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  • Response From T Buckley Re Contractors' Submission - Nov 2013

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    The Irish Tax Institute have raised issues and concerns to Revenue Commissioners and the formal responses in relation the contractors project

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    The Irish Tax Institute have raised issues and concerns to Revenue Commissioners and the formal responses in relation the contractors project

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
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    Download as pdf
    18K views17 pages

    Response From T Buckley Re Contractors' Submission - Nov 2013

    Uploaded by

    sussmag
    The Irish Tax Institute have raised issues and concerns to Revenue Commissioners and the formal responses in relation the contractors project

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
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    of 17
    llamiaaat Revenue a eens Ms Cora OBrien Cons oes Irish Tax tie South Bock Longboat Quay Grand Can! Harbour Dubin 2 71 November 2013 ‘Re: Revenue's National Contactors Project Dear Me O'Brien, ‘Tank you for your submission of 11 November. ln responding wil also adress the iss raised by you in your later of 14 August. Regarding the att leter, Lege the de sy in responding folly, ‘You have raised issues and questions in elton othe treatment of expenses (specially tavel and subsistence) the procedure for applying pena; the administration of the Centactors Projet: and ‘tuations where ther is hardship or inability to pay. You have also included coments of « more frveral nature which do nt appear to have immediate bearing on the current project, and while hey ‘sr of course noted, I donot propose o deal wth them etn his eter ‘As general commen, I woud lik to emphasise that Revenue his not change its interpretation of ‘he law in relation tothe ax tretment ofthe expenses of travel and subsistence. Some issues do arse inthe special eae of person providing service hough an itemneiay, ut or intention ist apply the law and practice as it exis, oto introduce new interpretations. Inthe inte of retest ossble larity, we are issuing a fre Tax Briefing Article No, 4of 203, which deals with most of ‘he fans you have aie, and Tattach a copy at Appendix 2. Is worth iterating thatthe ‘scrngements which are the focus ofboth Tax Briefings (3 and 4 of 203) are thse where the intermediary caers ino a conic, either diel withthe end-user or va an agency, under which it ‘gres to suply the services ofan individual While think te Tax Briefings cover most ofthe situations sed by you {escent principles sae sometimes best understood through examples, and I wil therefore commento each ofthe ‘examples and issues you have raised in your eter and submission. tn the flloning pages, words and hrases i itlies are taken from the FT communications y g Revenue 5) Clap ‘To bexin wit would tke to des the issu fiablty to pay and consistency (aes 5 & 60 the November sminion). Revnue's potion on isi to py ist ou of pegph 49 of ne (Ce of Practice for Reve Aud and we ar of our always willing dics appropriate means of aye of ib texpyer however, 20 the details given in Cave nd Cae of ae Sart leva. kn gener courexgricne i tata suitable secede of payment can be fxd ‘The quantum of lability isnot affected by the financial circumstances of the (On ise 6 (inconsistent etme) know that you are in contact with Mr Eoin O* Domnall, whois ‘manager ofthe Contactors Project, in relation to possible inconsistency, and the complaints and ‘view procedures are available to any case wher the taxpayer els until ete. The specie ‘vestions you pos ate- The numberof years under audi ‘Comment: For consistency of tetment, nd as a concetsion nthe cas of disclosures, we underook ‘0 del wih specified four-year period, 2008 to 201 ocusive. As you know, we ave sid that ssclosures covering thee four years would be accepted wher the resuing disposal of income fils ‘within sestorl noms and here sno specific reason to question the disclosure. Lam aware ofa vry ‘small umber of eters that issued in err specifying a two-year period. Tis was an ero, pot an inconsistency. Of couse, where there is eson to suspect ud or negligence, and particulary wire ‘here isn disclosure, the audit may be extended in accordance withthe Code of Practice, Expense deductions ‘Comment: We have had many queries around the statement that we expected disclosures tobe within Sectoral noms, Inn effort tobe hpi, we may have given broad indications ofthe picture ‘merping from the Project. Tiss ots sugeston tha here isa nerentae of