Short PRSI. Can I claim PRSI for work done in the black economy 34 years ago?

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A friend of mine got his PRSI record some weeks ago from a SW office in Donegal. He is not too far away from pension age.
There are a few gaps in his record and he is thinking doing something about it. It would improve his future pension.
He has no PRSI record for the tax year 1989/1990. But he had a job there for 26 weeks in what is called the black economy. He contacted his former employer and the employer reluctantly agreed to come forward with him. What can the two expect?
I suppose both have to repay the PRSI contributions from that time. Looking at historical sources, employers PRSI was 12.2 % and employees PRSI was 7.75%.
Will there be any penalty? Any surcharge or interest charge? Anything else?
It looks like that the employee will have no problem on the tax side. The entire wages stay well under the historical tax free allowance. The income from that job was the only income in the entire tax year. Neither was he on any social welfare payment during the entire tax year. He was not married at the time and had no kids either.
What can the employer expect? Could anything nasty come up? Or will SW just accept the whole thing without big fuss after some interviews and reward the PRSI contributions as soon as employer and employee paid the money they are being asked for?
What is the best way to approach this? Separate contacts from both employer and employee to SW- or should they go in together?
 
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Penalties and interest on a compound daily rate. The reality is it will probably wipe the employer out, if they have some money. But you can't get blood from a stone. Don't forget, your friend will also be liable for the Income Tax, not the employer.
 
Towger said:
Penalties and interest on a compound daily rate. The reality is it will probably wipe the employer out, if they have some money. But you can't get blood from a stone. Don't forget, your friend will also be liable for the Income Tax, not the employer.
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We are looking at Irish £ 75 a week- so the entire wages were Irish £ 1950. No income tax for the employee. PRSI share for employer would be about Irish £ 238 and about Irish £ 151 for the employee. Any rough calculation about what we are talking about as the final tally?
The employer retired 2 years ago. The business is closed.

Nothing done yet. Just looking for opinions.
 
Forumuser said:
We are looking at Irish £ 75 a week- so the entire wages were Irish £ 1950. No income tax for the employee. PRSI share for employer would be about Irish £ 238 and about Irish £ 151 for the employee. Any rough calculation about what we are talking about as the final tally?
The employer retired 2 years ago. The business is closed.

Nothing done yet. Just looking for opinions.
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FWIW, I was earning considerably less than £75 per week in 1989 and paying income tax every week.

Your plan is mad and both DSP and Revenue are thankfully more likely to burst out laughing at your story than to pursue either you or your former employer for tax arrears.
 
There would have been indeed tax deductions from the wages every week at that time if everything would have gone the right way. But due to the fact that there was no income for the rest of the year, your man would have gotten all his taxes back after the end of the tax year through claiming it back. To me it looks like that there is no tax fraud- at least on the employees side.
 
Forumuser said:
A friend of mine got his PRSI record some weeks ago from a SW office in Donegal. He is not too far away from pension age.
There are a few gaps in his record and he is thinking doing something about it. It would improve his future pension.
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S class said:
How critical are the 26 contributions ?

Are they needed to get into a higher averaging band ?
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You should answer this key question.
 
I made a telephone call in the afternoon. It is just the higher band your man is after.

Nobody here has come up yet with a figure for the PRSI payment from either the employer or the employee.
Judging by this:

When is interest applied by Revenue?

This page explains when interest is applied by Revenue
www.revenue.ie www.revenue.ie
the payment would be astronomical and the whole idea a real suicide job.
If I take above figures, convert them into Euros, take about 12853 days into consideration and apply an interest rate of 0.0274 % per day, the employer has to fork out a bit over Euro 100000 and the employee Euro 64k and bit.
Can this be true? Any employer here who "forgot" to pay PRSI for his employees in the past and got caught years later? Any first hand experiences?
 
