Dentists Feel Pain As Taxman Hits a Nerve

June 7, 2012

A new Revenue move could mean bigger tax bills for dentists and their workers.  

Following their previous focus on the tax status of locum doctors, Revenue have now turned their attention to the Dental sector. In recent weeks, they have written to the Irish Dental Association stating that Dental Associates and Dental Hygienists, “who in Revenue’s view are employees”, must have PAYE/PRSI operated on their earnings with effect from 1 January 2012.

The net effect of this move will be to prohibit many dental associates and hygienists from working as self-employed contractors for dental practices. They must instead be treated as employees, and have PAYE/PRSI deducted on their earnings.

This is in line with the Code of Practice for Determining Employment or Self-employment Status of Individuals, agreed by the Employment Status Group, under the Social Partnership process in 2007.

The biggest impact of this change will be the imposition of 10.75% employer PRSI on the earnings of affected workers.  This will represent a major additional cost for dental practices. Given the current state of the economy it will be difficult if not impossible for practices to pass on these cost increases to paying customers.

While the Irish Dental Association have asked Revenue to defer the implementation of the changes to 1 January 2013, it is clear that the new rules will take effect sooner or later.

Of course Revenue will be anxious to implement the changes as soon as possible in order to maximise their own Income Tax, USC & PRSI take from the dental sector, so it is difficult to see them agreeing to the dentists’ pleas.

The key message for dental practitioners, associates and hygienists is that they will need to take immediate action to review their current status, and ensure that they stay Revenue-compliant.

Their first step should be to review the recent Revenue letter to the Irish Dental Association, copies of which are presumably being circulated to dentists nationwide.  Chartered Accountants Ireland have published extracts from the letter online and these are also reproduced below:

Practices will also need to review their contracts with dental associates and hygienists as many of these workers may now be entitled to additional employee rights which did not arise while they worked as contractors, eg rights to annual leave, unpaid breaks, minimum notice, redundancy etc.

Whether or not individual practices and their dental associates and hygienists are affected by the new rules will depend on the existing contractual working arrangements in place in each case. Revenue have pledged “to consider each case on its own merits”. In cases of doubt, they are urging dentists and hygienists to make a submission to their local Revenue District, outlining the terms and conditions of the particular engagement(s) and asking for Revenue’s opinion on their correct status.

I recommend that affected dental practices, associates and hygienists should seek expert professional advice on their status and working arrangements before making any such submission to Revenue.

It may well transpire in individual cases that existing ‘independent contractor’ arrangements already conform with the self-employment criteria set out in the Code of Practice, and (more importantly) existing case law precedents. In such cases there may be no need to treat the workers in question as employees.

However given the stakes involved, and the risks attaching to non-compliance with any Revenue matter, it would be foolish to ignore this issue in the coming weeks and months.

Extract from Revenue correspondence to Irish Dental Association:

“Employment Status of Dental Associates and Dental Hygienists engaged by Dental Practices

Revenue have considered the circumstances surrounding the engagement of dental associates and dental hygienists in dental practices, having regard to the criteria set out in The Code of Practice for Determining Employment or Self Employment Status of Individuals and relevant case law. It is the Revenue view that generally speaking associates and hygienists engaged by dental practices are engaged under a contract of service (i.e. they are employees) and their remuneration comes within the scope of PAYE and that PAYE should be operated on all payments from 1st January 2012.

It is accepted that there may be exceptional cases where the terms of engagement differ from the norm and in these instances Revenue is prepared to look at these on a case-by-case basis. Revenue will consider each case on its own merits and in cases of doubt a submission, outlining the terms and conditions of the engagement should be submitted by the dentist or the hygienist to their local Revenue District for consideration.”


Revenue scrap ROS online Amend Tax Return facility

April 30, 2012

Revenue have withdrawn their ROS facility to amend an income tax return online.

Back in September 2010, Revenue added a useful feature to their ROS site which allowed a user to amend online a previously-filed Form 11 Income Tax return.  At the time, I heartily welcomed this move and hailed it as ‘an important innovation’. In the intervening 20 months or so, I used it on a number of occasions, most commonly as a particularly easy way of claiming a tax credit or allowance that had been omitted from an original tax return.  I found the facility to be both useful and straightforward to use.

This morning I was reviewing the tax records of a client who had reached 65 years of age in late 2010 but hadn’t previously notified either myself or Revenue of this fact. He was therefore entitled to an Age Credit for 2010, along with PRSI exemption and partial Income Levy exemption for that year.

I accessed ROS to amend his 2010 tax return accordingly but I could not find any links to access the ‘Amend Form 11’ facility. A quick google search yielded a blank apart from my own blog post of September 2010 which outlined the steps involved in amending a return on ROS and a link to the relevant Revenue eBrief which was issued around that time.  I was dismayed to find the eBrief link was dead, bringing me to a ‘Page not found’ page within the Revenue.ie site.

