Property Tax Arrears – Last Chance on 31 March

March 24, 2014

If you have any outstanding Local Property Tax or Household Charge arrears, you have a final opportunity to settle these by next Monday, 31 March in order to avoid interest or penalties.

From Tuesday 1 April, Revenue will launch a fresh nationwide compliance programme, aiming to collect as much of the outstanding property tax amounts as they can. LPT Local Property Tax Arrears Deadline

This will include:

  • The imposition of interest charges on outstanding arrears.
  • Mandatory deduction of unpaid Household Charge bills from wages and occupational pensions
  • Withholding of tax clearance certificates from defaulters.
  • Debt collection, Sheriff & other enforcement, in selected cases.

For more, including detailed instructions on how to pay LPT & Household Charge arrears, see the Revenue LPT page and last week’s Revenue Press Release.


It’s D-Day for Local Property Tax Payment!

March 21, 2014

Today, 21 March, is the payment date for your Local Property Tax (LPT) payment, if you previously opted to pay your 2014 LPT  by Single Debit Authority.

Local Property Tax LPT

If you are in this category, the LPT liability amount will be debited from your account today, or after the weekend.

For more on LPT, see the Revenue website.


Revenue Clarify Queries on Contractors Project

March 14, 2014

The ongoing Revenue Contractors Project rumbles on with today’s publication of a Revenue letter to the Irish Tax Institute which seeks to clarify a number of queries surrounding contractors who operate as limited companies, and what expense deductions they can claim against taxable income.

The Irish Tax Institute previously asked Revenue for guidelines on how individual contractors should be treated:

  • as genuine businesses, with full expense deduction entitlements; or
  • as de-facto employees with much more limited expense deductions,

in view of Revenue’s previous guidance on this topic last November.

Revenue Contractors Tax ProjectRevenue have now listed the following indicators in order to address this question:

  • does the contractor company  has an establishment (i.e. premises, employees, business) which will remain in place beyond the conclusion of an individual contract, ie if the current contract ceases, will the company retain a market to service?
  • was the contract obtained via a service procurement process, or by recruitment of an individual with specified skills/characteristics?
  • is the contract is defined by the completion of a project or task, or defined by period (including open-ended or renewable contracts).

In addition the arrangements behind every contract will determine Revenue’s position, including “working arrangements, reporting/supervision, length spent with one client, actual employment experience, and other arrangements”.

Based on the above, Revenue conclude that “a majority of professionals working in the Irish market are outside the scope” of the current restriction on expense deductions, “…because they are in business, offering a professional service on the open market.”

They go on to say that some professionals may have a combination of contracts, some of whom are open market business contracts, and others de-facto employments. They state that expenses connected with business contracts are allowable, but those relating to de-facto employments are not allowable.

The letter repeats Revenue’s contention that a company director or employee “without a fixed base” cannot claim an expense deduction for travelling to a job.

It also addresses the issue of “country money”, a concessional tax-free expenses arrangement for construction and electrical workers. It stresses that “country money” relates only to temporary assignments away from their employers’ base, and points out that Revenue are happy that contractor worker/directors are,  in similar situations, eligible for the more generous civil-service expenses rates.

Commentary

Today’s Revenue letter seeks to clarify much of the uncertainty surrounding their contractors project. However it is only partly successful in doing so.

It is welcome that they have now confirmed that “a majority of professionals working in the Irish market are outside the scope” of the project. However the position of those remaining within its scope remains as uncertain as ever.

In particular the fresh criteria have listed today remain quite vague and are capable of being interpreted in different ways.

For example the requirement that contractor company should have a premises, employees and/or business, that will remain after the current contract ends, is in many ways a  statement of the obvious – that almost all limited companies that fulfill a contract to completion have the capability to win another contract – either with the same customer or with another.

The issue of how a contractor company has sourced their contracts – eg via a service procurement project or by recruitment of an individual- is rather nebulous.

It is often said that people don’t do business with companies, but they do business with the people behind those companies, be it the owner of the company or more commonly its frontline staff.

Where for example, an owner-operated contractor company wins a contract, it is almost always because of the personal credentials of the company promoter than because of the corporate image or record of the company itself.

The same uncertainly persists with Revenue’s differentiation between project- or task-centred contracts or period-based open-ended or renewable contracts.

The fact that a contract has a fixed duration often has limited or no relevance to the nature of the services provided. An ongoing contract can cover work on many different projects and tasks, or can refer solely to a single project or task.

In addition, long-term or ongoing project contracts will often specify a fixed duration so that the contractor and customer can jointly negotiate revised terms based on changing costs and specifications at various intervals.

This all means that the ongoing uncertainty regarding Revenue contractors project is set to continue for the foreseeable future – with more and more cases ultimately being decided at the Appeal Commissioners, or in the Courts.

If you have concerns about your own position, you should review the implications  of the current Revenue contractors project with your accountant or tax advisor, and if necessary, seek independent professional advice, as soon as possible.

The Irish Tax Institute have published the Revenue letter in pdf format here. Otherwise you may access it on this blog, here.

