# Part of peoples’ salaries paid by way of “expenses”.



## patkeeno (25 May 2005)

In the dark ‘70s and ’80s it was common practice for part of peoples’ salaries to be paid by way of “expenses”. Employers organised matters in such a way that employees had to present monthly “expense” sheets against which the employee would be paid. I worked for a company in which over 200 employees were paid in that manner.



I’ve no doubt that the tax authorities were well aware of that practice at the time.



However, with so many trawls going on these days, what position would the taxman take if he found evidence of this practice in someone’s record going back to the '70s and '80s? Would the employee be 100% liable even though it was the employer’s decision to pay in that way?



Surely that would be grossly unfair.


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## ClubMan (25 May 2005)

patkeeno said:
			
		

> Surely that would be grossly unfair.



In general any exposure and prosecution of tax evasion is totally fair in my book. The usual caveat of the benefit outweighing the costs applies though - i.e. no point in Revenue chasing up certain outstanding liabilities if the cost of investigating would outweight the benefits accruing from collection of outstanding liabilities, interest and penalties.


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## patkeeno (25 May 2005)

Yes – but there were two parties to this arrangement, and the employer was more culpable than the employee. In my experience no employee asked for this arrangement – it was part of the conditions. I believe that the unfairness comes into it in a situation where say an individual ex-employee is caught up in a trawl whilst the company directors go unpunished 



If I were caught for back-tax on this, I would expect that in the interests of equity and justice the taxman would chase all the former directors and the rest of the 200 employees.   



Also, the company that I have in mind was no back alley sweatshop – it was a high profile, high-tech operation. This arrangement went on for years and I refuse to believe that the authorities were not aware of it.


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## ClubMan (25 May 2005)

patkeeno said:
			
		

> Yes – but there were two parties to this arrangement, and the employer was more culpable than the employee.



That's a matter of opinion and I'm not sure if/how _Revenue _would appportion culpability in a situation such as this. Either way, where outstanding liabilities exist I would expect the reponsible parties to meet these any any concomitant interest and penalties allowing for the caveat that I mentioned earlier.


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## ubiquitous (25 May 2005)

It is normal practice for the Revenue to chase the employer rather than the employee in these cases - presumably because it is easier to extract payment from businesses compared to individuals with families, mortgages etc.

Btw, it is not unknown for employees to fiddle expenses by overclaiming mileage or subsistence, without their employers knowledge. 

If an employee knowingly makes a false or exaggerated expense claim then they can have no complaints if they later face consequences from either the employer or the Revenue.


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## patkeeno (25 May 2005)

This was definitely not a case of employees fiddling expenses – it was company policy. Unfortunately the company is now out of business (don’t worry – I won’t name them).



If I approached the revenue with my story, what do you think that their attitude might be?


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## ubiquitous (25 May 2005)

Unless you can prove that you were in no way complicit in the expenses scam (ie you didn't sign for any fictitious expenses) and that the scam was initiated wholly by your employer, they would probably be compelled by procedure to invite you to prepare tax returns reflecting your undisclosed income for the years in question and to remit income tax, interest and penalties arising on this sum.


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## Purple (25 May 2005)

In this case the employee was evading the tax whereas the employer was facilitating the tax evasion. I don't think that facilitating tax evasion was a crime in the 70's and 80's. I know the employer is required to make the correct deductions but it was the employee who knowingly benefited from the scheme so unless they were simple minded in some sort of legal sense or were intimidated into accepting the practice I don't see how they shouldn't be held accountable for their own actions.
Just to be clear, if this sort of case ever did come up I think the employer should have to face the music as well.


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## samspuds (25 May 2005)

Do the revenue use any particular formula to calculate interest and fines for long overdue unpaid liabilities?

Thanks

Sammy


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## ClubMan (25 May 2005)

I'm not sure if it's up to date and authoritative but [broken link removed] might be of use.


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## samspuds (26 May 2005)

Thanks a million Clubman


Sammy


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## MugsGame (26 May 2005)

ClubMan - I hope you will be declaring this million when you receive it!


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## Seagull (30 May 2005)

The employer was not only facilitating tax evasion, they were also successfully dodging their own PRSI liablility, which definitely was a crime.


