Employee or Self Employed

The issue of employee or self employed was very topical with the revenue comissioners early this year. In particular in relation to locums. This blog post is a quick reminder of the questions which employers should ask them selves when determining whether a worker is employed or self employed.

If you hire sub contractors on a regular basis this is an area you should pay attention to as the penalties and fines could be significant.

He/she is an employee if some or all of the following apply:

Is under the control of another person who directs as to how, when and where the work is to be carried out
Works set hours or a given number of hours per week or month
Does not supply materials for the job
Does not provide equipment other than the small tools of the trade
Is not exposed to personal financial risk in carrying out the work
Receives a fixed hourly/weekly/monthly wage
Is entitled to extra pay or time off for overtime
Is entitled to sick pay
Receives expense payments to cover subsistence and/or travel expenses
Supplies labour only
Cannot subcontact the work
Does not assume any responsibility for investment and management in the business
Does not have the opportunity to profit from sound management in the scheduling of engagements or in the performance of tasks arising from the engagements
Will normally be covered under the employer’s public liability insurance
Works for one person or for one business

He/she is self-employed if some or all of the following apply:

Has control over what is done, how it is done, when and where it is done and whether he or she does it personally
(In the construction sector for health and safety reasons, all individuals are under the direction of the site foreman/overseer. The self-employed individual controls the method to be employed in carrying out the work.)
Controls the hours of work in fulfilling the obligations of the contract
Provides the materials for the job
Provides equipment and machinery necessary for the job, other than the small tools of the trade
Is exposed to financial risk, by having to bear the cost of making good faulty or substandard work carried out under the contract
Costs and agrees a price for the job
Receives an agreed contract payment(s) without entitlement to pay for overtime, holidays, country money, travel and subsistence or other expense payments
Is free to hire other people, on his or her terms, to do the work which has been agreed to be undertaken
Assumes responsibility for investment and management in the enterprise
Has the opportunity to profit from sound management in the scheduling and performance of engagements and tasks
Provides his or her own insurance cover as appropriate e.g. public liability insurance, etc
Owns his or her own business
Can provide the same services to more than one person or business at the same time
It should be noted that:

A worker paid by results (piece worker, commission, by share) is not automatically a self-employed contractor;
The fact that an individual has registered for self-assessment or VAT under the principles of self-assessment does not automatically mean that he or she is self-employed;
A worker who is a self-employed contractor in one job is not necessarily self-employed in the next job. Each job must be looked at separately.

Tax Return 2010

Tax Return 2010

Its that time of year again. Tax Season.  October is almost upon us and I strongly recommend anyone who needs to file a tax return get it in soon. October is a very busy month for all accountants and tax advisors and your accountant/advisor will have more time for you in September.

Heres some tips for getting ready for 2010’s tax return

    1. Check your records, If you miss a sales invoice you could understate your tax and ultimately be fined, if you miss a purchase/ expense invoice  you could pay more tax than you need to (Not good)
    2. Try to avoid the shoe box of doom. Sending your accountant a shoebox full of paperwork will increase your bill as they have to spend time sorting through it and entering the data. If your too busy / lazy to send in an excel sheet with your information at least use a tool like Plendi to capture the data.
    3. Don’t put crazy expenses in. Unless their protective you cant claim for shoes, so take the receipt out for the Jimmy Choo’s
    4.  Read the revenue guide to allowable expenses
    5. If you are a company director or employee ensure you claim your correct mileage and subsistence 
    6. When you get your accounts back from your accountant take a careful look at them. Are your sales down on a previous year? Are your expenses up? Use the information to improve your business.
    7. Don’t forget your medical expenses ,service charges and rent tax credits

Tax return 2010

  1. If you’ve gotten married recently or are in a civil partnership make sure the revenue know.
  2. Certain social welfare payments are taxable. If you received one during the year be sure to check if yours is, Even if its not taxable it may have to be shown on the return.
  3. If you can’t afford to pay your tax bill speak to the revenue as soon as possible. If you ignore it they will take action. If you contact them and make payment plans you can work it out.
Remember as always if you want a quotation for tax return please do not hesitate to call us on 01-4800531

Revenue Defaulters List Q1 2011 Analysed

I’ve been reviewing the latest revenue defaulters list for Q1.(The list below relates only to cases were settlements were made. The court cases are a different file) In terms of settlements there’s a big geographical difference with €2M collected in Wexford and only €34K collected in Kerry

There’s obviously still investigations going on into bogus non resident accounts with the €2.2Million in fines relating to bogus non resident accounts, Although the firm favourite with tax defaulters is under decleration of income tax with €6.5million in fines relating to this tax head.

