Léim ar aghaidh chuig an bpríomhábhar
Gnáthamharc

Tax Code

Dáil Éireann Debate, Thursday - 10 May 2012

Thursday, 10 May 2012

Ceisteanna (55)

Thomas P. Broughan

Ceist:

54 Deputy Thomas P. Broughan asked the Minister for Finance his views on the key conditions required by the Revenue Commissioners for workers who choose or are required to contract their labour to employers rather than work as direct employees; his views on the key rules whereby some long-standing workers in a key semi-state body (details supplied) are classified as contractors rather than employees and the way in which his Department evaluates the total cost of tax avoidance measures to the national Exchequer each year across the economy; if he has any further provision in this regard in view of the continuing deficit on the General Government primary balance; and if he will make a statement on the matter. [23522/12]

Amharc ar fhreagra

Freagraí scríofa

I am informed by the Revenue Commissioners that for reasons of taxpayer confidentiality they cannot discuss the tax affairs of specific bodies or individuals. However, on a wider note, whether an individual is engaged under either a contract of service (i.e. an employee) or a contract for service (i.e. self-employed) is not a choice but rather a question of fact and of general law. Regardless of how the parties to an engagement may describe themselves, all the possible factors (including written, oral and implied details) that bear on the relationship between the parties must be examined, given their proper weight and a decision made on their overall effect.

To try to provide some clarity as to whether an individual is employed or self-employed, the Employment Status Group (set up under the Programme for Prosperity and Fairness) published a Code of Practice for determining Employment or Self-employment status of Individuals. This Code of Practice was re-launched by the Social Partners in December 2007.

I am further informed by the Revenue Commissioners that cases come to their attention wherein individuals may have been incorrectly classified (either by the individuals or by the person engaging those individuals) as self-employed (sometimes referred to as a contractor) in relation to a particular engagement. However, if, on an examination of the facts and circumstances and having regard for the Code of Practice referred to above, the Revenue Commissioners find that individuals are, in fact, employees rather than self-employed contractors, they will notify the person engaging those individuals to register for, and operate, the PAYE / Universal Social Charge systems on payments made to those individuals and to also operate the relevant PRSI system. For example, in 2011 in the context of work undertaken by Joint Investigation Units, 357 individuals were reclassified as employees. This is quite apart from reclassifications which arise in the course of Revenue’s audit and Compliance programme.

As to my views on the rules for determining employed or self-employed status, I accept the guidelines outlined in the Code of Practice referred to above which was compiled with the assistance of Department of Enterprise, Trade and Innovation, the National Employment Rights Authority, the Department of Social Protection, the Revenue Commissioners, the Small Firms Association, the Construction Industry Federation Irish Congress of Trade Unions, Irish Business and Employers Confederation and my Department.

Of course, at the end of the day, the Code of Practice is for guidance only and the status (employed or self-employed) of an individual in relation to an engagement may, in some instances, have to be determined by the Courts.

I am informed by the Revenue Commissioners that it is not possible to accurately estimate the cost to the Irish economy of tax evasion or tax avoidance. The measurement of the scale of tax evasion or tax avoidance is inherently difficult given the nature of the problem. There is no one internationally recognised and agreed measure.

Revenue continues to identify and challenge aggressive tax avoidance schemes that seek to infer unintended use of legislation and which threaten tax yields and the perceived fairness of the tax system. In general, tax avoidance is tackled by reviewing and amending legislation where there are perceived loopholes and by challenging individual cases. The introduction of a Mandatory Disclosure Regime in January 2011, which placed obligations on Promoters of certain tax-avoidance transactions to disclose them to Revenue, is designed to act as an "early warning system" to help tackle such schemes.

Barr
Roinn