mandelbrot
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Thanks for that, only spoke to him last Monday and he said that he spoke to Revenue when I started up and the subsistence wasn't an issue... its depressing to think I will get penalized for incorrect advice.
well who actually pays the penalty is something that's between you and your accountant...
Thanks for that, only spoke to him last Monday and he said that he spoke to Revenue when I started up and the subsistence wasn't an issue... its depressing to think I will get penalized for incorrect advice.
Thanks for that, only spoke to him last Monday and he said that he spoke to Revenue when I started up and the subsistence wasn't an issue....
Thanks for that, only spoke to him last Monday and he said that he spoke to Revenue when I started up and the subsistence wasn't an issue... its depressing to think I will get penalized for incorrect advice.
On the other hand, even a tiny bit of research on your part, even reading the personal finance pages of the newspapers, would have given you some inkling of what you can and cannot claim as a deduction against tax. And when you're in business, you have an obligation to look out for yourself because if you're not doing it, nobody else will.
A tad strong there I think Tommy - the majority of people have no interest in getting to grips with that sort of stuff, and leave it to a fee-charging professional.
IMHO if the OP has taken care at day 1 to get a recommendation for their accountant, and checked that they are a member of a professional body, then they shouldn't have to be second guessing them on their advice. Otherwise what are they paying them for.
On the other hand, even a tiny bit of research on your part, even reading the personal finance pages of the newspapers, would have given you some inkling of what you can and cannot claim as a deduction against tax. And when you're in business, you have an obligation to look out for yourself because if you're not doing it, nobody else will.
I take issue with this as most normal people hire accountants to do their taxes and ensure they are revenue compliant. .
Agreed, get off the high horse there Tommy, that is what they are paid to do, if you get an electrician to wire your house do you also learn who to wire a house to understand if they are doing it right?
I paid them to do my accounts and make me compliant, hitting back at me on this is a off the mark.
Hi Bronte,
The cases in question are audits of Ltd Companies set up by a contractor, effectively a one-man band, rather than audits of self-employed individuals. So Bronte Ltd as opposed to Bronte.
Bronte Ltd contracts with the "employer" (Multinational PLC) to provide the services of Bronte.
Revenue aren't (yet at least) trying to look-through Bronte Ltd to impose an employment relationship between the PLC and Bronte performing the work. The employment relationship exists between the Bronte Ltd, and Bronte.
The thrust of the project has been to identify cases where Bronte Ltd is invoicing a customer, and only paying a relatively small salary to Bronte, but also paying out substantial amounts in tax-free expenses to this employee, in some cases the expenses exceeding or being a multiple of the salary.
So Bronte might go from being a PAYE employee of the multinational, earning €65k, to being an employee of Bronte Ltd, which invoices €80k p.a. to the same company to provide Bronte's services. Bronte is paid a salary of €33k, maximising her standard rate tax band, and also pays Bronte Junior, a teenage child, 9k p.a. for miscellaneous office type work. Then Bronte receives €30k in travel and subsistence payments from Bronte Ltd, tax-free, for travelling between the company base (at home) and the client's premises.
Bronte is delighted, because she is now netting way more take home pay.
The final customer is delighted, because they have gone from having an employee costing them €65k + 10.75% employers' PRSI + 8%-10% annual leave + various employers' obligations (redundancy entitlements etc...), to having a more flexible arrangement with a lower overall cost to them.
The exchequer, via Revenue, is sad, because it is losing substantial revenues from the arrangement - if there is legitimate avoidance involved they might decide to address it via legislation, but if the loss is via evasion in the form of non-allowable tax-free payments, that's a different matter. Hence the Revenue focus on the area, and the results would appear to indicate a good deal of the latter was/is present.
+1 on all counts there.
It's a repeat of the banks' DIRT evasion scam, where the architects of the racket (the banks) walked away scot-free while the suckers whom the banks importuned into the racket got nailed to the wall.
Where is the benefit to someone coming off jobseekers to get a 6-month contract with a multi, for which they have to set up a Limited Company, do the work and at the end of the 6 months get nothing, not even Jobseekers Benefit anymore because their last PRSI Class will now be Class S.
And is the rate of pay not higher to offset, to some extent, the loss of these benefits? Just for balance I'd suggest there are plenty of people in skilled jobs / professions who are very happy with the contracting model of working, just as there are plenty who'd prefer to be on payroll.In addition to this they don't get holiday pay, sick pay, redundancy, jobseekers benefit etc, all of which accompany a standard employment.
...maintaining CRO returns up-to-date lest they miss a date by one day and have to suffer an audit, another joke of legislation which merely serves to increase red tape for small companies.
Your posts around this area are very confusing Tommy - on the one hand you've posted previously in favour of the contracting mode of having labour supplied, but now you're supporting DB74's comments about the State coming in and tearing up company law and contract law to look through the separate legal identity of contracting arrangements through Ltd co's, and impose PAYE status.
Certainly the structures that have arisen appear to have been driven by the desire of the MNC's not to have to employ labour via employees, with all the responsibilities that entails. They pay a premium to acquire labour via different structures because it suits them that way. But where's the racket that they're running?