Increasingly puzzled, I tried the ROS help section of ROS.ie and its ROS FAQ – Form 11 page which told me:

“Can I avail of ROS to file an amended Form 11?     
Unfortunately at this time if you have previously filed a Form 11, on either paper or through ROS, you will not be presented with the option of filing an amended return.”

Finally admitting defeat, I then had to resort to writing a letter to Revenue asking them to (i) update and amend my client’s 2010 Form 11 accordingly; and (ii)  issue a new Income Tax assessment including the Age Credit and exemptions. My letter has just gone off in the post. I expect that it will reach Revenue in 1-2 days time and they will presumably deal with it in due course. No matter how efficiently they manually process it, the service cannot match the speed and efficiency of the automatic ROS service.

I am disappointed that Revenue have withdrawn the facility to amend returns online via ROS, and it seems to be a retrograde step for everyone concerned.

It is doubly disappointing that they didn’t alert accountants and taxpayers of the move, choosing instead to merely delete the eBrief that had previously explained the feature. Maybe I’m expecting too much, but a fresh eBrief announcing the change would at least have made ROS users aware that the feature no longer existed – saving both their own and their clients’ time. Hopefully Revenue will reintroduce the facility before too long.


15 Nov 2012 is ROS ‘Pay & File’ Tax Return Deadline

April 4, 2012

Revenue have confirmed this morning that the existing 31 October 2011 Pay & File deadline for 2011 Income Tax returns is being extended to Thursday 15 November 2012 for returns filed online via the ROS system.

To avail of the extended deadline, an individual must, by 15 November

  1. file their 2011 Form 11 Income Tax return by 15 November 2011 using the online ROS system.
  2. also use the Revenue ROS system to make their ‘Pay & File’ self-assessment tax liability, ie
  • Preliminary Tax for 2012;  and
  • Balance of Income Tax payable for 2011

The existing deadline of 31 October 2012 applies, unless:

  • the Form 11 tax return is filed on ROS; and
  • the required Income Tax payment is made using ROS.

Capital Gains Tax

The Revenue announcement makes no mention of any extension to the Capital Gains Tax return filing deadline of 31 October next. Individuals subject to self-assessment Income Tax are required to file their Capital Gains tax details as part of their 2011 Form 11 Income Tax Return. However, separate payment deadlines apply for Capital Gains Tax liabilities.

Capital Acquisitions Tax

The deadline extension also applies to Capital Acquisitions Tax (CAT) payments and IT38 returns for gifts or inheritances with valuation dates in the year ended 31 August 2012. Again it is conditional on the CAT IT38 return filing and tax liability payment both being made through ROS.

Online filing is now compulsory for almost all IT38 returns so the extended deadline will be especially useful here, as it will provide for more time for beneficiaries to sell assets or liquidate investments in order to meet the CAT payment deadline.

Pension Payments

In previous years, the extended 15 November deadline has also applied for the purposes of RAC, AVC and PRSA pension payments.   Today’s Revenue eBrief does not mention this particular issue although I expect that the 15 November deadline will also apply this year where the individual pays & files via ROS by 15 November.

This would enable qualifying pension payments, made by 15 November 2012, to attract backdated tax relief against 2011 tax liabilities. However Revenue have not yet confirmed that this concession will continue this year.

If you are considering making a pension payment in November and claiming the tax relief against your 2011 liability, please make sure to check for further Revenue updates between now and October. In the meantime, in case of doubt, it is safer to work on the assumption that the previous 31 October deadline applies, and make any such pension payment by the end of  October.


Medical Expenses – How to claim your Tax Relief

April 3, 2012

Did you know that you can claim tax relief on the cost of doctors bills, prescriptions, nursing home fees and other medical expenses?

This is one of the most valuable Income Tax reliefs around, and is easy and straightforward to claim. Yet, amazingly, each year many thousands of taxpayers never claim their refunds.

Contemporary Living magazine is an on-line lifestyle magazine for county Cavan

My new article for Contemporary Living magazine explains how you can avoid this expensive mistake.


P35 & RCT35 Online Filing Deadline Tomorrow

February 22, 2012

Tomorrow, 23 February, is the online filing deadline for 2011 Employer PAYE/PRSI P35 & Contractor RCT35 returns.

A P35 return includes details of all pay, PAYE/PRSI/USC deductions and other employee details for the year ended 31 December 2011.

An RCT35 return must be filed by all principal contractors in the construction, forestry, and meat processing sectors. It includes details of all payments made to subcontractors in 2011, and tax deduction details where relevant.

The original deadline of 15 February 2012 which applied to both returns is extended to 23 February for returns filed online via ROS.

In a recent eBrief, Revenue stress the importance of employers recording their employees’ PPS numbers correctly on P35 returns. Presumably the same guidance applies to subcontractor PPS and tax reg. numbers recorded on RCT35 returns.

