The Revenue Commissioners have warned builders and tradesmen to be on their guard in relation to tax compliance, as the construction sector slowly recovers from its long recessionary slump.
The collapse of the building sector following the 2008/09 crash was a catastrophe, not only for those working in and earning a crust from construction, but also for Revenue, who had enjoyed booming tax receipts from the sector in the Celtic Tiger bubble years.
In its eBrief last week, the tax authority announced that it is beefing up its “compliance interventions” programme for the industry, in order to ensure that the State benefits fully from the recovery.
Revenue have now flagged the following key issues:
- Operation of the eRCT system, including full reporting of payments to sub-contractors, and notification of “Unknown” sub-contractors;
- Reconciliations of Home Renovation Incentive (HRI) applications with VAT returns;
- Cross-checking of eRCT, PAYE/PRSI and VAT returns with reported profit margins;
- Reviews of VAT Reverse Charge and PAYE/PRSI procedures;
- More attention on the vexed question of classifying employees vs. subcontractors; and
- A fresh focus on the treatment of non-Irish resident principal contractors & sub-contractors.
Once underway, the Revenue “compliance interventions” programme will entail more:
- aspect queries – requests for documentation and other specific questions
- profile interviews – interviews focusing on the key tax “compliance risk areas” identified by Revenue based on the taxpayer’s profile.
- revenue audits – full examinations of tax returns and claims.
- unannounced visits to construction sites.
Revenue are strongly encouraging builders and tradesmen to review their tax compliance, and regularise any shortcomings before they take action.
In many cases this will entail making an “unprompted voluntary disclosure” and settling tax, penalties and interest liabilities.
If you are going down this road, I strongly recommend that you first arm yourself with appropriate professional assistance and ensure that your proposal complies with the Revenue Audit Code of Practice.