The "racket" such as it is, is that somewhere along the way people advising on the structures started telling the contractor that they were OK to claim the cost of getting to and from work as a tax-free reimbursable expense - I don't see how that one can be hung on the MNC's unless there's evidence that they were involved in selling that particular pup.
So on the one hand you seem to be saying it's the MNC's fault because the whole structure is a dance to their tune, and on the other hand it's the contractors' fault for not checking their entitlement beyond paying a professional fee to someone to do it for them - that's a bit of a cop out. The reality is the majority of the fault has to lie with the person or people, who were being paid to think about and advise on it, saying: "it's OK to claim X, Y or Z as a business expense under this structure", because ultimately that's what is causing the grief.
And sure, there are going to be shades of grey in some cases (as to normal place of work), but there are LOTS where, as Bronte has pointed out, a person seamlessly continues on doing the exact same job and all that changes is the legal / contractual structure around it at the behest of the employer - in those cases it is quite clear cut - why would you be entitled to expense the cost of your commute next week when you couldn't last week. I've heard of cases where people based their companies out of parents' houses because they lived too close to their job to be able to claim enough tax-free expenses... is that the MNC's fault?!
Sure, we could have the State blunder in and insist on PAYE employments, but I think we're all intelligent enough to realise what the consequence of that would be in a lot of cases / industries. Much better that the people working in these structures just comply with their obligations. Or else allow everyone to claim deductible expenses for the cost of their commuting, and do away with tax-free reimbursements - I commute 150 miles round trip and can't claim a dime for it, so I'd be all in favour!!
Ten months from the end of the financial year is hardly an unreasonable window to get your house in order, is it?
I think you misunderstand the concept of Companies Office ARDs. These are set, not according to the year-end date, but on the basis of the company's date of incorporation. In the case we saw here yesterday, an ARD in March could leave the company owner in question with as little as 12-15 weeks to file returns post-year end. There are measures one can take to avoid this sort of situation, but only if the person knows their way around the intricacies of CRO rules.
Again, this is something that, in general, people pay the professional to manage for them, and if they don't then it's their responsibility to figure out how to extend etc. as necessary to ensure a decent window for filing - when I was responsible for managing the company secretarial work for upwards of 100 small/medium companies I always did my best to ensure there was the maximum window of time, and I'd suggest this is the norm if you look at the majority of generally compliant companies' filings, they follow the pattern of year-end, 9-month gap, CT return followed by CRO return...
I hate it when we fightA few digs at me within those paragraphs, let me clarify:
I have never taken issue with the Revenue approach to the sort of defacto employment contracting arrangement where the contractor drives in to a premises at 9 every morning and goes home at 5 in the evening.
I don't necessarily agree that such an approach exists, every case should be taken on it's own facts. But from a qualified auditor's perspective, if you've looked at 3 cases in a particular industry over the past few months where the circumstances were similar and lots of expenses were clearly not allowable, wouldn't you have a valid basis for believing there's a trend, and would you not rightly approach later cases with a level of skepticism proportionate to the experience of the earlier cases..?However I have taken exception to Revenue attempts to convince bona fide contractors, in business on their own account, that there is something iffy about their general modus operandi, and specifically about their entitlements to claim motor & travel expenses and other overheads as deductions against turnover for tax purposes.
I also take exception to Revenue's "one size fits all" policy in dealing with such cases, despite the obvious reality that many cases differ from one another.
I don't know a thing about the DIRT fiasco so I can't speak to its suitability or not as a comparator, but in this case the MNC's are simply paying for labour, am I missing something as regards their involvement in the overclaiming of expenses by the people contracting to provide that labour?My point in relation to the multinationals is to echo @DB74s comments that Revenue seem to be all the time getting quite aggressive with the small guys while there never seems to be a focus on the dominant players within the industry. The DIRT fiasco and coverup is a very ugly precedent and it is shameful that Revenue are now repeating it.
There's only one thread Tommy!And I take particular exception to your "and on the other hand it's the contractors' fault for not checking their entitlement beyond paying a professional fee to someone to do it for them - that's a bit of a cop out." comment which utterly distorts what I said on the other thread.
Do you really disagree with my view that a business person should have a broad general awareness of the issues that affect them?
There's only one thread Tommy!.
If one of your clients came to and said, "I want to buy X, can I claim it against my tax bill?", and you say yes and are completely wrong, then that has to be your fault. And if they don't even ask you, but you actively tell them, as is the case in a lot of the very straightforward contractor cases, that they should be claiming (say) mileage & subsistence that they're not entitled to, then why should they have any reason to doubt or second guess you.
And if they don't even ask you, but you actively tell them, as is the case in a lot of the very straightforward contractor cases, that they should be claiming (say) mileage & subsistence that they're not entitled to, then why should they have any reason to doubt or second guess you.
Some of the best business people I know subscribe to the belief that a little knowledge is a dangerous thing, and accept that since they're never going to be fully competent in tax-related matters, they should pay someone else to do it.
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