Is my employer fiddling my tax?

K

Killter

Registered User
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Hi all

my pay is being divided up into Basic pay and Subsistence pay every week and therefore I pay pittance in tax. in the last year Ive paid about 300euro in PAYE contributions even though some weeks my gross could be up to 820euro a week.
I am told that the subsistance aspect of my pay is to cover periods for when i work away from home-but until recently I have only worked a couple of nights away from home, about five nights in the last year. I think its a tax fiddle???
then our contract moved to a place where i have to work away all week and the company is deducting 60euro a week from my pay for rent, and ill have to pay for bills etc. out of my pay that hasnt gone up to reflect the fact that Ive to work away from home. So my so called subsistence pay isnt really subsistence pay after all.

It seems to me that they are fiddling the tax system so they pay less tax.


Also, does this mean that I wouldnt be paying my stamps i.e. could i draw the dole if need be? Would i be liable for a tax bill -i only pay the p.a.y.e. the company deducts from me shown in my payslip-if i reported it?

Any thoughts?

Cheers.
 
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Re: Pay being divided into "basic pay"and "Subsistence pay"

I must say that does sound like a bit of a fiddle. What does it say on your payslip regarding the PRSI payments? They should be detailed as deductions. As employee and employer PRSI are based on a percentage of income if they are calculating it on the basis of "Basic" wage then it would seem they are avoiding paying the employer PRSI on your whole income. I work away a considerable amount of time and I expense subsistence. This is not liable to tax as it has already been taxed (I have spent money that I earned the previous month). In your case it sounds as if you haven't been taxed for this income. Is this legitimate? Particularly if "subsistence" is a substantial part of your income.
 
Re: Pay being divided into "basic pay"and "Subsistence pay"

Hi So-crates

My the subsistance pay accounts for about a third of all my income, regardless if im away or not. It is not taxed.

Im looking at a payslip infront of me. dated 10/08/2007. Tax paid column is 252.82euro to date. Ive been working with them for a year now. another column says "Tax credit TD" which is 2343euro to date. (i lost track of what tax credits are when they changed over, but im not worried about that-its the fiddle im wondering about. and also if im liable to pay tax.)

I did ask them twice when i started with if they were paying my tax and they said to my face they were.

Should i spill the beans or will this put me in the pot?

edit....regarding PRSI.
I took a few days off on the slip im looking at so my pay was 509.72euro. The prsi dedcutions for that week is 10.52euro. P.a.y.e. is 4.76euro. the only other mention of PRSI isemployer PRSI 1372.70 for the year I presume.
the only other deduction is accomdation, 60euro.

Also, my employer owns a few companies. this is standard practice for all his companies and he employees about 100 or so people. it says at the top of my slip under "employer" a name of one of his other companies that does totally different work from what i do.
 
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Sounds at best unusual and at worst dodgy. If you have grounds for suspicion that your tax and PRSI are not being dealy with correctly then you have a duty to make sure that they are. If you do not then there could be repercussions for you - e.g. demand for outstanding income tax and some impact on your PRSI benefits.
 
At a rough calculation (I couldn't make the numbers line up exactly but I am guessing parts of it so that is to be expected) it looks like they are paying PRSI only on the "basic" income. I had a look around the Revenue Commissioners website and the closest thing that I could find was Round Sum [broken link removed] but these should be taxed. Also they are quite specific about the conditions for expenses and from what you said it sounds like you mightn't have met them.
 
I would be worried that tax efficiencies like this are stacked in favour of the employer. It sould like this here also. The major worry I would have if I were you is in terms of applying for credit in the future.

While you may be earning €800 per week your P60 will not reflect this. As a result if you go to apply for a mortgage the lender will not take subsitance payments into account.

The situation sounds irregular at best to me. You should get hold of your P21, that is the cream coloured certificate the tax office would have sent you earlier int he year and it tells you who you work for and how much tax credits etc. are applied to that work. Then check your P60 that the same employer is on it and the same tax credit information is also on it for last year.
 
command said:
You should get hold of your P21, that is the cream coloured certificate the tax office would have sent you earlier int he year
Click to expand...

That is not a P21, it's a notice of determination of tax credits and cut off point. The revenue do not usually send out P21s automatically.
 