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## Vanilla (30 May 2005)

In my opinion the respective bargaining positions of the parties to the tax evasion is very important. It is likely that at that time the company or employer was in a very strong bargaining position vis a vis the employee. The employee effectively felt compelled to go along with the scheme. This in my view makes the employer the guilty party.


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## dam099 (23 Jun 2005)

The employer would also be obligated to collect tax from the employee under the PAYE system, using “expenses” to pay staff in this manner means they are breaching this obligation, which is why the Revenue normally go after the employer.


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## Betsy Og (24 Jun 2005)

It gives me a right pain in the jacksie when I see what our 'Super' Moderators attitude to tax evasion in the past was.

The self righteousness is such that I feel I should be looking up to the clouds for a deep booming voice when reading those posts.

Picture the scene, a high tech company, in the dark old 80's, young grunt fresh out of college, his first suit, told this is the way they get paid, everyone get paid this way - So you expect him to blow the whistle on this evil, despicable, unpatriotic practice - giza break. Are ye all subscribers to the Joan Burton school of potentially sincere but ultimately uninformed whingeing.

Do ye really believe there was a spontaneous eruption of Eureka in every smelly farmyard in the 80's when everyone said - f**k it, I'll say I'm not resident, sure the bank will never check it, and that way I'll save the DIRT???

The banks actively promoted it, they should be held primarily culpable.

_[Potentially libellous comment removed]._

This country was in a This post will be deleted if not edited to remove bad language state in the 80's, why are 2005 standards being imposed on the craytur's who were cajoled into having non-resident accounts - and cajoled isnt too strong a word since the banks had their tongues out to rake in the cash. Any are you telling me the Revenue didnt know about this at the time???, Revenue are people too y'know, I sure they knew Auntie Maggie had a few bob in a dodgy bank account but sure who didnt. There was neither the political will nor the balls on Revenue's part to take on the banks.

So now we persecute the little man. Why does the little man pay penal rates of interest????, interest is interest - i.e. a payment for the loss of the time value of money, a penalty is a punishment. Yet interest rates are 11.75% p.a. - by God wouldnt you horse your cash into that account if twas available. But no, this is just a ridiculous scheme to screw the people a bit more.

Tis surprising we dont have the Michigan Militia breaking out in Ireland, but ... sorry ... no, we have too many quislings in our ranks, subjecting us to sanctimonious drivel, it twas 1916 -22 ye'd be under yere beds, extract your heads from your posteriors, just because its the law doesnt make it morally right, dont check your brain at the door, they legally kill unborn babies all over the world - sure its the law so it must be right????, a government uniform on a soldier doesnt mean his killing is morally right - sure its the law so it must be right???

I believe that in this day and age we should all pay our proper taxes as I do, and not a penny more than necessary - though I'm not convinced of the value for money - but to have such a simplistic and unsympathetic view of the many many crayturs caught up in the Revenue trawls is apalling, and very un-Irish if I may say so - I'm in the EU but I'm an Irishman, I'd say some of ye are considering naming yere kids Gunther and Dieter so they can 'just follow orders'.


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## contemporary (24 Jun 2005)

> Picture the scene, a high tech company, in the dark old 80's, young grunt fresh out of college, his first suit, told this is the way they get paid, everyone get paid this way - So you expect him to blow the whistle on this evil, despicable, unpatriotic practice - giza break


 
Exactly, the employer told you you paid less tax when tax rates were at 56% who is going to say no to that.

Look at the increase in the CGT take when it was reduced to 20%. 

With income tax rates at 56% VAT and DIRT at 21% and CGT at 40% you wonder why people tried to dodge tax. 

In the low tax environment we have now there isnt an excuse though


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## ubiquitous (24 Jun 2005)

> It gives me a right pain in the jacksie when I see what our 'Super' Moderators attitude to tax evasion in the past was.


Does that include me? In actual fact, I agree with every word you wrote and have argued similarly on many occasions on these pages. What I said above referred to patkeano's query as to what Revenue would do if approached by a PAYE employee confessing to full or partial complicity in a tax scam dating back many years. Confronted with such a situation, I believe that the Revenue officials concerned would be obliged to follow the letter of the law in investigating the confession. Whether they would, or indeed should on the other hand actively seek out hidden scams of this nature dating back 15-20 years, in the absence of specific new evidence, is another matter entirely

BTW, contemporary, VAT was as high as 35% in the mid-80s!