eames ht will ‘uagustloned The circumstances ofeach case determine what expenses ae reasonable, and ‘unsupported claims for expenses wil aways result in challengs Salary of Spouse ‘Comment: This deat within some detail i the Tax Briefing Article. There is no brie to ‘yment of salary to family member fo services or duties performed inthe business. If, servizes ‘or dais ae ot performed however the fits that the salary” payment is actualy an application 3f * portion ofthe contactors taxable income and mast be eae as such. g Revenue a Clin ps Catan inn Penalties ‘Comment: The aplication of penis is als clarified in the Tax Briefing Aris. The purpose of (his Project isto deal with abuse, Its not intended a a routine check on the expenses of constr. ‘Thowe selected for nterventon typically exhibit exceptionally high expenses nti Revenue records For that reason, the opeaing posto is that deliberate behaviours suspeced. Inevitably, onocens ‘cro, tectical adjustment and careless bebaviou cur in ome ofthe cases, an the appropiate ‘nal is then applied, The reason for requiing a statment in writings tothe appropiate penalty tobeapplicd, and for approval ofthe pnaly at Assistant Sereary evel, was purely to ensre ‘consistent eatment, In all cases, there is recommendation fom the easeworkeautor wh is familiar withthe dete ofthe ase Mating a disclosure ‘Comment: The proces of disclosure nd ou expectation within this Project, were set out in til ‘in the ITI Bulletin published on 9 July 2013 (copy of text at Appendix 1). The cases detailed inthe ‘submission are nesesuily stated in summary fashion edt is ot possible to give a detailed response ‘We ave however checked and have found no cae where detailed material wa insisted upon without specific reason, In that context, our experience o dat as been that where disclosures have been challenged there is tendency forthe ibility to be significantly revised upwards. As you know, its ‘commen practice oindet inthe intial ut noice all ofthe material tht maybe required to avoid complaints about subsequent requests. Your members ae however well aware that fthere ae icutios in producing materi imely engagement withthe autor wl almost lvays achieve reasonable eolution Consistency i very important to Revenue and we havea formal project structure involving ‘epresetatves of each Region to ensure good intemal communication and goverance. Each case is however unique in some respets, andthe appearance of inconsistency ca result rom eucil ferences in the detail of aes, Specific Cases and Scenarios Letter of 14 August 2013; Seonaro 1 Alice isa director ofa star-ap company which provides architectural services. She has a purpose-built ofc atthe end ofr garden, in which she carries out the vst majority ofher ae 3 Revenue iz Clnsoo Canam wits design wrk Shs secre contrat provide architectural sere. Ll She end the promises of AB Lido 2 ours every Fede to provide wrk pats nd dcus ‘he rot Ay ater tne ay fom her home ofc spon met poetics o develop Sr tn father. {si Rees view that he pres of AB Li, where she ponds 2 ors por ck Sof fertile of er? ‘Comment Tee ses not etl er om his smmary. apes that Alize i eg to tend nd perform work fo AB onsite fortwo hours weck If, the she ot ened any "ave ofr tht purpose. Forte reminder her mek ses an ait in bie athe ‘oma way, and Tax Briefing 3.02013 dott ply to er. Pace unde SI, 14 and ‘P2700 ply Ihe ins with AB Li isofthe ae that actu eves (ot specify Al's serve) ae requied it mayb thal of er business ouside Tx Bring 3 £2013, The fics oer elataship with AB Ld mist deterine which appli Scone? Brendan sa director ofa company with a contract to provide services to CD Lid and EF Lud ‘He prevcusly had an office inthe nearby town, in which he carried onthe vast majority of is ltes, wh one orto vss por mon othe promises of CD Lad and EF Lid. Duet the economic downturn. he was forced to ve up the lease on hi office and he ransfrred his fice eqnipment and activity toa home ofc. It seems o be Revense's view that the premises @FCD Lid and EF Led have now become Brendan's normal pace of work This i despite the {Fact thas fice in town would previously have ben considered his norma place of work ‘and hes carryng on the same dues rom hs home office a he previously did rom hs offce ‘Comment: The change of location of Brendan's fice has no bering at all onthe allowability of his ‘eave expenses, His werk appears to consis entirely of contrat with CD Lidand EF Lid. The precise nature ofthe serices that are being provided to CD Lid and EF Lid ae not slated. Nori it lear whether his work would normaly be eared out onthe premises of CD Lid and EF Lid andthe ‘lreunstancesin whch ie caries out the work a another