The Departments of Finance and Social Protection issued a Consultation paper on what they term Intermediary-type Structures ie Contractors with a call for submissions closing on 31 March 2016.
We have reviewed the Consultation Paper and are disappointed it does not engage with the reality of the world of professional contracting and is more narrowly focussed on perceived losses of revenue to the Exchequer.
References to zero hours contracts appear as emotive headline grabbing comments but have little or no reality to Intermediary-type contracts.
Here is our slidedeck from the Contractors & Revenue Audits Seminar. There are a lot of worried contractors out there!
Contact Anthony Casey if you wish to discuss your own personal position
The Revenue Commissioners launched their Contractors Project in the Revenue South West region (ie Munster) in Spring 2013 following what they perceived as wholesale tax evasion by professional IT, engineering and pharmaceutical contractors in the region.
Noone Casey are hosting a seminar for contractors on 19th September 2013 at 6.30pm in the Alexander Hotel, Fenian St, Dublin 2 on Contractors & Revenue Audits.
The Revenue Commissioners are targeting contractors for Revenue audit following the success of their initial Contractor project in the Munster region. The first round of Audit notification letters has been issued with subsequent rounds being issued in the coming months.
The Revenue Commissioners continue to roll out their Contractor Project. This ‘project’ has expanded from a Munster initiative to an National review of COntractors accounts and tax returns. Revenue have successfully challenged the tax returns of many contractors since the project began and have recovered significant amounts of underpaid taxes.
Noone Casey have been to the forefront of negotiations & discussions with Revenue as to the scope & impact of their audits.
We are hosting a seminar in early September to bring the Contractor community up to speed on the latest Revenue audit issues.
Register your interest in attending the Seminar with Ruth at 6766 476
Further details of the seminar will issue over the next 2 weeks.
As you may be aware the Revenue Commissioners have launched a review of tax compliance by contractors in the Munster region. Revenue are focussing on both the One Contractor One Company and Composite/Umbrella company structures.
This project has been so successful for Revenue that they are rolling the review out nationally with immediate effect.
We recently met the Revenue Commissioners review team in Cork to assess their progress in this project.
The key issues we learnt are:
• Revenue believe a large number of contractors are over claiming home office and travel costs.
• Revenue have predefined parameters they are using to identify contractors to be audited.
• Once identified for audit, Revenue have specified levels of ‘unvouched expenses’ they are prepared to accept without penalty for the contractors.
• If contractors have levels of expenses which Revenue believe are unjustified, Revenue are seeking to charge interest of 12% pa and penalties ranging from 10% (unprompted disclosure) to 100% (liabilities discovered in audit) of the tax liabilities.
Following our meeting with the Revenue Inspectors, we are familiar with the audit parameters and unvouched expenses thresholds Revenue are utilising in this review.
Noone Casey are acting for numerous contractors in their negotiations with Revenue using our industry knowledge and the specific knowledge we have obtained in our meetings with Revenue.
If you are or have been contracting in the past 4 years and have any concerns over your tax compliance, feel free to contact me acasey@noonecasey.ie or 01 6766476 for a free, confidential review of your tax status.
So, the Revenue Commissioners have announced a review of ”the tax affairs of companies and their directors, where the main source of income is a contract or contracts “for service” with a larger company or companies (directly or through intermediaries), the company in question does not appear to have a substantial business separate from these contracts, and in most cases the director(s) are the only employees of the company and pay tax through PAYE”.
Revenue have “established that in many cases there are deficiencies in accounting for input costs and expenses, with the result that there has been a significant understatement of tax liability to the benefit of the director(s)”.
In other words, Revenue believe contractors are over claiming expenses relative to their work profile.
It is our understanding that Revenue are also examining the Umbrella/Managed company status of many contractors. There is real concern that the PRSI class applicable to many contractors operating through Managed companies is incorrect and substantial liabilities may exist.
This review is being carried out in the Revenue South West region incorporating Cork, Limerick, Kerry & Clare.
At Noone Casey we look after the tax affairs of many hundreds of contractors using our real time online accounting tool I-Finance. We ensure only appropriate expenses are claimed thus avoiding the issue of underpayment of taxes.
I-Finance is structured so that you
• Operate as a proprietary director of your own limited company. Why is that important?
o You have greater control over your own money – no 3rd parties controlling the bank account.
o You have no exposure from Revenue should they move against the umbrella/composite company structures.
o You can maximise simple tax saving techniques which are not available in a Sole Trader/Umbrella Company structure.
• We process all the financial administrative tasks relating to your contract – which gives you more time to focus on the things you want to do.
• We prepare and issue all your client-approved invoices.
