[Ireland] €1billion cost of self-employment scam to State

The Dáil’s spending watchdog has called on Revenue to investigate ‘bogus self-employment’ cases which could be costing the Irish Exchequer up to €1billion a year, Extra.ie reports.

The scam involves employers misclassifying workers as self-employed rather than employees for tax gains. Such misclassification can negatively impact the worker because they miss out on benefits self-employed people cannot claim.

The Public Accounts Committee (PAC) has called for Revenue to launch an investigation into the matter. It particularly identified issues in the construction and courier sectors.

The PAC found that under a 1997 agreement by Revenue and courier firms, couriers are treated “as self-employed for tax purposes.” Revenue said this arose from a social welfare appeals officer’s decision that “couriers were regarded as self-employed for PRSI purposes.”

The PAC said it was concerned that the decision to classify these workers in such a way has resulted in employees losing benefits they should be entitled to. They additionally noted that the Exchequer has potentially lost uncollected taxes and PRSI.

The committee has now called for Revenue to conduct an investigation into the 1997 agreement. Members said this should establish the magnitude of revenue lost to the State as a result of this bogus self-employment, the number of workers impacted by it and the financial cost to those workers.

PAC chairperson - Sinn Féin TD Brian Stanley - called for the investigation to be carried out by an independent group.

“We want this investigation to be carried out by a firm outside of the State’s control, possibly even a firm outside of Ireland, to ensure that there are no conflicts of interest,” Mr Stanley said. “Bogus self-employment is a blight upon workers’ rights which is reportedly costing the State €1billion a year in uncollected PRSI.

“The committee has also called for the Government to bring forward legislation to replace the existing Code of Practice to provide stronger and more comprehensive protection for workers.

“As far as the PAC is concerned, this is only the start of our examination… We will be following up with Revenue to ensure that there are no delays to establishing the requested investigation and that the terms of reference are suitable.”

The PAC also expressed concerns about bogus self-employment in the construction sector.

In 2019, Revenue visited 1,673 sites and interviewed 6,650 people. It found that just 6 per cent of these workers were classified as employees or registered as PAYE applicants.

The Dáil’s spending watchdog has called on Revenue to investigate ‘bogus self-employment’ cases which could be costing the Irish Exchequer up to €1billion a year, Extra.ie reports.

The scam involves employers misclassifying workers as self-employed rather than employees for tax gains. Such misclassification can negatively impact the worker because they miss out on benefits self-employed people cannot claim.

The Public Accounts Committee (PAC) has called for Revenue to launch an investigation into the matter. It particularly identified issues in the construction and courier sectors.

The PAC found that under a 1997 agreement by Revenue and courier firms, couriers are treated “as self-employed for tax purposes.” Revenue said this arose from a social welfare appeals officer’s decision that “couriers were regarded as self-employed for PRSI purposes.”

The PAC said it was concerned that the decision to classify these workers in such a way has resulted in employees losing benefits they should be entitled to. They additionally noted that the Exchequer has potentially lost uncollected taxes and PRSI.

The committee has now called for Revenue to conduct an investigation into the 1997 agreement. Members said this should establish the magnitude of revenue lost to the State as a result of this bogus self-employment, the number of workers impacted by it and the financial cost to those workers.

PAC chairperson - Sinn Féin TD Brian Stanley - called for the investigation to be carried out by an independent group.

“We want this investigation to be carried out by a firm outside of the State’s control, possibly even a firm outside of Ireland, to ensure that there are no conflicts of interest,” Mr Stanley said. “Bogus self-employment is a blight upon workers’ rights which is reportedly costing the State €1billion a year in uncollected PRSI.

“The committee has also called for the Government to bring forward legislation to replace the existing Code of Practice to provide stronger and more comprehensive protection for workers.

“As far as the PAC is concerned, this is only the start of our examination… We will be following up with Revenue to ensure that there are no delays to establishing the requested investigation and that the terms of reference are suitable.”

The PAC also expressed concerns about bogus self-employment in the construction sector.

In 2019, Revenue visited 1,673 sites and interviewed 6,650 people. It found that just 6 per cent of these workers were classified as employees or registered as PAYE applicants.