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Contractors & Revenue Audits
- 1. 20/09/2013 Noone Casey: Contractors & Revenue Audits
- 2. Anthony Casey, managing partner Ireland’s leading advisors to professional contractors for over 20 years Work hand in hand with all of Ireland’s leading agencies Developed I-Finance, market leading cloud based solution to Contractors finances Met with Revenue in March 2013 re Contractor Project Ensuring our clients pay the appropriate tax without Revenue audits 20/09/2013 Noone Casey: Contractors & Revenue Audits
- 3. Principal Officer Cork South West District & Regional Office South West Region Instigator of Contractor project in South West region 20/09/2013 Noone Casey: Contractors & Revenue Audits
- 4. Limited company contractor Composite Company contractor Umbrella company contractor Mitigate risk of audit Minimise tax liability 20/09/2013 Noone Casey: Contractors & Revenue Audits
- 5. Structure: ◦ one contractor beneficially holding 100% of own company Revenue challenging travel & subsistence and home office expenses Revenue identifying target companies for audit 20/09/2013 Noone Casey: Contractors & Revenue Audits
- 6. Revenue Audit criteria: ◦ Directors salary/fees/pension < 85% of turnover ◦ Expenses > 5% of turnover 20/09/2013 Noone Casey: Contractors & Revenue Audits 85 5 10 0 % of turnover Directors salary Expenses Retained profit
- 7. REAP; Risk Evaluation Analysis & Profiling system Revenue audit data based on last filed accounts Mitigate risk by filing current year accounts with reduced expenses asap 20/09/2013 Noone Casey: Contractors & Revenue Audits
- 8. If notified of audit ◦ Contact accountant/advisor asap ◦ 4 years period ◦ Penalties Non prompted disclosure 10% of liability Disclosure 50% of liability Non disclosure 75-100% of liability Example of Revenue notification letter in pack 20/09/2013 Noone Casey: Contractors & Revenue Audits
- 9. ◦ Vouched expenses ok ◦ Unvouched expenses (for audit settlement purposes only) Turnover < €50k < €75k €2,000 Turnover €75k - €100k €3,000 Turnover > €100k €4,000 20/09/2013 Noone Casey: Contractors & Revenue Audits
- 10. Structure: ◦ 6 contractors holding 15% shareholding ◦ Remaining 10% shareholding held by service provider ◦ No payment of employers PRSI 10.75% ◦ Travel & subsistence – where is the company office? 20/09/2013 Noone Casey: Contractors & Revenue Audits
- 11. Restriction of unvouched expenses ◦ Turnover > €100k ◦ €4,000 expenses per company rather than per contractor ◦ 6 contractors €650 each? ◦ Clarify status with Service provider asap 20/09/2013 Noone Casey: Contractors & Revenue Audits
- 12. Revenue challenge to PRSI status of directors Many contractors claimed Proprietary Director status i.e. S1 status no employers PRSI 10.75% New document issued clarifying 50% shareholding required for S1 status Revenue to issue clarification of existing cases in near future 20/09/2013 Noone Casey: Contractors & Revenue Audits
- 13. Part 2 of Schedule 1 to the Principal Act is amended by inserting the following after paragraph 6: ―7. Employment in the State in a company under a written or an oral contract of service, whether expressed or implied, where the employed person is — (a) the beneficial owner of that company, or (b) able to control 50 per cent or more of the ordinary share capital of that company, either directly or through the medium of other companies or by any indirect means.‖ 20/09/2013 Noone Casey: Contractors & Revenue Audits
- 14. Contractor will be notified personally as a director of company What control do you have over the audit? Can you make an individual disclosure if appropriate? Need to talk to service provider asap 20/09/2013 Noone Casey: Contractors & Revenue Audits
- 15. Issue re ownership of potential tax liability Liability may rest with company ◦ Directors legal responsibility under company law Is contractor liable for other contractors debts? What does your contract say? 20/09/2013 Noone Casey: Contractors & Revenue Audits
- 16. Composite company model is broken as a result of PRSI changes Preferable to contract through limited company Talk to existing provider about restructuring If dissatisfied with existing advice talk to Noone Casey 20/09/2013 Noone Casey: Contractors & Revenue Audits
- 17. No room to manoeuvre Remember penalties ◦ Unprompted disclosure 10% penalty ◦ Prompted disclosure 50% penalty ◦ No disclosure 75-100% penalty Possibility of raising funds? 20/09/2013 Noone Casey: Contractors & Revenue Audits
- 18. Example 20/09/2013 Noone Casey: Contractors & Revenue Audits €k €k Turnover 100 Disputed expenses 20 Allowable unvouched expenses 4 Additional taxable income 16 Additional tax (IT,PAYE/USC) 8 Penalties (disclosure 50%) 4 Interest 1 Total 13 For 4 years 52
- 19. Revenue statement on Travel & Subsistence (in pack) Overly restrictive & contradictory Being challenged by Noone Casey, Institute of Taxation & other interested parties No option but to adhere to Revenue statement at present If changes, retrospective claim 20/09/2013 Noone Casey: Contractors & Revenue Audits
- 20. Every contractor must review financial/tax status to assess risk Potential downside of Revenue audit is too great We will carry out free assessment for all attendees at this seminar Prompt, independent, expert advice Take control of your financial position 20/09/2013 Noone Casey: Contractors & Revenue Audits
- 21. 20/09/2013 Noone Casey: Contractors & Revenue Audits
- 22. Anthony Casey /Diarmuid Ryan Noone Casey 9 Fitzwilliam Square East Dublin 2 Telephone: (+3531) 676 6476 Email: acasey@noonecasey.ie Web : www.noonecasey.ie Twitter: noonecasey LinkedIn: Anthony Casey 20/09/2013 Noone Casey: Contractors & Revenue Audits