Revenue have advised me that it welcomes the important Supreme Court judgement recently delivered on employed versus self-employed individuals. The judgement brings welcome clarity to what is a complex area, particularly on the key factors to be considered when classifying an individual’s employment status for income tax purposes. It remains the case, as outlined in the reply to the Deputy’s previous question, that questions of employment versus self-employment status impact the work of three different Government bodies. The Department of Social Protection (DSP) has responsibility for the PRSI system and determines employment status for social insurance purposes; the Workplace Relations Commission (WRC) determines employment status when adjudicating on employment rights matters; and Revenue may determine a worker’s employment status in the context of his/her treatment for income tax purposes and in allocating the income earned to the appropriate Schedule under the Taxes Consolidation Act 1997.
I am further advised by Revenue that home tutors engaged under the Home Tuition Grant Scheme are considered, for tax purposes, to be employed under a contract of service. This means that these tutors are considered employees of the parent or guardian concerned and are subject to PAYE deductions on any emoluments (pay) received from the scheme. For ease of administration, the Department of Education operates PAYE on payments of emoluments made to a home tutor where the parent or guardian concerned employ the tutor directly. This administrative practice circumvents each individual parent or guardian from the requirement to register as an employer and administer the PAYE system. The PAYE system is a tax and contributions collection mechanism, and the taxation of income under Schedule E does not confer employment rights or employment status for PRSI purposes. The administration arrangement has no bearing on the taxation status of an individual rather, it simply facilitates operation of PAYE by the Department of Education, rather than the employer (the parent or guardian).
Revenue have again confirmed to me that instances where determinations of employment status between Revenue and the DSP (and/or the WRC) differ are very rare and there is open dialogue between the relevant bodies to discuss the respective views. While in most situations involving determinations of employment status there is commonality of approach across the three bodies, the decision of one organisation is not binding on the other and, as a consequence, a determination of employment status in one context may not be the same as in another context. The Supreme Court judgement recognises that the separate legislative regimes of the agencies may need to be considered. I am advised that formal engagement will commence shortly between the three organisations to consider the implications of the judgement, in particular in relation to considering any required changes to the joint Code of Practice on Determining Employment Status.
