Revenue has advised that about 60,000 taxpayers will receive notification via ROS of their Local Property Tax (LPT) obligations. These are taxpayers who have an active ROS digital certificate. This would include taxpayers who may, for example, prepare their own VAT and/or PAYE/PRSI returns but have an adviser who deals with their income tax returns.
An interesting note from the Institute of Tax re an Appeals Commissoners decision on 12 March 2013.
“Appeal Commissioners Decision of 12/3/2013
As a result of a Tax Audit estimates on a re-grossed basis for PAYE/PRSI were made on a Company which had discharged third party liabilities of a Director. The Appeal Commissioner held that re-grossing was not appropriate and that PAYE/PRSI only applied to the amounts actually paid by the Company. The Revenue Commissioners have expressed dissatisfaction.”
You would nearly feel sorry for the Revenue!
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 firstname.lastname@example.org 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 email@example.com or 01 6766476 to discuss your affairs.
We will advise you on the correct route out of your potential difficulties.
A SARP return must be made by an employer of
employees who availed of relief under the Special
Assignee Relief Programme (SARP) during the year
ended 31 December 2012 on or before 15 February
Under the SARP program 30% of basic salary (to a
maximum of €127,500) is excluded from the charge to
Income Tax for employees who take up full time
employment in Ireland. Qualifying employees must have
been a full time employee with a Company incorporated
and resident in a Treaty State for the 12 months prior to
arriving within the State. The individual must also be
resident in Ireland to qualify for the relief. The relief
does not apply to Universal Social Charge or PRSI. An
Employer will also be able to bear the cost of certain
items for a relevant employee on a tax free basis to
include the cost of a return trip for the employee and
family to an overseas country to which they are
connected plus primary and or post primary school fees
up to €5,000 per annum per child where the school is
approved by the Minister of Education.
The SARP return is available on the Revenue website
• details of the Employer and Employee registration
• employee name
• amount of income, profits or gains in respect of
which no tax was deducted
• costs associated with an annual return trip to the
country of residence or nationality for self and/or
• costs of school fees for children paid to an approved
school in the state
• increase in number of employees as a result of the
operation of the relief or number of employees
retained by the company as a result of the operation
of the relief