location, Theft that he had his own office ‘and equipment could be evidence that he snot working under the general direction and conto of CD {Ud and EF Lidin which cose Tax Briefing 3 of 2013 is not eleven. On the oer han, it could be ‘hat the normal place of elvery ofthe service i the premises of both CD Ltd and EF Lid bat Fenda does his work diffrent location fer coaveticine wl with he agreement of CD Lid and “EF Ltn which case the Tax Briefing applies, eee ¥ Revenue a Cin es ist een Sconcrio 3 We understand rom follow-up correspondence with Revenue, your view is hat the same princples apply regarless of whether the expenses of ravel and sbsitence dre ncured On ‘rear journey toa locton inside or outside the State, This gives rs toe following Davai a director ofa company with « mambor of contact fo provide series to A Lid (cated in Cor) B Lid locoved n Limerih), C Ld ocaed in Brussel) nd D Led (located 'n Paris). His home ofc is based in Dublin. Under these contract, Kevin is repird 0 ork wo das per month athe premises of ach of ALi 8 Ld C Lid amd D Lad 15 Revenues vew tat he premises ofD Lud in Pare considered tobe Ks normal place f work forthe two days ofthe mont which he spends there? Is, the case tht heir ‘hen mot ened to ax: free reimbursement of th os of his fights to and oreright ‘acconmodation in Pars? ‘Comment: The Tax Briefing Article is quite clear on the sue of foreign vers domestic uavel, ‘Thereis o difrence. The postion dealt within ITS4 relates to someone with fed base of| ‘employment ireland Dave's situation isnot entirely clear, thatthe nate of is contracts could make difference. ‘hey ae contrat fr the delivery this services, he could be inthe sittion tht israel expenses sre mot reimbusable fie of ax. However, the number of ontacts suggest tat his company sia act nthe busines of providing a service, fr whch it curently bas a numberof cles. As such Davis's expenses may be paid taxee. AS with Alc, the facts would determine whic treatment spies ‘We areatso unclear ast whether the postion would be difven in relation expenses ‘incur n vs the premises, of say D Ld, if D Lad was a poental cen of Bvt ‘rather ‘hana current lint. n these circumstances, the premisrofD Ld cud not be David's normal place of work. Non-deductbly of travel and subsistence expenses these Circumstances woud be a serious impediment to hase seeking to expand ther businesses ‘broad. ‘Comment: It would ser hat such expenditure would be wholly and exclusively ail ot fr the PUPORES oF hecompany's rade and therefore, deductible in computing is profits assessable under Schedule D, Revene also aceps that axe reimbursement of travel and subssece expenses can ‘be made in thes circumstances, A this point, a more general comment sums appropri: ‘You expressed particular concern bout the ftepretaton outlined in Example 9 th Tax Briefing ‘This iterpetaton is based on the well accepted view that ifan employee has no fixed base thea be of ‘she cannot lin tax deduction in respect ofthe expenses of travelling oa jb under section 114 of 5 ¥ Revenue i cectesiiee the TasesConoom Ac 197, Youahed whch hs apes o xp shne, services ae rove ied se vn ieee oro a payer The mean a uso’ tt apes ithe aetna being weed ey. Ay eecn treatm ries siny ease thats cde: nthe separ to in 154 wich ou ute txpyer a ed ste expenses of al ican on onpoy shes maybe ‘enue es ota. As have sendy inca, thei change Reve exiting imerretton. ‘You raise the question ofthe long standing concesion re “country money" inthe buldngandallied trades, “Country money" applies o employee and not to contactors. Contractors the bailing and ali aes are trexed the sme way as contractors in oer sectors, This coacession for ‘employees applies in station where te employee generally as o choice over the loation at hich the work takes pie. Its dictated by the employe. Is very different tothe situation dealt, within he Tax Briefing, where the individual ofen controls he intermediary. Submission of 11 November: {Issue 1 ~ Revenne previously geve a clean bil of health tthe taxpayer ‘Comment: This issue is spociiclly deat with in Tax Briefing Article No, 402013. Persons who {eel they were given comfort in relation other practices in elation to expenses shoul make heir ‘cases known and cases wil be considered inthe lght ofthe Tax Briefing ‘Issue 2~ Bonafide travel expenses are being disallowed cave 1 ‘The contractor bese in South West raveled fom home toa pharmaceutical plant i the South West four ays a week He ws required by is work to travel o Dui o perform Ks work des one dey each week “He didnot lim expenses for the travel berween hs home and the engineering plant He

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