• You dictate how much you want to be paid, we process the payroll for you and make sure all your PAYE/PRSI is correctly deducted and returned on your behalf.
• We monitor your company bank account and assist you execute a ‘same day payment’ model via online banking into your personal bank account.
• We offer you up-to-date advice on all allowable business related expenses.
• We prepare and file all your annual returns (both personal and company related).
• We advise you on how to financially plan for the future and assist you in selecting the best savings and investment options for you personally.
If you are operating as a contractor in the Munster region and have concerns over the expenses you have claimed and /or your Managed company structure, contact me today acasey@noonecasey.ie or 01 6766476 to discuss your affairs.
We will advise you on the correct route out of your potential difficulties.
While Agency workers do not have the same employment rights as regular workers, under the EU Directive on Temporary Agency Work, Temporary Agency Workers have the right to equal treatment regarding basic employment conditions. The EU Directive on Temporary Agency Work came into effect on the 5 December 2011. The Directive is transposed into Irish Law by the Protection of Employees (Temporary Agency Work) Act 2012. It provides that all Temporary Agency Workers must have equal treatment with regular workers in respect of hours of work and rest periods; pay and work done by pregnant woman, children and young people. The Act came into effect on the 16 May 2012. Temporary Agency Workers covered by the Act have the right to the same employment conditions as if they had been directly employed by the hirer under a Contract of Employment. The right to equal pay has retrospective effect to the 5 December 2011. The Act applies to Agency Workers employed by an Employment Agency who are assigned to work for a temporary period to another Organisation. The Act may exclude employees under a Managed Service Contract which is a Contract for Services, for example, cleaning, where the Contractor is responsible for managing and delivering the service. The Act does not apply to work done in the course of a Work Placement Scheme or any publicly funded Vocational Training or a Re-training Scheme. Pay is defined as including only basic pay, shift premium, piece rates, over-time premium, unsocial hours premium and Sunday premium. Pay does not include Occupational Pension Schemes, Financial Participation Schemes, Sick Pay Schemes, Benefits-in-Kind or Bonus Payments.
A report by PricewaterhouseCoopers has shown that there may be more jobs made available for IT contractors, as a direct result of financial services companies being severely affected by cybercrime.
Many IT, Engineering and other Professional Contractors who use composite company structures may be facing large PRSI liabilities as Revenue and DSFA challenge the PRSI status of such contractors.
Contractors who hold only15% of the shares in a composite company may not be entitled to Class S PRSI status; employers PRSI of 10.75% will fall due in those circumstances. Class S status is only applicable to those shareholder/employees who control their companies. A 15% shareholding with up to 6 other contractors who may not know each other does not suggest control.
Noone Casey has developed I-Finance an online realtime accounting solution for professional contractors to address this concern & to legitimately maximise the tax advantages of contracting.
Have a look at our short video here to get a better understanding of the issues involved. If you feel this affects you, contact Noone Casey for an independent assessment of your position.
I-Finance uses the Limited Company type structure thus avoiding the employers PRSI issue. The table below gives you an idea of how each of the common contracting structures compare.
Company Structure Type
Limited Company
Umbrella Company
Composite Company
Ownership
You own 100% of your own company
You have no ownership
You own 15% of an externally controlled company
Directorship
You and your appointee are directors of your own company
You have no directorship
You and up to 6 others are directors of the company. You may not know the other directors.
Employment
You are the employee of your own company
You are an employee of the umbrella company
You are an employee of the composite company
Expenses
You are entitled to tax deductible expenses through your own company
You are not entitled to any expenses
You may be entitled to a lesser amount of expenses
Tax planning
You can use your own company to assist in appropriate tax planning opportunities
You cannot use the umbrella company to assist in your tax planning
You cannot use the composite company to assist in your tax planning
Tax appropriateness
We ensure you manage your affairs in full compliance of all taxation and PRSI legislation
You are treated as an employee and have taxes deducted appropriately
The Revenue Commissioners are examining the appropriateness of the PRSI structures of composite companies
Dentists, PAYE workers and the cash-for-gold industry are coming under intense scrutiny from the Revenue, which is determined to crack down on the shadow economy, The Sunday Times reports.
Post Budget Seminar Wednesday 8th December 6.30pm Chamber of Commerce, Clare St, Dublin
We are co-hosting a post budget seminar with CPL on Wednesday evening to identify the financial and taxation changes impacting on IT professionals going into 2011. All welcome.
I-Finance is Ireland’s leading online real time intelligent financial solution for professional contractors. I-Finance is provided by Noone Casey. I-Finance is a 4 stranded service. It combines:
Administration and bookkeeping
Online financial dashboard
Taxation and personal financial advice
Analysis and savings on services such as Insurance, Pensions, Banking and Telecoms