refers my own experience in that regard.- if a contractor is incurring significant overheads associated with their trade, this by Revenue's own standards would indicate that they are in business of their own account.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?