Misleading Retention Rates of 90% Raise Revenue Suspicions

Recruitment agencies and businesses that use contractors are usually involved in large projects on tight timelines and an easy area to overlook is due diligence checks on the intermediaries you use.

Icon Accounting encourages all organisations who engage intermediaries to perform full and proper due diligence on all payments.

Full knowledge on how the contractors are engaged, and that any payment models used are fully compliant with the Irish Tax System.

We have previously alerted Agencies to schemes which Revenue have said are not tax compliant – these include payment via Employee Benefit Trusts (EBT Schemes), Pension Annuities and Jobs Boards (misuse of loyalty points!)

In all cases, these schemes are mainly aimed at contractors and involve the user being paid in two parts. The first part is a salary, so small that there’s little or no Income Tax or PRSI or USC liability.

The second part is claimed to be non-taxable, as it’s a capital payment to a loan or scheme.

These schemes are highly contrived and involve the user agreeing to pay the promoter an income. Contractors are generally told they can take home 80% to 90% of their income.

This is highly unlikely to be true and agencies should not rely on the promoter who is selling the scheme.

So, if you’re an agency with contractors using one of these schemes, and being paid this way, they are highly likely to be avoiding tax and won’t be far from the Revenue radar.

Agencies who engage with promoters who use these schemes risk at least reputational damage and at worst being liable for unpaid tax, PRSI & USC if they can be shown to be involved in the arrangements.

Icon Accounting & other PCSO members do not use such schemes.

For more information on keeping contractors fully tax compliant, please contact Icon Accounting on 01-8077016 or email info@iconaccounting.ie

John Bell FCCA

Finance Director