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## Betsy Og (24 Jun 2005)

ubiquitous said:
			
		

> Does that include me? In actual fact, I agree with every word you wrote and have argued similarly on many occasions on these pages.


 

My sincere apologies Ubiquitous as it appears I included you in error. Glad to know I'm not fighting a lone battle on this one. 

Mea cupla. mea culpa, mea maxima culpa (someone might tell me if I've given that the right expression - I heard it recently in a mass or something - think it was to do with our new Pope) - the gist is, my apologies


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## RainyDay (25 Jun 2005)

Hi Betsy - That's an interesting rant, but it doesn't change the facts. You can try to pass off the blame onto the Revenue, and the banks and Uncle Tom Cobbly and all - but the tax evader still bears legal & financial responsibility for their actions. There is no reason why Revenue shouldn't pursue such evaders to the full extent of the law.


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## Betsy Og (27 Jun 2005)

RainyDay said:
			
		

> Hi Betsy - That's an interesting rant, but it doesn't change the facts. You can try to pass off the blame onto the Revenue, and the banks and Uncle Tom Cobbly and all - but the tax evader still bears legal & financial responsibility for their actions.
> 
> BY GOD THEY DO, YOU CAN CHALK THAT DOWN, YOU COULD SING THAT IF YOU HAD AN AIR TO IT.
> 
> There is no reason why Revenue shouldn't pursue such evaders to the full extent of the law.


 
Well, granted, there is no reason in law why they shouldnt. But ocassionally, not too often mind, the law is an ass. People who turn up in every trawl obviously werent harmless eejits caught up in it. People with offshore accounts, I would guess, knew what they were doing. People who bared all to a tax amnesty (but really didnt) have used up the one free kick you could argue was due to them - and are in dire trouble IMHO as all bets are off re the original amnesty. 

However, I do honestly believe, ranting and raving and foaming at the mouth as I occasionally do, that there were and are many innocents (or relative innocents - this is where the 2005 standards applied to the 80's kicks in and people make that argument for the one who cant be named for fear of libel so surely it should apply to the normal Joe who, after all, isnt charged with carrying off a high office of the state demanding impeccable integrity) who are being squeezed for every penny and then hung out to dry because they are vulnerable. Victimising the little man, and imposing penal interest rates, just isnt cricket in my book. 

As for the young fella in his first job, even Revenue arent wholly detatched from reality and might come to a reasonable settlement in that case - Revenue do settle plenty of cases, partial waivers of penalties and interest etc., so its not all so scientific and inflexible as you might believe. They can show compassion if they want, but in reality they probably only will when its put up to them on a wet freezing Wednesday in Wimbledon (to borrow a phrase from soccer), like most people and organisations they "dont like it up 'em", but the vulnerable dont feel able to put it up to them so by and large they are cruelly crushed - a bit cowardly in my estimation. Liberal treatment of the harsh cases I say.


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## daltonr (4 Jul 2005)

I may be wrong about this, but I find that the people who speak most harshly about tax evasion in the 70's and 80's are the people who were in short pants and going to school at the time.

I've yet to find someone who worked a low paying job with kids to raise through the 70's and 80's lambasting others for anything they did.

The ironic thing is that some of the people who speak out most on this were in all probability the beneficiaries of tax evasion themselves.   The school books, the school uniforms,  the holiday in Rosslare or Mosney,  the Raleigh Chopper for Christmas...

Can you all honestly say for certain that your parents never once did a nixer,
never once accepted a portion of their pay under the counter?   No you damn well can't.

Anyone who tries to judge people who lived, worked and raised a family in the 80's 
from the vantage point of the astonishing wealth of the last 10 years,  is a jackass.

-Rd


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## Purple (4 Jul 2005)

Once again I agree with you Rd. I have no time for tax evasion in the low personal tax environment we are in now but applying today’s moral standards to historical cases is stupid. 
To do so in a broader context would categorise the founding fathers of this state as terrorists and the founding fathers of the USA as self-serving racist members of a secret society.


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