Revenue’s role in the area of the determination of employment status is to determine the employment status of an individual for income tax purposes. Meanwhile responsibility for PRSI classification rests with the Department of Social Protection and matters relating to workers’ rights fall within the remit of the Workplace Relations Commission (WRC), which operates under the aegis of the Department of Enterprise Trade and Employment.
I am advised by Revenue that they have always tackled instances of bogus self-employment through risk identification and through other methods where it comes to its attention. With respect to tax matters in this area, Revenue has been very active, over a long number of years, in carrying out compliance interventions in relation to potential misclassification as part of its risk-based approach to ensuring that the proper tax is paid by the individuals concerned. Recent work has involved examining risks across multiple sectors including construction, medical locums, persons delivering food, couriers and brand ambassadors in the motor industry as well as the media sector.
Revenue’s determination to tackle misclassification of employment from an income tax perspective is borne out by the recent Supreme Court judgement in the “Karshan” case. Having lost in the Court of Appeal, Revenue took this case to the Supreme Court and, in a judgement delivered in October 2023, ultimately won. In this case, the Supreme Court delivered an important judgement on the key factors to be considered when classifying an individual’s employment status for income tax purposes. The judgement brings welcome clarity and provides a decision-making framework to assist businesses to correctly classify workers between those who are employed or self-employed for income tax purposes.
Revenue has publicly encouraged all businesses which currently engage contractors, sub-contractors, or other workers on a self-employment basis (i.e. where that worker is not treated as an employee of the business for income tax purposes), to review the nature of any such arrangement(s) in light of the Supreme Court “Karshan” judgment and to consider any implications it may have for the business in terms of applying the appropriate income tax treatment to such individuals.
Revenue will shortly issue detailed guidance to explain the implications of the “Karshan” judgement for tax purposes and is also working closely with in the Department of Social Protection and the Workplace Relations Commission to update the joint Code of Practice on Determining Employment Status.
In respect of RTÉ, I am advised that Revenue is precluded under Section 851A of the Taxes Consolidation Act 1997 from commenting on the tax affairs of an individual, business or entity.
However, I can point to information disclosed by the former Director General of RTÉ, Ms. Dee Forbes, at a Public Accounts Committee hearing on 20 January 2022, wherein Ms. Forbes told the Committee that RTÉ had engaged with Revenue in a review of contractors (i.e. individuals treated by RTÉ as self-employed). Following engagement with Revenue, RTÉ accepted that the individuals concerned were actually employees and made a payment in the amount of €1,223,252 in respect of liabilities identified by Revenue. Ms. Forbes also alluded, during this hearing, to the on-going investigation by the SCOPE section of the Department of Social Protection involving the investigation of the contractual and employment arrangements of approximately 500 individuals within RTÉ. This case was cited by Deputy Catherine Murphy at the recent Public Accounts Committee hearing on 25 January 2024 as an example that demonstrated that there are consequences to misclassification of employment.
The proper classification of employment status for tax purposes across all sectors remains a key focus for Revenue and will continue to do so in the coming years.
Having regard to the above, I think that it can be accepted that the Revenue Commissioners have applied, and will continue to apply, the taxation code, as respects employment and self-employment, to RTÉ in the same way as it applies those rules to other businesses.
For the above reasons, I do not believe that there is a need for an independent investigation into the role of the Revenue Commissioners role in handling the issue of bogus self-employment.