If you’d like to see if any of your neighbours feature on the list its available here

Tax treatment of locums

The tax treatment of locums has been topical with the revenue for the last year or so. There have been a number of audits particularly to out of hours doctor services.

The revenue have published some information in tax briefing 82 which clarifies the situation. Its important to remember that is a complex area of taxation and getting it wrong can be costly.

If you have any queries or would like any assistance on this subject please do not hesitate to contact Do My Books on info@domybooks.ie or 01-4800531

1. Background
Revenue, in conjunction with the Department of Social and Family Affairs and the National Employment Rights Authority (as appropriate), will continue to focus on the issue of employed v self-employed across a multiplicity of sectors for the foreseeable future.

The purpose of this article is to set out Revenue’s position as regards the status (employed or self-employed) of individuals described, correctly or otherwise, as ‘locums’ in the fields of medicine, health care and pharmacy.

2. ‘Locums’
The term ‘locum’ (and, in particular, as regards engagements in the fields of medicine, health care and pharmacy) now appears to be a colloquial term used to cover a wide and disparate range of engagements and, perhaps, to describe non-permanent appointments or engagements.

Notwithstanding that an individual may, in relation to an engagement, be described, correctly or otherwise, as a ‘locum’, Revenue’s approach is to examine cases having regard to the Code of Practice for Determining Employment or Self-employment Status of Individuals and having regard to relevant case law on the subject of contract of service (employed) and contract for service (self-employed).

3. Code of Practice for Determining Employment or Self-employment Status of Individuals.
This is not a Revenue Code of Practice. It has its origins in the Employment Status Group (set up under the Programme for Prosperity and Fairness) which sought to provide clarity as to whether, in relation to an engagement, an individual is employed or self-employed. As outlined in the Code, “that group was set up because of a growing concern that there may be increasing numbers of individuals categorised as ‘self employed’ when the ‘indicators’ may be that ’employee’ status is more appropriate”.

The Code of Practice was updated in 2007 with the assistance of –

Irish Business and Employers Confederation
Construction Industry Federation
Small Firms Association
Irish Congress of Trade Unions
Department of Social and Family Affairs
National Employment Rights Authority
Department of Enterprise, Trade and Employment
Revenue Commissioners
The Code does not espouse a “one cap fits all” approach but rather stresses that “it is important that the job as a whole is looked at, including working conditions and the reality of the relationship, when considering the guidelines. The overriding consideration or test will always be whether the person performing the work does so ‘as a person in business on their own account’.” As stated in the Code of Practice –

“Its purpose is to eliminate misconceptions and to provide clarity”; and
“It is not meant to bring individuals who are genuinely self-employed into employment status”.
The Code of Practice is available on a number of websites including Revenue’s (www.revenue.ie).

4. Assistance
Local Revenue Offices or Scope Section in the Department of Social and Family Affairs may be contacted for assistance in deciding the appropriate status of an individual or groups of individuals. The relevant contact details are in the Code of Practice.

5. Questions & Answers
Q.1. What is the tax treatment of payments to a ‘locum’?

A.1. Whether or not an individual is described, correctly or otherwise, as a locum is not the deciding factor. The deciding factor is whether, in relation to an engagement, the individual is engaged under either –

a contract of service [i.e. an employee]; or
a contract for service [i.e. self-employed]
If an Employee:-
If, having examined the facts, circumstances and evidence relating to an engagement, an individual is, in relation to that engagement, an employee, then his or her remuneration from that engagement is subject to deductions at source under the PAYE system.

