Revenue Once Again Turn Screw on Contractors

The seemingly interminable Revenue Contractors Tax Project took another twist today with the issue of a fresh letter from Revenue South West Region to the Irish Tax Institute.

Revenue are now promising a speedy resolution to their audits of “some 550” contractor companies, whose tax position has not yet been resolved.  These form part of an ongoing project to claw back travel expenses and other tax deductions claimed by such companies.

The letter concedes that from Revenue’s viewpoint, “progress has been disappointing in the first Quarter of 2014” and complains of “widespread evidence of delay and reluctance to agree settlement”.

Revenue Contractors Tax Project

Presumably, this is a reference to the increasing numbers of contractors who are opting t0 formally challenge Revenue assessments with the Appeal Commissioners.

Revenue now state that:

  • Where taxpayers have made submissions that have not yet been processed by Revenue, responses will now “issue as a matter of urgency”.
  • Enquiries where “there is no evidence of significant liability” will be closed.
  • In cases where a liability has been determined, but no settlement has been made, the taxpayers concerned will be notified of Revenue’s intention to raise assessments within a further 10 days.
  • Where taxpayers have failed to reply to Revenue information requests, Revenue will raise assessments based on disallowing all expenses claimed.
  • Where taxpayers previously filed a “Notice of Intention” to make a disclosure, but haven’t subsequently done so, Revenue will withdraw the concessions “set out in (our) letter of January 2013 within 20 days.
  • Ongoing audits which started after 1 January 2014 will progress normally.
  • Taxpayers who cite inability to pay liabilities must first agree their liabilities before any discussion can take place on how they can pay the settlement amounts.

Ironically, today’s letter was unveiled only hours after the UK House of Lords slammed the ongoing campaign by Revenue’s counterparts in the UK, HMRC,  to disallow tax benefits accruing to “personal service companies” through the controversial IR35 legislation in that jurisdiction.

It’s worth noting that no equivalent legislation applies in Ireland and the entire Revenue campaign here has been based, not on the laws of the land, but on Revenue’s own interpretation of the law.

Based on the UK experience, there is no guarantee whatsoever that the Revenue stance will withstand a future challenge 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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