Do you employ a cleaner directly to clean your offices. By directly I mean you pay them as an employee or you pay them from the petty cash box.
If you have them recorded as an employee and dedcut PAYE and PRSI then very good. If you employ them through an agency and they are an employee of that agency that is fine to.
But if you pay your cleaner from the petty cash box or by cash out of your pocket and dont deduct tax or prsi for this person you are more than likely breaking the law. This 'casual labour' may cost you a lot more in the future when you get a PAYE inspection and this person is deemed to be an employee and the money you paid them over the years will be deemed their net pay. So you now have to pay up the tax and prsi you never deducted, plus interest and penalties.
Why do you pay these people cash. Is it because;
1. They are receiving benefits they will lose of they start to work and so will not work except for cash.
2. You never considered them as employees
3. You consider it their problem, they are self employed and should look after their own tax. But did they give you an invoice for the work done, with their name, adddress and tax (pps) number on the invoice?
On point 3, even if they did give you an invoice this may not be enough for the tax man and you will still be liable for their tax and prsi.
On point 1, if you are paying these people cash and they are receiving state benefits, is it fair that you work and pay taxes and those taxes are paying these people's benefits and then you are paying them again? Consider that!
As a business your company's reputation could be ruined if your name gets published along with all the other tax offenders. How much will office cleaning cost you then?
A note from the revenue on who is or is not an employee.
http://www.revenue.ie/leaflets/revdsw.pdf
A document with some good information about same
http://www.revenue.ie/leaflets/sp_it104.doc
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I just posted today on the related topic of false self-employment at http://breadandroseslife.blogspot.com/2006/04/employed-or-self-employed-false-self_08.html It's from a Canadian perspective but touches on similar points.
You say "But did they give you an invoice for the work done, with their name, adddress and tax number"
a sole trader, trading under their exact own name they mdon't need a RBN from the CRO, and if their income from services is below x they don't need to register for VAT, so what is this "tax number" you mention, do you mean their PPSn
Apologies, tax Number referred to is PPS number. I have amended blog accordingly.
Linda, it is unfortunate the world over that what seems like a good idea, reducing tax bills, will have a long term effect on a person.
If they are not contributing towards social insurance (PRSI in Ireland) they may not be entitled to state monetary assistance if they need it, as they will not have contributed.
In Ireland the revenue commissioners (tax man) do not look favourably on "Self Employed" paid cash cleaners or similar positions and usually, when found, will seek backdated tax and prsi from the employer.
In many of these positions I have found that the "employee" is also in receipt of state benefits and will loose those benfits if they work. Those benefits are of worth more to them than taking a job, so they are happy receiving cash and the employer gets cheap labour subsidised by the state.
The Irish revenue commissioners have some info on how to check if a person is an employee or not.
http://www.revenue.ie/leaflets/revdsw.pdf
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