If Self-employed:-
If, having examined the facts, circumstances and evidence of an engagement, an individual is, in relation to that engagement, self-employed, then –

the individual pays his/her tax under the self-assessment Pay & File system; and
depending on the nature of the service being provided –
the individual may be obliged to charge VAT on the provision of the service, opinion, etc; and
the payer (if a public body) may be obliged to deduct Professional Services Withholding Tax at source from payments made to the individual.
Q.2. I am a GP and I am about to engage a doctor and a nurse to work in my practice. I have put into the contract of engagement a specific clause that states – “Dr. / Mr. / Ms. XX is a self-employed doctor/nurse and is not an employee of this practice”. What is the Revenue view on this?

The content of written contracts between parties is, of course, a matter for those parties and/or their legal advisors. However, as outlined in the Code of Practice – “statements in contracts (considered by the Supreme Court in the case of ‘Denny’) such as –

“You are deemed to be an independent contractor”,
“It shall be your duty to pay and discharge such taxes and charges as may be payable out of such fees to the Revenue Commissioners or otherwise”,
“It is agreed that the provisions of the Unfair Dismissals Act 1977 shall not apply etc”,
“You will not be an employee of …….”,
are not contractual terms and have little or no contractual validity. While they may express an opinion of the contacting parties, they are of minimal value in coming to a conclusion as to the work status of the person engaged.”

Therefore, regardless of how the parties to an engagement may describe themselves in contracts, all the relevant factors (including written, oral and implied details) that bear on the relationship between the parties are to be examined, given their proper weight and a decision made on their overall effect. In other words, Revenue may examine matters other than those contained in written contracts.

Q.3. I run a GP practice and the doctors and/or nurses that I wish to engage to work in my practice have informed me that they do not wish to pay tax via the PAYE system and that they will only work for me if they are engaged as a “self-employed contractor”. What is the Revenue view on this?

A.3 If, on examination of the facts, circumstances and evidence of an engagement, the individuals are employees, then they cannot simply ‘opt out’ of paying tax under the PAYE system (and paying PRSI) on the remuneration from that engagement (nor, indeed, can the payer of the remuneration opt out of PAYE / PRSI obligations).

In some instances, individuals or practices may be of the erroneous opinion that they can simply elect or decide that such individuals can be engaged either under a contract of service (i.e. an employee) or under a contract for service (i.e. self-employed). In such cases, it may be beneficial for both parties to examine the Code of Practice referred to above.

Q.4. What is the position as regards an individual who works only a few hours per week?

A.4. Depending on the facts, circumstances and evidence of an engagement, an individual may be a full-time employee, a temporary employee, a part-time employee or a casual employee or, indeed, may be self-employed. The fact that an individual may not have continual work under an engagement does not, of itself, make such individual a self-employed contractor in relation to that engagement.

Q.5. What is Revenue’s view as to the tax treatment of ‘agency workers’?

A.5. Revenue does not regard the taxation of workers engaged through agencies any differently to the taxation of workers engaged by any other means. The article “Taxation of individuals engaged through agencies” published in Tax Briefing (Issue 31) in April 1998 refers. This may be accessed through the following link http://www.revenue.ie/en/practitioner/tax-briefing/archive.html#year1998

Q.6. We are a group of GPs which operates the doctor element of our local “Doctors Out of Hours Service”. We engage other doctors to do the work. What is Revenue’s view as to the status (employed or self-employed) of these ‘other doctors’?

A.6. From Revenue’s experience to date in such cases, the Revenue view is that such ‘other doctors’ are engaged under a contract of service (i.e. they are employees).

Q.7. I own a pharmacy and have engaged a ‘locum’ pharmacist to work for me. What is the correct tax treatment of the payments I make to the locum?

A.7. Once again, whether or not an individual is described, correctly or otherwise, as a locum is not the deciding factor. From Revenue’s experience to date in such cases, the Revenue view is that such “locum” pharmacists are engaged under a contract of service (i.e. they are employees) and the remuneration from that engagement is subject to deductions at source under the PAYE system.

Tax Calculator

NPPR Charge

Its that time of year again. The NPPR (Non principal private residence charge) is due on or before the 30th of June 2011.

