The rules and regulations governing the employment of casual labour have changed greatly over the past number of years. Not so long ago it was common practice for cash payments to be made and the tax paid at the end of the year.
Now, there is a dedicated inspection unit called the National Employment Rights Authority, whose sole function is to ensure employees are getting all their rights. If you don't meet all the criteria as an employer, you are exposing yourself to serious penalties.
This week, we have the first in a two-part series on what your responsibilities are if you have employees on your farm.
The first thing that a farmer hiring casual labour or long- term employees must do is register with the Revenue Commissioners as an employer. Then tax credit certificates must be obtained for all employees. In the case of non-Irish nationals who have never worked here before, you won't be allowed to do this until you've secured a Personal Public Service (PPS) number for them. That will involve a trip to your local Department of Social Protection office.
There is a raft of rules that govern how you treat your employees. These do not apply only where the worker is hired as a self-employed contractor. In such instances the person hired would be required to register for tax with Revenue as a self-employed person and return the income earned on his/her tax returns.
While the following list is not exhaustive and the person's status must be determined on a case-by-case basis, the typical things that the Revenue or Employment Regulator would look for include whether:
Registration as an Employer
As an employer, you are required to register with Revenue and account for Irish PAYE tax, PRSI and the new Universal Social Charge (USC) on your employees' income.
To register as an employer, you need to complete the employer section (PART D) of the Revenue Form TR1 or, if you are operating through a company, Form TR2. If you are already registered under another tax bracket, a Form PREM Reg should be completed.
Registration of Employees
It is up to you to ensure that all of your employees have PPS numbers. Non-Irish national employees will more than likely need to request this from their local Department of Social Protection office. In order to operate PAYE tax correctly, the farmer must ensure the employee applies for a Certificate of Tax Credits and Standard Rate Cut-off Point. This is done by completing a Form 12A, which must be submitted by the employee to his/her local tax district.
Other issues you should consider include needs for work permits and the review of your employer liability insurance requirements. This can add up, with FBD quoting €110 for every €10,000 paid out in wages.
Tax Returns -- Employer
A Form P30 must be filed by you with Revenue on a monthly basis, or less frequently dependent on agreement with the Revenue, along with payment of the PAYE/PRSI and USC withheld by the 14th day of the following month. There is an extension available to day 23 of the month where returns are filed and any liability arising is paid online. Alternatively, what many farmers do is establish a direct debit for the monthly tax payments, eliminating the need to file monthly P30 returns.
In both cases, a Form P35 must be filed at the end of each calendar year providing details of all employees, employment income and benefits, tax deducted and payments to Revenue. The due date for filing the annual P35 return is February 15 following the end of the relevant year. Again an extension is available to February 23 where returns and payments are made online.
Failure to file the P35 return and pay the relevant tax by the due date will give rise to an exposure to a maximum penalty for late filing of €4,000 and annual interest rates on the late payment of tax of 10pc.
In order to comply with the regulations, such as providing a regular payslip, a weekly or monthly payroll is usually required. The cheapest of these computer packages are available at a cost of about €165. However, this is not the only cost involved. There is also the time spent inputting and maintaining the payroll. If you do not think you'll have the time or inclination to do this, a bookkeeper or accountancy firm will need to be hired to do the job.
Tax Returns -- Employee
If the employee has any non-PAYE income they may be required in certain circumstances to file an annual income tax return. The due date for submission is currently October 31 of the year following the tax year concerned.
It is mandatory, however, for owners or any director who holds more than 15pc of the shares in the business to file an annual tax return, even if they do not have any source of non-PAYE income.
There may also be filing obligations in foreign jurisdictions. For example, employees tax resident in Northern Ireland may have obligations in the UK.
Aidan O'Boyle is a manager in Grant Thornton's taxation unit