Forumuser said:
Any first hand experiences?
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I have heard of a second hand tale, from years ago. Persons conscience needed to be cleared They had all the figures worked out what needed to be paid. They walked into Revenue in O'Connell Street and made a self declaration of fiddling the system. The Revenue were so impressed/amazed that they let them off some of the interest.
 
I think your friend would be better off not involving the former employer.

He should instead provide any evidence of the employment like payslips, diary entries, photos. But at a 35-year remove I wouldn’t hold out much hope that he has any of these.

I’m missing a few dozen PRSI contributions from when I was a teenager but I have zero record of anything and the business folded in I think 2001. I have never bothered to try and get them restored.
 
Dr Strangelove said:
I think your friend would be better off not involving the former employer.

He should instead provide any evidence of the employment like payslips, diary entries, photos. But at a 35-year remove I wouldn’t hold out much hope that he has any of these.

I’m missing a few dozen PRSI contributions from when I was a teenager but I have zero record of anything and the business folded in I think 2001. I have never bothered to try and get them restored.
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In those days you had the small brown envelopes with all figures written on the back. There is nothing left of that.
There are 4 eye witnesses around- ex colleagues. At least on of them would testify in court. He once fell badly out with the employer and would only be too willing to cut his throat with great pleasure.
 
Your calculation is incorrect.
Revenue interest is calculated on a simple interest basis as far as I know.
So it's 10% a year
34 years would be 340%
The original amount was IR£1950
So €2,500
So the interest would be 340% of €2,500 or €8,500

If the interest is compounded, and I don't believe it is, it's about €24,000 interest.
 
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Brendan Burgess said:
Your calculation is incorrect.
Revenue interest is calculated on a simple interest basis as far as I know.
So it's 10% a year
34 years would be 340%
The original amount was IR£1950
So €2,500
So the interest would be 340% of €2,500 or €8,500

If the interest is compounded, it's about €24,000 interest.
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You got it wrong. IR£ 1950 is the full wages- not the PRSI figure.
 
Exactly how many contributions is he short by.

Would he be able to achieve these between the date of his 66th birthday and the end of the calendar year of his 66th birthday.

If the timing is favourable he might reach his target at the end of the tax year of his 66th birthday.
He could then just defer to 1st January of the year after his 66th birthday.

If not he would loose another complete year of contributory pension.

Bearing in mind that the contributions in his pension claim year are not counted and he seems to only require an extra 26, he would certainly reach his target on 1st January after his 66th birthday.

In either case he could apply for Jobseekers Benefit to fill in the deferral gap.

If he is remaining in employment up to his 66th birthday he might qualify for Pay related Jobseekers benefit.

If he manages to qualify for this he might get more from PRJB than what he would have achieved from the Contributory Pension.
 
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S class said:
Exactly how many contributions is he short by.

Would he be able to achieve these between the date of his 66th birthday and the end of the calendar year of his 66th birthday.

If the timing is favourable he might reach his target at the end of the tax year of his 66th birthday.
He could then just defer to 1st January of the year after his 66th birthday.

If not he would loose another complete year of contributory pension.

In either case he could apply for a Jobseekers Benefit to fill in the deferral gap.

If he is remaining in employment up to his 66th birthday he might qualify for Pay related Jobseekers benefit.

If he manages to qualify for this he might get more from PRJB than what he would have achieved from the Contributory Pension.
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I was not told how many contributions your man needs. He was talking about several gaps in his PRSI count. I suspect more skeletons in the cupboard.
At the moment he is only interested to find out the costs and risks of the above case. He will decide if he will bother at all depending on those facts and figures.
There are indeed other ways to make up the shortfall in his pension- as you demonstrated.
 
Forumuser said:
employees PRSI was 7.75%.
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Brendan Burgess said:
Revenue interest is calculated on a simple interest basis as far as I know.
So it's 10% a year
34 years would be 340%
The original amount was IR£1950
So €2,500
So the interest would be 340% of €2,500 or €8,500
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Correction: The interest would be 7.75% of €8,500 or €660

Not sure what the penalties would be other than being laughed at.
 
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