Key Post Revenue crackdown on contractors' expenses - what should a contractor do now?

mandelbrot

Former user
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2,330
There is very little openness and transparency about Revenue's recent attempts to retrospectively rewrite the tax code on subjects such as locum doctors and contractors, to suit their own agenda.
What parts of the tax code have they tried to rewrite?

If their poor bosses lie awake at night fearing public persecution for not hammering businesses and individuals hard enough, they should either quit or ensure that their organisation pursues similar performance goals and strategies as their international counterparts such as HMRC.
One of the biggest fears of senior managers in any large organisation, public or private, is what some loose cannon further down the hierarchy might do, unknown to them and beyond their control until it's too late. The unknown unknown!

If they take the latter course of action they will learn that it is possible to achieve fulfillment of those goals and strategies without having to make up the law as they go along or adopting ridiculously inflexible approaches to what are often extremely technical compliance issues.
Seeing as you seem clued in on these things, how do Irish Revenue's performance goals and strategies differ from HMRC?

All of this a long way away from the Garda response to the penalty point scandal...
Not sure I get what you're saying here - there hasn't AFAIK been a Revenue equivalent to the penalty point scandal (cue WizardDr arriving in to talk about DIRT!). Are you saying that Revenue are more likely, or less likely, to encounter such a scandal?
 

T McGibney

Frequent Poster
Messages
3,551
What parts of the tax code have they tried to rewrite?
The retrospective rewriting of the rules (not the laws, mind you) on contractors' deduction entitlements and the custom & practice surrounding medical locum contracts are two cases in point.

One of the biggest fears of senior managers in any large organisation, public or private, is what some loose cannon further down the hierarchy might do, unknown to them and beyond their control until it's too late. The unknown unknown!
I think this rebuts your earlier point.

Seeing as you seem clued in on these things, how do Irish Revenue's performance goals and strategies differ from HMRC?
HMRC presumably have their own detractors but I really wish Revenue would be as business- and enterprise-friendly as HMRC are.
 

Zacchaos

Frequent Poster
Messages
50
Mandelbrot,

By aggressive in approach I mean, by including more years and tax heads in initial audit enquiries (ties up more time for compliant tax payers), more aggressive in person and forceful with their opinions & interpretations on legislation - and by taking a more aggressive line on materiality in settlements, think DB74 picked up on this.

The economy relies on small businesses to a significant extent - there is only one sector of the small business sector that has had a strong lobby over the years - farming - and this has flowed right through government policy into tax legislation. Other small business sectors could have done with a similar lobby over the past few years - small businesses are very vulnerable and have no safety net - a lot of business owners feel that the government/policy makers are working against them - Revenue, with an aggressive approach from collection to audit are just another example - and as pointed out in the previous post, Revenue are not as good as their counterparts in the UK in giving simple tax advice to businesses.
 

Dec05

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Messages
33
I would appreciate an opinion on this one please .... If expenses were previously claimed and now based on the revenue clarification cannot (specifically travel from home) ....would the zero amount, where there had always been a small amount charged, raise a flag to the revenue?
I want to be fully compliant but am wondering what are the implications of this ?
Thanks
 

fearbeag

Frequent Poster
Messages
37
Hi Dec05
If the amounts of expenses claimed are small, I wouldn't be too concerned.

However if you have had high expenses at any point in the previous 4 years you might want to take a look at that. Even if these expenses are fully legitimate it is a serious challenge to convince Revenue of this. The default Revenue position is that there was tax evasion occurring.

In relation to raising a flag to the Revenue. The Revenue have officially ended the National Contractors project, though they are many unresolved cases still. I expect that they will continue to monitor the sector and any high expense claims / low % of tax paid will stir their interest. In the sector as a whole, they will be expecting that expense amounts claimed will drop, so for that reason I don't think you should be too concerned.

If you are concerned then talk to your accountant, and check out the IPCI which has issued guidance which may be of relevance.
 