The 2011 charge is based upon the ownership and status of the property on the 31st March 2011.

What is the NPPR (Non Principal Private Residence) charge?

The NPPR charge is an annual charge of €200 introduced by the Local Government (Charges) Act 2009 in respect of all residential property not used as the owner’s sole or main residence.

What is a Non Principal Private Residence?

Essentially, a non principal private residence is any dwelling which is not used by its owner as his or her sole or main residence.

Does the charge apply to residential property outside of Ireland?

The charge only applies to properties situated in Ireland.

What types of properties are liable for the NPPR Charge?

The main types of residential properties that are liable for the charge are, private rented properties; vacant properties (except new but unsold residences, which have never been used as a dwelling and are part of a trading stock of a business) and holiday homes. What types of properties are NOT liable for the NPPR Charge? certain heritage buildings approved under section 482 of the Taxes Consolidation Act 1997, newly constructed but unsold buildings which have never been used as dwellings and that form part of the trading stock of a business, buildings let by the Government, housing authorities and the Health Service Executive, a building occupied under a shared ownership lease within the meaning of section 2 of the Housing (Miscellaneous Provisions) Act 1992, accommodation provided by a voluntary housing body, a building let under the Rental Accommodation Scheme, accommodation provided on behalf of the Health Service Executive a building in respect of which commercial rates are paid.

Is a building divided into flats or bedsits liable for the NPPR Charge?

The charge is payable in respect of each unit of accommodation. Where a building is divided into flats or bedsits, the charge applies to each flat or bedsit e.g. if the dwelling is divided into four bedsits a charge of €200 x 4 = €800 would apply.

Is a house let as one unit to a number of occupants liable for the NPPR charge?

Yes, the charge is €200 for the house.

I own a mobile home. Is this liable for the charge?

A mobile home is not liable for the non principal private residence charge.


Are there any exemptions from the NPPR Charge?

You are advised to check section 4 of the Act for detail.  However, the following abbreviated list should act as a guide:


1.    Principal Private Residences

2.    Where a person partly occupies a dwelling as his or her sole or main residence and avails of the Revenue Commissioners’ Rent-a-Room Scheme

3.    Discretionary trusts or corporate bodies that are accorded charitable status

4.    Where a person is moving house and, in the process, owns two houses for a relatively short period.

5.    Joint ownership of a property after a divorce or separation agreement where the second residence becomes the primary residence of one party.

6.    Where a person who owns a principal private residence vacates the dwelling in question because he or she is long-term incapacitated as a result of physical or mental illness

7.    Where a residence is occupied rent-free by a relative of the owner and the owner resides on the same property or within two kilometres of .the residence in question.

8.   Where a landlord and a Local Authority have a signed contract in place under the Rental Accommodation Scheme for a property, on the liability date i.e. 31st July 2009 and 31st March in 2010 and each subsequent year, the property is exempt from the NPPR charge.

Contact the relevant local authority if you are in any doubt about the liability of your property i.e. the County Council or City Council in which the property is located.

To pay visit https://www.nppr.ie/
Rental Income

New reduced VAT rate

The Finance (No. 2) Bill 2011 has a provision for a new reduced VAT rate at 9%. This rate mainly applies to good and services related to tourism. This list of goods and services on which the VAT rate will change is listed below.
Supplies of goods and services at the new 9% rate:

  • catering and restaurant supplies, including vending machines and take-away food (excluding alcohol and soft drinks sold as part of the meal)
  • hotel lettings, including guesthouses, caravan parks, camping sites etc
  • cinemas, theatres, certain musical performances, museums, art gallery exhibitions
  • fairgrounds or amusement park services
  • facilities for taking part in sporting activities including green fees charged for golf and subscriptions charged by non-member-owned golf clubs
  • printed matter e.g. newspapers, brochures, leaflets, programmes, maps, catalogues, printed music (excluding books)
  • hairdressing services

The VAT rate is effective  for the period 1 July 2011 to 31 December 2013.

