Tag Archive for: Revenue

Revenue Issue Updated Guidelines for Determining Employment Status for Taxation Purposes

Revenue Publish Guidelines for Determining Employment Status for Taxation Purposes

Revenue have today issued a new Tax and Duty Manual: “Revenue Guidelines for Determining Employment Status for Taxation Purposes“.

The previous Manual was taken offline to be updated after the October 2023 Supreme Court judgement in the Karshan case.

The new Manual provides welcome clarity as it outlines the five-step decision-making framework that businesses are required to use to determine whether a worker is an employee or self-employed for taxation purposes.

However, for some sectors, the new Manual will create additional payroll responsibilities as individuals previously considered self-employed should now be treated as employees and put on payroll.

Revenue have encouraged businesses to urgently and comprehensively review arrangements with all workers and determine their employment status for taxation purposes.

If you require any assistance, please contact us.

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Revenue Warns Airbnb Hosts over their Tax Compliance

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Revenue have recently written to over 12,000 taxpayers who are in receipt of income from the letting of short-term accommodation through Airbnb. Airbnb have provided Revenue with details of payments made to customers in the years 2014, 2015 and 2016 in respect of the provision of short-term accommodation.

The letters issued by Revenue are reminders to taxpayers to include this income in their tax returns. Revenue have confirmed that they will be carrying out a range of follow up compliance checks to ensure that tax returns are filed on time and completed correctly.

Income received from the letting of short-term accommodation is treated differently for tax purposes to income received from renting a property under a landlord and tenant arrangement. In addition, income from a trade of short-term letting is subject to different tax treatment to income from the provision of accommodation on an occasional basis.

When preparing your income tax return, please be aware of the following points when calculating profits from the occasional letting of short-term accommodation:

  1. A deduction against profits may only be made in respect of incidental costs directly associated with the service provided to guests. Examples of incidental costs include commission paid to online accommodation booking sites, cleaning fees, the cost of providing breakfast to guests as well as a reasonable apportionment of electricity, gas and heating utilised by guests;
  2. A deduction against profits is not allowable for annual costs associated with a property such as insurance, TV licence and general maintenance costs;
  3. Capital allowances on the cost of furniture and fittings for the property are not available against the profits;
  4. No deduction is allowable against profits in respect of expenditure incurred in advance of a property/room being made available for guest accommodation.

For income earned in 2017, the required date to submit your income tax return on Revenue’s Online Service (ROS) is 14 November 2018.

If you have any queries or concerns relating to the letter issued by Revenue, please contact our Tax Department.

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Revenue Publishes Updated Transfer of Business Document

On 31st July 2018, Revenue published an updated Transfer of Business document, revising the previous document which was reviewed in December 2017.

There are significant differences between the two versions when it comes to which transfers of property come within the transfer of business (TOB) provisions.

 

The December 2017 document confirmed Revenue’s view that TOB applied:

  • where a property had been let on a continuing basis and was being sold to a tenant who is an accountable person; and
  • in the case of a vacant property that was let or partially let on a continuing basis in the past.

Whereas, the 31st July 2018 version confirms that TOB will not apply to:

  • “The transfer of a let property to the tenant…as the only asset being transferred in those circumstances is the property itself and the transfer of a property without any additional assets, which together with the property would constitute an independent undertaking…regardless of how the property had been used prior to its transfer”; and
  • “A transfer of [property], of itself, without any additional assets (such as a letting agreement), which together with the immovable good, would constitute an independent undertaking…regardless of how the [property] had been used prior to its transfer”.

Vendors, their solicitors and tax advisors should review all property transactions currently in progress to ensure the correct VAT treatment is being applied in light of this updated Revenue guidance.

For further assistance please get in touch.

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Revenue moves to PAYE Modernisation and Real Time Reporting

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What is PAYE Modernisation?

With effect from 1 January 2019, employers will be required to notify Revenue with details of the amount of the emoluments and the tax due for each employee on/ before the payment date on a real time basis. This means that each time an employee receives a payment or benefit from their employer, the PAYE due and remitted to Revenue must be 100% accurate.

This real time reporting (RTR) process abolishes the requirement to file P30’s, P35’s, P45’s, P46’s and employers will no longer have to produce P60’s at the end of each tax year.

A Revenue Payroll Notification (RPN) will replace the current Tax Deduction Card (P2C) and from the 1 January 2019 all employers will be required to:

  • Obtain the most up to date RPN before making any payments to employees
  • Report employee payments (amount of pay, payment date, amount of PAYE, USC and PRSI deductions) to Revenue in real-time, and
  • Reconcile Revenue’s response to the payroll submission

At the end of each month, employers will receive a statement from Revenue with payroll submission totals. Employers must either:

  • Accept the statement as their monthly return, or
  • Correct payroll data if the statement is incorrect

The statement issued by Revenue will be deemed to be the return if no amendments or corrections are made before the return due date i.e. 14 days after the end of the month (23 days for ROS users who file and pay online).

The legislation governing the new regime, provides that a failure by an employer to correctly operate PAYE on a payment/ benefit to an employee, may result in the employer being liable for the payment of income tax on a grossed up basis. In addition, the existing €4,000 penalty for non-operation of PAYE may be enforced more readily.

Employers should take the time now to review their employee data, payroll processes, policies and systems to ensure that they are ready to comply with their RTR requirements on 1 January 2019.

Should you require any further details on PAYE modernisation or real time reporting (RTR), please contact Anne Comber, Manager of Payroll Services.

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