T McGibney
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Tweet from Frank Fitzgibbon (@FrankSunTimes)
SunTimesBiz: @Niall_Brady reveals Revenue to blitz engineers and IT consultants who claim self-employed status but work for a single client
https://twitter.com/FrankSunTimes/status/295292853771436032
Anyone got a scan of the article?
Tweet from Frank Fitzgibbon (@FrankSunTimes)
SunTimesBiz: @Niall_Brady reveals Revenue to blitz engineers and IT consultants who claim self-employed status but work for a single client
https://twitter.com/FrankSunTimes/status/295292853771436032
Anyone got a scan of the article?
According to http://www.askaboutmoney.com/showthread.php?t=41282 Revenue were also supposed to be planning such a crackdown in 2006, so I'm not sure how much one should be worried about this?
Is this not a simple case of Revenue allowing practices to carry on for years;
Then take out the bazooka 'the lookback' where you sit on your hands (I would have used another term but for sensitivities of the moderators who) and ignore the issue for years. Then you threaten them - knowing full well that when you start investigating that lo and behold they are breaching various parts of the tax code and then there can be a big investigation and the Revenue get medi paudits etc.
Its a regular feature now of what the Revenue do,
I thing they reccently 'spotted' transfer pricing abuse after falling over documents a mile high from the UK and other jurisdictiosn and rushed out their practice note.
Marvellous stuff.
My own blog http://mcgibney.ie/ has a full transcript of the Revenue letter and a link to the original document on the Irish Tax Institute website.
So this "crackdown" seems not to be with being a contractor rather than an employee (even though working for a single client in a single location - which I do), but rather with such contractors underpaying their tax (which I don't do, as far as I'm aware)?
I'd suggest that through the normal audit programme, individuals in Revenue started feeding back upwards the information that these types of cases were yielding additional tax more frequently and perhaps in greater quantities than other traders - this is a process that can take time to sink in in an organisation as large as Revenue, particularly since only a small percentage of taxpayers are audited in any given year, and we are talking about a relatively small subset of the total. Sample size and confidence intervals etc... you'd hardly deem it wise they leap before they look, given the scarcity of resources?
So this "crackdown" seems not to be with being a contractor rather than an employee (even though working for a single client in a single location - which I do), but rather with such contractors underpaying their tax (which I don't do, as far as I'm aware)?
Given the mayhem that IR35 has caused HMRC in the UK (a country with much weaker anti-tax avoidance laws than we have in Ireland), I'd be amazed if Revenue here fall into the same trap.As for your question about the nature of the crackdown, I wouldn't be surprised if we end up with our own equivalent of the UK's IR35 here.
contractors have become much more common in the last 10 years as employers try to get around their obligations and move people off the books. Sometimes things reach a tipping point.
Sorry, this sort of perjorative sanctimony drives people (like me) round the bend. The whole trend away from the monolithic employer/ 'job for life' culture towards a more unsettled, entrepreneurial culture is happening globally and is not merely a case of individual employers trying to scam their workers or the system.
If Revenue force Irish business and industry to operate within an internationally outdated straitjacket that all human resource deployment must be via permanent, pensionable employment, with all the inflexibilities that this entails, our economy will suffer dreadfully in the medium to long term.
That's not an issue for Revenue though surely it's one of Govt policy. I'm no socialist, and I never meant that the employers are trying to scam anyone, they're managing the flexibility and cost of their workforce.
The reality is that at the moment our legislation is what it is. Jimmy employed in a job, earning a salary and paying PAYE on it may find that Johnny next door who is contracted into the same job is being paid a daily rate in excess of Jimmy's, to compensate for the lack of employment rights/holidays etc., but Johnny (through good, or bad, tax planning) ends up paying much less tax and has a far higher take home pay. It is hard to square that circle.
But the recession has already squared the circle, with a vengeance.
Johnny has no offer of work for the entire month of January. He sits at home watching daytime TV, and can't even claim the dole, while Jimmy's permanent job means that he happily goes to work every day and collects his pay cheque at the end of the month.
Even when he goes back to work in February or March or whenever the company wants him, Johnny wishes that his "higher take home pay" was something more than a myth.
Meanwhile Jimmy, who has been off sick for a few weeks, and has saved a few bob in commuting costs (while still getting paid), plans his summer holidays...
TMcGibney has suggested that his experience in audits of these cases has been relatively trouble free - you might say it's because of Revenue "ignoring" a problem, but I'd say it's because of either: no problems with expenses etc. existing, or a poorly trained auditor not being able to understand them.
Obviously nobody condones tax evasion.
That said, in an international economy where massive companies like Tommy Hilfilger employ no manufacturing staff whatsover and subcontract every role, our own Revenue Commissioners, and our Government, need both to be crystal clear that they have no ideological prejudice towards the principle of subcontracting.
The evidence to date in both respects sadly suggests the opposite, and our economy will be at a serious competitive disadvantage for as long as this prejudice persists.
I dont think I have ever seen a Revenue Auditor "ignoring" a tax liability issue. Training is not an issue either, as in my experience Audit Inspectors are acutely aware of all relevant issues. That's why, when someone gets an audit notification, they know it's serious business.
Out of curiosity where does this happen?
One example would be the manner in which the entire employment v self-employment issue has been pursued in recent years, particularly since the [broken link removed], and the manner in which medical, pharmacy and dental practices have been scared away from hiring genuinely independent contractor locums.
Meanwhile consumers wonder why the cost of these services is higher here than across the border, and other sectors, including internationally traded sectors, wonder if they will be next to be targeted.
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