Following on from the recent project which focussed on the tax compliance of contractor companies in the South-West of Ireland, the Revenue Commissioners are broadening the scope of their project to include the Border, Midlands & Western region.

In a recent meeting with the Institute of Taxation it was confirmed by Revenue that the scope of the project has also been broadened, it now includes a wide range of contractors including engineers, project managers and software consultants. In addition, it will not be restricted to contractor companies but will include self-employed contractors, limited companies and directors of companies.

The majority of audits will be in the form of desk audits i.e. letters will be issued requesting information rather than visiting the taxpayers home/premises. All taxes (VAT/Corporation Tax/ Income Tax/PAYE/PRSI) will be included for the four years from 2008 to 2011. The focus will continue to be on “exaggerated” expenses claims, wages understated, payments to family members, and other expenses claimed. The issue of travel expenses will also continue to be a focus, with Revenue repeating their view that expenses incurred in respect of travelling from home to work are generally not allowable, and will only be allowable in extremely exceptional cases. 

We would reiterate our previous advice to any contractor with doubts about the validity of previously claimed expenses – review them as a matter of priority and discuss them with your accountant. If tax has been underpaid it would be advisable to make a full disclosure to minimise the level of penalties applied

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