Ireland’s tax system is assisting the growing practice of “bogus self-employment”, according to a new report by Tasc, the independent social change think tank.
It points to the construction industry as an example, where the proportion of self-employed has grown from 25 per cent in 2006 to 38 per cent in 2015. Generally, it says “flexibility” is being forced on more and more workers in Ireland.
One of the report's authors, Prof James Wickham, described as "ironic" a situation whereby the Irish tax system seems to facilitate bogus self-employment by allowing "employers" to designate the recipients of contracts as self-employed and without consultation.
Direction
He said such “self-employed” people were in fact “like any other employee: they are working under someone else’s direction, they don’t have their own equipment and don’t supply materials, they certainly don’t employ anyone else.
“However, thanks to the Revenue’s relevant contracts tax, they magically become their own bosses,” he said.
“Revenue’s online system allows employers to become principal contractors and employees to become subcontractors literally at the click of a mouse. Providing the principal has the subcontractor’s name and tax number, no active consent from the subcontractor is even necessary.”
In practice, it meant workers lost entitlement to jobseeker’s benefit, which is not means tested, and also to an invalidity pension or help following occupational injury, while firms did not have to pay employer’s PRSI, account for any wages or administer PAYE.
The loss to the economy of this was estimated by Tasc at “at least €21 million in 2015”, he said.
Prof Wickham noted how in theory people could complain about this practice to Revenue but Tasc had found “no evidence that this actually happens for the simple reason that acceptance of self-employment status is now often a condition of employment”.
Revenue regulations
It meant Revenue regulations to prevent workers being wrongly deemed as self-employed were now “a formulaic decoration”, he concluded.
“It’s as meaningless as all those ‘terms and conditions’ you promise you’ve read every time you buy something online,” he said.
