Beware of the Rogue Operators – The Red Flags are Waving

In recent months we have seen the re-emergence of rogue operators entering the Irish Contract Market offering misleading tax avoidance schemes.

Over the past decade and beyond, every so often there are new firms entering the market offering a new “product” that they sell as a legal way of avoiding tax, when in fact it is tax evasion.
Revenue will inevitably catch up with the scheme and the Contractor will end up having to pay extra taxes and fines to cover the taxes missed as a direct result of being ill-advised.
 

What to watch out for as an Independent Professional/Freelancer?

• Promise of retention rates of 85%-90%.
• Payments of low salary coupled with annuities, loans or trust payments from an offshore scheme.
• It is a 'Capital Instrument' and not subject to tax.
• Contract with various countries.
• Multiple contracts in the chain.
• Slick sales pitch over-promising compliance and retention rates.
• Assurance to promote that you are an employee and have no personal liability, S811b counteracts this.

If you are an independent professional or freelancer currently in a scheme, I would recommend that you get independent legal advice from a tax specialist or a legal professional who can give you an opinion.

If you are recruiter for Contract Roles, to mitigate the use of these schemes and to safeguard your Contractor and Hiring Client, we advise that you do the following:

• Request Company Registration documents – Ensure the company is registered in the Republic of Ireland.
• Irish VAT Registration Certificate.
• Insert a clause in your contract for services stating that Income earned from the Contract should be taxed in Republic of Ireland and no offshore schemes should be in operation.
• Request a copy of the Irish Tax Clearance Certificate.
• Ask ‘does the company or provider have a physical office in the Republic of Ireland?’
• Only use reputable umbrella company providers or Irish Personal Limited Companies with full tax registrations in place.
• If they offer large referral fees this will should raise alarm bells.

Generally, with these schemes, if you think it is too good to be true - it generally is.
There are other ways to reduce your tax bill, though they may not be quite as lucrative as some advertise, but that is because they are legal!

Always do your homework to avoid any nasty surprises from Revenue!