Self-employed vs. Employee PRSI clasification

C

Cormac06

Guest
Hi All,

First time poster on here. I have a question regarding the PRSI classification (self-employed or employee) from a previous job.

I was 'employed' Aug 05-March 06 under the guise of a self-employed contractor. I left the company in March 06 unhappy with this status as it would affect my taxation rights. Having done some research on this I found the several documents joint-published by the Dept of Social & Family Affairs, IBEC and the Revenue Dept. These contain criteria which are a guide to whether a person is self-employed or an employee. All of these criteria suggest that I was, as suspected, an employee.

Having left the company I contact the Scope Section of the Dept of Family Affairs which deals with such claims. I have yet to hear anything substantial from them, apart from a 'we have received your letter' letter and that they are investigating my claim.

The period during which I was with the company in question is still a nuisance for me tax-wise.

I was just wondering if anybody else on here has ever faced this problem? If so, what was the outcome? Does anyone have any recommendations for me?

Thanks in advance for your help.
 
Hi Cormac

I don't have anything useful to offer regarding your immediate problem (other than to say it happened to me once too on a part time job, the employer failed to pay PAYE and PRSI. I managed to make him pay the PRSI but ended up having to pay the PAYE myself).

However, the lack of a mechanism in Ireland to pay voluntary PRSI contributions to cover the "PAYE" benefits has been a bugbear of mine for years (I once even rang Pat Kenny after one of the McCreevy budgets about it... unfortunately there are no votes in it so no one is ever going to do anything about it).

Self employed people in Ireland pay PRSI as we all know, but most people don't know that it basically only covers you in regard to old age pension (one or two other twiddly bits but essentially after one year self employed you are chucked out of the social welfare net and it then takes up to two years to get back in again).

In most European countries self employed people (or those like you who discover they have been forced to be self employed) can pay extra voluntary PRSI to cover themselves for the period in question. A number have specific laws to avoid your situation. Not in Ireland.

I think this is wrong and one of the main reasons why there are so few self employed women in Ireland compared to other countries. Unless you can afford (and obtain - harder than you might think) income protection insurance, being self employed in Ireland is a very dangerous place to be so sensible risk-averse women with family responsibilities do not choose it voluntarily.

Of course you can choose to go the limited company/ pay yourself PAYE route but that is complicated, expensive and not really suitable for most startup businesses run by women. I do wonder whether it is actually legal under European law, but given the tax derogation where member states can largely do what they like, I ain't spending my money challenging it.

I would be really interested to know what happens to your situation, whether social welfare will do anything about it at all.

All the best

Imogen
 
As you started in Aug 2005; you were liable to submit an income tax return on or before 31 October 2006 and pay the tax owing for your commencement period 01.08.05 - 31.12.05.

Effectively, when you took home the proceeds of your labours, that was before the deduction of tax, and which you still have.
 
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