The Revenue.ie website contains more guidance on completing P35 and RCT35 returns.



Budget 2012 – More Highlights

December 6, 2011

The 2012 Summary of 2012 Budget Measures – Policy Changes is now online.

This includes the following points that were not fully addressed in the Minister’s Speech today.

Budget 2012 6 December 2011USC Surcharge on ‘Property Reliefs’ income – A surcharge will apply from 1 January 2012 on individuals with gross incomes over €100,000. The surcharge will be 5% on the amount of income sheltered by property reliefs in a given year. This will be operated as a a higher rate of USC and will apply to all ‘high earning’ investors with Section 23 or accelerated capital allowance schemes investments

Investors in accelerated capital allowance schemes will no lose their entitlement to unused capital allowances,  beyond the tax life of the scheme after 1 January 2015.

The new 2% Stamp Duty rate on non-residential property applies from Budget Day, 6 December 2011.

Consanguinity relief from Stamp Duty, which applies on transfers of non-residential properties between blood relatives is to be retained to the end of 2014 but will be scrapped after 1 January 2015. This relief provides for a 50% cut in the standard rate of Stamp Duty on intra-family transactions.

The €100 household charge will be replaced by a full property tax in 2014.

The increases in Capital Gains Tax (CGT) and Capital Acquisitions Tax (CAT) from 25% to 30% will apply from Budget Day. The cut in the tax-free Group-A CAT threshold (most commonly parent-to-child gifts and inheritances) will cut the maximum tax-free sum from €332,084 to €250,000. This also applies with immediate effect.

A new CGT incentive relief applies to properties bought between Budget night and the end of 2013. If the property is held for more than seven years, the Capital Gain arising in that period will not attract CGT. This incentive is introduced with immediate effect.

The tax relief scheme for corporate investment in renewable energy projects is being extended from 31 December 2011 to 31 December 2014. This scheme encourages investment in approved renewable energy projects in the solar, wind, hydro (including ocean, wave or tidal energy) and biomass sectors

The exit tax on life assurance policies is being increased from 27% to 30% in line with the increase in DIRT tax on deposit interest. These changes apply from 1 January 2012.

The €200,000 Domicile Levy is being extended to include non-Irish citizens. The Budget 2011 version of this levy was an embarrassing failure with just 10 people declaring themselves liable to pay it by the recent deadline, according to RTE News last month.

The VAT rate increase from 21% to 23% will apply from 1 January 2012. Traders will therefore avoid the VAT hike on their pre-Christmas and pre-New Year Sales receipts.

The VAT rate on District Heating is being cut from 21% to 13.5%

Admission charges to open farms will become liable to VAT from 1 January 2012. This will be charged at the 9% VAT rate for tourist enterprises.

Excise Duty on cigarettes goes up by 25 cents (including VAT) for a packet of 20. A pro-rata increase applies to other tobacco products.

The Carbon Tax increase on petrol and diesel applies from midnight on Budget Day, with the corresponding increases in Kerosene, Marked Gas Oil, Liquid Petroleum Gas (LPG), Fuel Oil and Natural Gas applying from 1 May 2012.

Betting Duty of 1% is being applied to remote betting. A  Gross Profits Tax of 15% is being charged on betting exchanges. These will commence from the second quarter of 2012, subject to EU Commission approval.

Research & Development Tax Credit – The first €100,000 of qualifying R&D expenditure will benefit from the 25% R&D tax credit on a volume basis. The tax credit will continue to apply to incremental R&D expenditure in excess of €100,000 compared to the equivalent expenditure in the base year 2003.

The outsourcing limits for sub-contracted Research & Development costs are being increased.

A portion of the R&D credit may be used to reward key employees who have been involved in the development of R&D.

The annual ‘imputed distribution’ charge on Approved Retirement Fund (ARF) assets is being increased from 5% to 6% in respect of ARFs with asset values over €2 million. This comes into effect on 31 December 2012. A similar charge will now apply to vested PRSAs with assets in excess of €2 million.

The 20% ‘final liability tax’ on the transfer of ARF assets on the death of an ARF owner to their adult children is being raised to 30%.

The current 50% employer PRSI relief for employee contributions to occupational pension schemes and other pension arrangements is being scrapped from 1 January 2012.

Capital Gains Tax Retirement Relief

The existing unlimited retirement relief from CGT for transfers of ‘qualifying assets’ to family members will be maintained for individuals aged 55 to 66. An upper limit of €3 million will apply to such transfers made by owners over 66 years, after a two year transitional period.

The current upper limit of €750,000 for assets transferred outside the family is being retained for individuals aged between 55 and 66 years. However a lower limit of €500,000 will apply to such disposals by persons over 66 years after a similar two year transitional period.