VAT and Charitable Donations via SMS Text Message

VAT Rate

Questions have arisen in relation to the VAT treatment of donations to charity, usually for specific disaster appeals, made via mobile phones using SMS shortcodes. The purpose of this eBrief is to clarify the correct VAT treatment that should apply in respect of such donations.

The provision of telecommunications services is liable to VAT at the standard rate, currently 21%. Charitable donations are not deemed to be consideration for a supply and are therefore outside the scope of VAT. Generally speaking, the donations in question are made where an individual texts an SMS shortcode specific to a charity, with the intention of donating money to that charity. Following receipt of that text message, a separate message is sent to the individual and the amount that represents the donation is debited to their bill or to their prepaid phone credit, as the case may be.

Donations where the telecommunications provider waives their fee
Where the full amount of the donation is passed over directly to the charity concerned, the entire amount is deemed outside the scope of VAT. The amount involved represents a donation to charity and, because the operators have waived their fee, is not regarded as consideration for the supply of a telecommunications service. It is not a question that any VAT due on a taxable transaction has been waived. It is on the basis that no consideration has been charged for a telecommunications service that no VAT charge arises.

Donations where a fee is charged for the telecommunications service
Where the provider of the telecommunications service charges a fee for facilitating the transaction, then they are obliged to charge VAT at the standard rate on this fee.

However any monies that are directly transferred to the charity, independent of this fee, are considered to be a charitable donation. This donation is also deemed to be outside the scope of VAT.

Where €1 is attributed to the shortcode but 10c of this is deducted as a fee for the telecommunications provider, then that 10c will be liable to VAT at the standard rate. This 10c is deemed to be consideration for the supply of telecommunications services. The remaining 90c, assuming it is passed in full to the charity, is considered a donation and no VAT will apply to this.

Where the full €1 is directly transferred to the charity, and the service provider makes no deduction, that full amount is a non-taxable donation to that charity.

Where other parties involved in the process charge fees, such as those providing technical support, those fees are also liable to VAT.

The charity involved, the mobile operators, and any other party supplying services to support the process, must be in agreement in respect of the transaction set-up. The mobile operators must be able to clearly identity all appropriate transactions in their records so that the VAT status of amounts treated as contributions to charity can be verified.

Taken from http://www.revenue.ie/en/practitioner/ebrief/2011/no-292011.html

Preliminary Tax for 2011 and Universal Social Charge (USC)

Normal rules

The amount of preliminary tax that an individual is required to pay to avoid a charge to interest is the lower of:

  • 90% of the final liability to tax for the current tax year, or
  • 100% of the liability to tax for the immediately previous year, or
  • 105% of the final liability to tax for the year preceding the immediately previous year where payment is made by direct debit.


Section 531AS(5) TCA 1997 (introduced by S 3 FA 2011) introduced changes to the 100% rule in calculating preliminary tax for 2011. Where an individual wishes to pay preliminary tax on the basis of 100% of the previous year’s liability, his or her preliminary tax payment for 2011 is to be based on the final liability for the year 2010 as if the USC had been payable and as if the income and health levies had not been payable for that year.

A systems development to the 2010 Notice of Assessment and the ROS 2010 Form 11, scheduled for completion in early July 2011, will show (in addition to the final Income Tax liability for 2010) the 2010 liability as adjusted for 2011 preliminary tax purposes. This will assist agents/customers in paying their preliminary tax liability for 2011. Revenue will issue a further eBrief when this development is completed.

The 90% rule remains unchanged. An individual calculating his or her preliminary tax for 2011 on the basis of 90% of the 2011 liability should incorporate the USC that will be payable for that year.

The 105% rule likewise remains unchanged. Where a direct debit is in place, the amount paid must equal 105% of the final liability for 2009.

GE to return $3.2 billion tax refund to US Treasury

Facing criticism over the amount of taxes it pays, General Electric announced it will repay its entire $3.2 billion tax refund to the US Treasury on April 18.

GE uses a series of foreign tax havens that the company says are legal and that led to an enormous refund for the 2010 tax year.

The company earned $11 billion in 2010 on revenue of $150 billion.

The company, based in Fairfield, Conn., plans to phase out tax havens over 5 years and said it will create one job in the US for each new job it creates overseas.