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

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patkeeno

Guest
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.
 
patkeeno said:
Surely that would be grossly unfair.
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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.
 
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.
 
patkeeno said:
Yes – but there were two parties to this arrangement, and the employer was more culpable than the employee.
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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.
 
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.
 
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?
 
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.
 
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.
 
Do the revenue use any particular formula to calculate interest and fines for long overdue unpaid liabilities?

Thanks

Sammy
 
I'm not sure if it's up to date and authoritative but [broken link removed] might be of use.
 
The employer was not only facilitating tax evasion, they were also successfully dodging their own PRSI liablility, which definitely was a crime.
 
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.
 
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.
 
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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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
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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
 
It gives me a right pain in the jacksie when I see what our 'Super' Moderators attitude to tax evasion in the past was.
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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!
 
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.
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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
 
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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