Dec05

Frequent Poster
Messages
33
Thanks for that fearbeag. I wasn't aware the project had officially ended - I have read some articles about this being "Phase 1" - so am wondering what's coming next.

Regarding my specific situation, yes the amounts claimed were very small but as the revenue stance is to consider everything as deliberate and attracting max penalties, I don't want to enter their radar.

It's a pity the revenue don't have a helpline to give out advise - I worked in other countries where you could phone the tax office for advice & they were v informative & helpful. unfortunately they have a more negative, scary "big brother" approach here.

Thanks again, v v helpful !
 

fearbeag

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Messages
37
I am not sure if there was an exact end date, I presume that the different regions have had different end dates as they started at different times. The Revenues end target was July. That said, there is still open cases from the project, so I guess all it means is there are no new cases being added.

I am not sure the fact that the Project has officially ended means a whole lot. I guess the risk of audit for contractors hasn't changed, i.e. if the returns show a low % tax then they may come a snooping. Though I think that future audits might be for individual years rather than the 4/5 years used in the contractors project.
 

fearbeag

Frequent Poster
Messages
37
Hi Scouser,
I don't have a link that confirms the project has ended.
This is based on feedback from the IPCI which has met with the Revenue on numerous occasions.
The feedback from their last meeting with the Revenue is that the National Contractors project won't be continued as it has concluded.
It was the Revenues intention to finish it by July '14 anyway.

http://taxinstitute.ie/Portals/0/Tax Policy/Contractors Project/Revenue letter on open cases - April 2014.pdf

However as I said in the previous posts, they are still unresolved cases, so while the project has ended, the fat lady hasn't even taken to the stage.
And I would also expect the Revenue to keep tabs on the sector in future routine audits.
 

Scouser

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Messages
120
Know of someone who has received an audit letter today for the last 4 years, not finished yet by the looks of it, or maybe this is just a normal audit that would have happened anyway.
 

Wadaboutit

Registered User
Messages
2
also know of a friend who received a letter last week from the South West Revenue. Officially, according to an IPCI update last Oct/Nov, this National Contractors Project may be over but it seems the Revenue are just progressing under a new scheme. As Scouser says, perhaps it is the normal audit process but whatever way you look at it, these audits are not at an end in this sector.
 

Joe_90

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Messages
2,226
Know of someone who has received an audit letter today for the last 4 years, not finished yet by the looks of it, or maybe this is just a normal audit that would have happened anyway.
Normal audits don't tend to start out with 4 years
 

fearbeag

Frequent Poster
Messages
37
Well the project may be officially disbanded, but it seems the screw is still being turned. I can't say I am surprised. It would have been nice if the Revenue focused on resolving open cases / appeals from the original audit rather than adding new cases. Justice delayed, justice denied.
 

fearbeag

Frequent Poster
Messages
37
Revenue issued their assessment in my Company's case last September after 700 + days. This was appealed immediately. Then a further long wait, where they ignored my requests to process the appeal. They have now issued new assessments for the same disputed tax, this time against me. So not alone a long wait they now want the same disputed tax two times. Justice delayed, justice denied.
 
J

Jon Snow

Guest
Revenue issued their assessment in my Company's case last September after 700 + days. This was appealed immediately. Then a further long wait, where they ignored my requests to process the appeal. They have now issued new assessments for the same disputed tax, this time against me. So not alone a long wait they now want the same disputed tax two times. Justice delayed, justice denied.
Are you sure they actually want the tax twice?
 

T McGibney

Frequent Poster
Messages
3,551
Revenue issued their assessment in my Company's case last September after 700 + days. This was appealed immediately. Then a further long wait, where they ignored my requests to process the appeal. They have now issued new assessments for the same disputed tax, this time against me. So not alone a long wait they now want the same disputed tax two times. Justice delayed, justice denied.

Good luck with this. A long and stressful road. You have done well to immediately appeal the company assessments and I presume you will be doing likewise with the personal ones. Perhaps the less said online the better in relation to ongoing cases, but if you're stuck at any stage don't hesitate to PM me if I can help in any way.
 
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