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Revenue’s Latest Letter on Contractors Project

March 14, 2014

The following is a copy of Revenue’s letter of 10 March last to the Irish Tax Institute in relation to queries they raised on their ongoing Contractors Project.

Revenue

“ITI Queries on Revenue letter of 27 November 2013

Query 1. We would like to have some sense of how Revenue will determine whether a taxpayer falls within the remit of Tax Briefing No.3 i.e. how Revenue will determine whether a taxpayer is supplying the services of an individual under the end-user’s control, rather than otherwise supplying services. Is this based on a review of the contract terms, working arrangements etc?

Revenue Response: Unfortunately, as the question implies, there is no short answer that will cover every case. There are several indicators however, which enable classification of most cases. •

  • The first question is whether the company in question has an establishment (i.e. premises, employees, business) beyond the conclusion of contracts for an individual contractor. This would establish that the company is in the business of providing a service to the market generally.
  • The next issue is how the contract was obtained – was it through a procurement process aimed at securing a defined service, or was it recruitment of an individual with specified skills/characteristics? •
  • The terms of the contract will show whether it is a contract defined by completion of a project or task, or defined by period, or openended/ renewable. •
  • Where the position is unclear, the actual arrangements will determine our view, and working arrangements, reporting/supervision, length spent with one client, actual employment experience, and other arrangements would be considered.

Consideration of the foregoing will lead to the conclusion that a majority of professionals working in the Irish market are outside the scope of tax briefing 3 and 4 of 2013 in relation to their travel and subsistence expenses, because they are in business, offering a professional service on the open market. It is also the case that a company may have a combination of contracts, some obtained through normal service procurement, and others that constitute provision of an individual’s services. In such situations, expenses arising in the business are treated as such, while travel connected with the individual’s contract must be treated as set out in Tax Briefings 3 & 4.

Query 2. On a related point, in “case 2” on page 7 of your letter you note that the contractor is clearly not within the category to which the Briefing applies – is this because of the number of contracts he has, or because of other factors?  

Revenue Response: The number of contracts certainly indicates that the contractor is operating as a business, seeking and accepting contracts for project management service wherever the opportunity arises. The product consultancy service he provides is a professional service, similar to the giving of legal or accountancy advice. Finally, he is working to complete delivery of a service, not under the direction of the client. Overall, this is a business, and expenses incurred in conducting the business are allowable for tax purposes.

Query 3. There is a reference on page 5 of the letter to “…the well accepted view” that if an employee has no fixed base then he/she cannot claim a deduction for travelling expenses under Section 114. Our members are unclear as to where this view comes from.

Revenue Response: There is a slight misquotation in the query. My letter refers to the expenses of travelling to a job. If an employee has a fixed base, and is required to attend for work at some other location, then expenses may be reimbursed, calculated on distance from home or fixed base, whichever is less. If however there is no fixed base the expense of getting to work is the cost of commuting, for which no deduction is allowed.

Query 4. In relation to “country money”, the letter notes that country money applies to employees and not to contractors. Members have queried why country money is not available when Revenue are treating those who fall within the Tax Briefing as defacto employees i.e. “working under the general direction and control of the enduser”.

Revenue Response: We have pointed out several times that we are not, in this project, addressing the issue of whether some contractors should be regarded as employees. The application of “country money” is a concession made to deal with specific features of employment in the construction and electrical industries. In practical effect, it deviates very little from the regime described in Tax Briefings 3 & 4, since tax-free expenses are not paid where travel is to or from the employer’s headquarters or the site for which the employee was recruited. Expenses are tax-free only where the  employee is required to attend for work at other sites, all more than 32km from employer’s headquarters. The rate of payment of country money is then set to eliminate the need for detailed computation. In the case of a contractor required to attend temporarily at a site other than the contract site, expenses are similarly payable tax-free, and are not confined to the country money rates.

Tony Buckley 10 March 2014″


Don’t Let Your ROS Digital Certificate Lapse

March 4, 2014

A new Revenue web security measure means that all pre-2014 Digital Certificates for the ROS system will expire on 27 March next.

In the meantime, ROS users will be prompted to renew their Digital Certificates and update their passwords.

Revenue OnLine ROS

This is a very simple process which takes less than 2 minutes to complete.

If you are an infrequent ROS user, you should ensure that you log on to the system before 27 March, and update your Certificate.

Otherwise it will expire and you will then have to apply for a fresh Cert before you can again access ROS.

The Revenue eBrief on this issue is here.


2013 Income Tax Returns Now Online

March 3, 2014

The 2013 Form 11 & Form 11E Income Tax returns are now available on the Revenue website.

The deadline for filing these returns with Revenue is 31 October next.

The Form 11E return is a shorter and simpler version of the standard Form 11 Income Tax return.

2013 Form 11 Tax Return now online

The Revenue Helpsheets for Form 11 & for Form 11E are also online.

If filing a paper tax return, you should first ensure that you are not subject to Mandatory eFiling for Income Tax returns.

Of course, the smartest and easiest way to file an Income Tax return is via ROS, Revenue’s online system.