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Ireland: Tax abuse in State bodies, says Revenue

23 October 2012   (0 Comments)
Posted by: SAIT Technical
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By Fiona Gartland (Irish Times)

Executive summary (SAIT Technical)

Irish Revenue Commissioners have indicated that it believes that certain government departments and public bodies have been involved in instances of breaches in tax codes. Revenue has indicated that such instances will be challenged by reference to the law. Concerns were raised about the tax compliance of consultans hired by ministers on special contracts through their consultancy companies. Such persons do not pay tax through the PAYE system, but are subject to 20 per cent professional services withholding tax.

Full article

THE REVENUE Commissioners has said it believes Government departments and public bodies have been involved in "a number of instances” of "offensive tax avoidance and or abuse”, according to documents released under the Freedom of Information Acts.

The documents, which did not detail cases, said the instances had "directly or indirectly” come to the attention of Revenue and were considered a breach of tax codes. "Where such activities come to Revenue's attention we will challenge them by reference to the law,” the documents said.

Released by the Department of Health to The Irish Times, the documents were issued to departments when concerns were raised in the Dáil about the tax compliance of consultants hired by ministers on special contracts through consultancy companies.

Those engaged through consultancy companies do not pay tax through the PAYE system, but are subject to 20 per cent professional services withholding tax. In a letter to departments dated June 27th, 2012, chairwoman of the Revenue Josephine Feehily said she was writing to help ensure they were not "unwittingly found wanting or subject to adverse criticism for failing to comply with their tax compliance obligations or for facilitating unacceptable tax avoidance”.She said departments "need to be particularly mindful of not engaging in activities that seek to circumvent tax law”.

An attached document highlighted situations that gave rise to "most queries and misunderstanding”. Under "Offensive Tax Avoidance/Abuse”, it said, "there are a number of instances that have directly or indirectly come to attention where Revenue considers that offensive tax avoidance/abuses of the tax system envisaged in paragraph 19 of the Code of Practice for the Governance of State bodies have occurred”.

The document said it was not uncommon for Revenue to come across misclassified employees: " . . . it is not the manner of recruitment nor what a person calls him or herself which determines their classification for tax purposes. In particular, it is not necessary to be a permanent public servant to be classified as an employee in accordance with tax law.”


Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


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