I am advised by Revenue that their review of the flat rate expenses regime is ongoing and that it is intended to have the review completed by the end of 2019. The Deputy will be aware from my previous replies on this matter that Revenue confirmed an implementation date of 1 January 2020 in respect of any changes that may be made to the flat rate regime, to ensure they do not impact on any specific group earlier than the rest. Revenue has advised that this position is unchanged.
The flat rate expenses regime is a concessionary practice operated by Revenue where both specific commonality of expenditure exists across an employment category and the statutory requirement for the tax deduction as set out in section 114 of the Taxes Consolidation Act 1997 is satisfied. To qualify for a deduction under that section, an expense must be “wholly, exclusively and necessarily” incurred in the performance of the duties of the employment and paid by the employee. The purpose of the flat rate expenses regime is to simplify tax administration for both taxpayers and Revenue by making it easier for large groups of employees working in the same sector to avail of their entitlement to tax relief in respect of allowable expenses incurred in the performance of their employment duties.
The Deputy will be aware from my previous replies to questions on this matter that I am aware of Revenue’s programme of work in this area. Furthermore, the Deputy will be aware that the administration of the tax code is exclusively a matter for Revenue who are independent in the performance of their functions. Any changes in practice to the flat rate expenses regime are therefore a matter for Revenue, but I understand that any withdrawal of the practice can only take place if Revenue are satisfied that there is no longer a legally valid basis to give the concession, after engagement with the relevant representative body acting on behalf of the various categories of workers.
As I have said on previous occasions, there has been no change to the general rule set out in legislation so all employees retain their statutory right to claim a deduction under section 114 TCA for any valid expenses incurred wholly, exclusively and necessarily in the performance of the duties of their employment, to the extent which the expenses are not reimbursed from any source. So while certain employees may no longer claim a deduction on a universal “flat rate” basis, they may still be able to still claim a deduction on a specific “vouched basis”.