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As a first step, I'd ask whoever processes the wages in your company to explain it to you. It is possible that they have some agreement with the Revenue on payment of flat rate expenses due to the particular industry.

If what that person tells you doesn't make much sense or sounds suspicious, you could then call your own tax office.
 
Nige said:
As a first step, I'd ask whoever processes the wages in your company to explain it to you. It is possible that they have some agreement with the Revenue on payment of flat rate expenses due to the particular industry.
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Fair point. But bear in mind that flat rate tax credits for certain industries are very limited and probably don't explain this situation.

[FONT=Arial, Arial, Helvetica]List of Expenses in Employment Allowances available to Employees[/FONT]
 
It's amazing in this day and age that there are some employers out there who blatantly and stupidly fiddle the PAYE system in the manner outlined above. I'm not saying that the above scenario is definitely a fiddle but I have seen 1 or 2 cases along very similar lines in recent years.
 
ClubMan said:
Fair point. But bear in mind that flat rate tax credits for certain industries are very limited and probably don't explain this situation.

[FONT=Arial, Arial, Helvetica]List of Expenses in Employment Allowances available to Employees[/FONT]
Click to expand...

That list is very limited, but it is possible for employers to have one off agreements with Revenue - though most of these agreements were retracted around the time that that BIKs became subject to the PAYE system.
 
Cheers everyone. I know the way these people work and when I asked a few times about it all I got was gibberish from them. Complete bull. Theyre the type of company that dont give breaks for a ten hour day (a hard and dangerous day too) so I think Ill just ring the tax office when I leave (hopefully soon).

Thanks for replies
 
You are entitled to a tax free subsistence when working away from the office for 5 hours or more a day, an additional amount is allowed to be paid tax free if working away more than 10 hours, so you don't have to be away overnight to qualify.
Onus is on the employer to deduct the correct PAYE and PRSI from your gross salary, so if there ever was a Revenue Audit, and your employer was found to have incorrectly deducted the tax and prsi, they are liable, not you. You are only liable if you overclaimed tax credits, etc.

Social Welfare contributions are based on number of credits, ie one credit per week, rather than amount deducted. Therefore, once any amount is being paid, at the A rate each week, your PRSI record should be intact for claiming benefits. you can write to the Dept of Social Welfare for a statement of the number of credits you have earned to date and to see if your are on track for having enough to claim pensions, etc.

Finally, when applying for a mortgage/loan, make sure you provide the financial institution with your payslips, as this will show your subsistence seperatly. this will be counted as income when processing your application. But will not appear on your P60.
 
LMCD said:
Onus is on the employer to deduct the correct PAYE and PRSI from your gross salary, so if there ever was a Revenue Audit, and your employer was found to have incorrectly deducted the tax and prsi, they are liable, not you. You are only liable if you overclaimed tax credits, etc.
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This seems to go against any previous information I've ever read on tax being a personal responsibility. The employer may get in trouble for the mistakes/errors/fraud, but I've always thought that the employee is still liable for the unpaid tax?

Finally, when applying for a mortgage/loan, make sure you provide the financial institution with your payslips, as this will show your subsistence seperatly. this will be counted as income when processing your application. But will not appear on your P60.
Click to expand...
Again, I could be totally in the wrong - hence why I mention it, I thought that any/all financial institutions based all figures on "Basic" pay (so no inclusion of subsistence as it is a sporadic, or at least non guaranteed should working conditions change, payment)? (some exemptions made for commission based staff, but never heard it in relation to site based)
 
Satanta said:
This seems to go against any previous information I've ever read on tax being a personal responsibility. The employer may get in trouble for the mistakes/errors/fraud, but I've always thought that the employee is still liable for the unpaid tax?
Click to expand...
That was always my understanding too.
 
LMCD said:
Onus is on the employer to deduct the correct PAYE and PRSI from your gross salary, so if there ever was a Revenue Audit, and your employer was found to have incorrectly deducted the tax and prsi, they are liable, not you.
Click to expand...

The employer is liable for non-operation of PAYE & PRSI regardless of the employee's ultimate tax position. On the other hand, an employee may have a tax liabillity if they knowingly receive income on which no tax has been paid. In practice this is a very grey area and normally the Revenue find it easier to nail the employer.
 
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