Employers warned of fines for bogus job contracts
EMPLOYERS have been warned that they risk huge fines for incorrectly classifying staff as being self-employed contractors.
Accountants TaxAssist said fines of €50,000 are now commonplace for cases where bogus self-employment is proved.
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There is now an increased focus by Revenue and the Department of Social Protection on firms that treat members of their workforce as self-employed contractors when they should be treated as employees, according to Michael Scanlan, of TaxAssist.
Treating someone as self-employed means there is no employer PRSI (pay related social insurance) of 10.95pc paid on total pay.
Where Revenue finds that workers' employment status is incorrectly classified it demands backdated employer PRSI be paid by the employer, at a minimum.
Mr Scanlan said Revenue was getting stricter on the issue of bogus contractors.
"From the employers' point of view, because a lot of these contractors tend to be earning high amounts, the unpaid tax bill and therefore the risk of classifying them wrongly is often quite high. In fact, we've seen bills of over €50,000 recently.
"When the Revenue have focused on the employer, they will often then turn their attention to the contractor and pursue them to ensure their taxes were correctly filed."
According to Patricia King, of the Irish Congress of Trade Unions, the State could be losing up to €240m a year because of bogus self-employment, which is a problem particularly in the construction industry.