HSE failed to deduct tax from nearly 400 contract workers
The HSE could be facing a bill running into millions of euros in back tax, which it failed to pay for nearly 400 contractors it employed over three years.
The income tax should have been deducted at source, but a risk assessment found this had not been done in the case of 389 people who were employed on contract in hospitals and in the community between 2011 and 2013.
They include a lot of sessional workers who provide a wide variety of services.
A spokeswoman for the HSE confirmed it has identified a potential tax risk but did not say how much is involved.
She said its "tax advisors are currently setting up a process to ensure this risk is mitigated".
The HSE is now writing to each of the contractors in question to determine whether or not they are fully tax compliant to identify any potential liability for the HSE, she added.
If it has to recover payment from contractors it could take years to be recompensed.
The contractors worked in various parts of the country including the Galway University Hospital Group, Limerick University Hospital Group, Cork University Hospital and St Luke's Hospital in Dublin.
Others worked in the area of social care and mental health across the country.
Stephen Mulvany, HSE's chief medical officer who alerted senior managers around the country, said: "We have compiled a list of 389 suppliers deemed to be subject to income tax at source.
"We now have need to deduct income tax at source on payments to these individuals in order to be tax compliant," according to the correspondence seen by the Irish Independent.
He added: "There may be some media comments or queries associated with the issue of these letters."
He pointed out that taking income tax at source does not confer employment status on the person providing the service.
The HSE has been heavily reliant on contract staff in recent years because of the restrictions it faced in hiring full-time workers as a result of the moratorium on recruitment in the public service.
It reported a workforce of 100,881 full-time employees at the end of April.
It claimed to be clamping down on its serious levels of absenteeism with absence rates of 4.36pc in March, the lowest rate for that month on record.
The HSE said that "The year to date rate of 4.47pc puts the HSE generally in line with rates reported by the Irish Small and Medium Enterprises (ISME) for large organisations in the private sector and available information for other large public sector organisations both in Ireland and internationally.
"Latest NHS England absence rates for year to October 2014 recorded an overall rate of 4.42pc, an increase from the previous year of 4.18pc."