Since the 1st of January 2019, Van, Motorcycle & Pushbike Couriers will no longer operate under the 21 year old special tax arrangement between Revenue/Social Welfare and Courier Company owners. Under the previous system, tax and PRSI were deducted at source from couriers, this has ceased since January 1st. Revenue is now advising that couriers self-declare as self-employed and pay tax and PRSI accordingly.
A note of caution: Although eventually forced to abandon the Special Tax Arrangement, Revenue state:
“Revenue are of the view that, in general, motor cycle and bicycle couriers are engaged under a contract for service i.e. they are self-employed individuals”
Fact: The Scope Section, The Chief State Solicitor’s Office, The Employment Appeals Tribunal, and more recently the Tax Appeals Commission have determined that couriers are not self-employed..
My advice for couriers? DON’T DECLARE AS SELF EMPLOYED
Instead, write to:
Scope Section, Department of Employment Affairs and Social Protection
or Email email@example.com and request an ‘Insurability of Employment’ determination. The vast majority of you are not self-employed, never have been, and this is why:
ILLEGAL STATE AID –
On the 3rd of April 1997, the Office of the Chief Inspector of Taxes wrote to a chartered accountancy firm, which represented Courier Firms at: Quote “Discussions”.
The subject of the discussions as described by the Office of The Chief Inspector of Taxes
Fact: The Courier Industry was operating almost entirely in the black economy.
Fact: Revenue were fully aware that the Courier Industry was operating as such.
Fact: Courier Firms were non-compliant with their tax obligations.
On the 3rd of March 1997, a meeting was held between Courier Company representatives and representatives of the Revenue Commissioners in the Burlington Hotel. A Special Tax Arrangement was agreed between the parties. The non-compliance of the entire Courier Industry for at least 5 years was wiped from existence. With effect from the 6th of April 1997, the Revenue Commissioners deducted tax and PRSI, at source, weekly, from individual Couriers pay cheques.
Revenue themselves refer to it as a PAYE operation. PRSI was deducted at S Class, the self-employed PRSI class.
The Revenue Commissioners are also very clear as to why they were going to classify all couriers as self-employed:
“In the interest of uniformity”
Fact: All couriers were classified by the Revenue Commissioners ‘In the interest of uniformity’.
3 years later, a courier was determined by the Scope Section of the Department of Social Protection to be an employee and not self employed. The individual courier was labeled as self employed under the special tax agreement. This decision by Scope was appealed to the SWAO. At the Appeal hearing, the Minister’s Senior Counsel submitted a lengthy legal submission concluding –
“It is contended that the Appeals Officer is bound to hold that the claimant is employed under a contract of service” (employee)
Despite no new evidence, no new point of fact or law to warrant an appeal in the first instance, the Appeals Officer overturned the Scope Decision.
While this Appeal was waiting for this hearing in the Social Welfare Appeals Office, the Chairman of the Public Accounts Commission began inquiries into the employment status of couriers. To this end, he wrote to both the Chairman of the Revenue Commissioners and the Secretary General of the Department of Social Welfare. He asked why were all couriers being treated as self employed. The Chairman of the Revenue Commissioners replied –
“As regards taxation, the issue of couriers an particularly motorcycle couriers was the subject of protracted discussions between Revenue and courier industry representatives”
The Revenue Chairman enclosed copies of what he terms “the arrangement reached for tax purposes”.
It is in these arrangements that it states that a Social Welfare Appeals case of 1995 was non-binding and that the classification of all couriers as self-employed by the Revenue Commissioners was “in the interest of uniformity”.
The Secretary General of the Department of Social Welfare also replied to the Chairman of the Public Accounts Committee. In his letter he stated:
“In order to resolve the matter, a number of representative ‘Test Cases’ were selected in 1993/94 for detailed investigation and formal insurability decision under social welfare legislation. This process resulted in a decision by an Officer of the Social Welfare Appeals Office on 12 June 1995 who decided that a courier was self employed …. The Appeals Officer’s decision established the criteria in relation to the employment status of couriers that has, since then, been generally accepted thought out the industry and also but the Office of the Revenue Commissioners for tax purposes”.
Fact: Each case must be assessed on its own merits in accordance with the general precedents of Irish Law concerning contract of service. Operations which seem the same may differ in the actual terms and conditions in any given case.
Fact: The Revenue Commissioners did not accept that the decision by an Appeals Office of 12 June 1995, established criteria in relation to the employment status of couriers. The Revenue Commissioners were at pains to point out that the decision of 12 June 1995 was not binding on Revenue, that each case must be taken on its own merits and that the Revenue Commissioners classification of all couriers as self employed was ‘In the interest of uniformity’
Fact: The 1995 Appeals Office case was not a ‘Test Case’. It can not lawfully be a test case.
Fact: The only person to refer to the 1995 Appeal case as a test case is the Secretary General of the Department of Social Welfare and he only calls it a test case 5 years after the appeal hearing and only when under pressure to explain to the Chairman of the PAC why occupations which may differ in the actual terms and conditions are all being treated as self employed by the Department charged with determining employment status.
For 21 years this Special Tax Arrangement, based on nothing more than the Revenue Commissioners instruction to treat couriers as self-employed ‘in the interest of uniformity’ has continued. Every Scope Section determination made in accordance with the general precedents of Irish Law, which challenged this Special Tax Arrangement, has been overturned by the Social Welfare Appeals Office.
On the 30th of October 2018, the Tax Appeals Commission issued determination 23TACD2018 regarding PAYE and PRSI (TAX APPEALS COMMISSION) which determined that a delivery driver was an employee and not self employed.
This determination from the Tax Appeals Commission is identical in all relevant detail and legal argument with the Legal Submission submitted by the Minister for Social Welfare’s Senior Counsel to the Social Welfare Appeals Office over 18 years earlier in March 2000.
On the 13th of November 2018, in Revenue eBrief No. 198/18
the Revenue Commissioners state “The previous agreement set out in Appendix 1 will no longer apply”
Fact: The Agreement set out in Appendix 1 is the Special Tax Arrangement agreed between the Revenue Commissioners and representatives of Courier Firms in the Burlington Hotel in March 1997.
Fact: For the entire duration of the agreement, both the Revenue Commissioners and the Department of Social Welfare were fully aware the classification of all couriers as self-employed was contrary to the general precedents of Irish Law and that the repeated overturning of Scope Section Determinations by the Social Welfare Appeals Office was a Political Policy which unlawfully ignored the general precedents of Irish Law.
Fact: This Special Tax Arrangement was not available as a rule to other employers to evade their PRSI obligations.
Fact: This Special Tax Arrangement with the Revenue Commissioners and the Department of Social Welfare to evade employers PRSI contrary to the general precedents of Irish Law amounts to illegal state aid for the courier industry.
The Special Tax Arrangement is not the only tax arrangement of its kind. The Revenue Commissioners and the Department of Social Welfare have a number of these special arrangements with selected industries, most notably the eRCT system.
The deliberate misclassification of employees as self-employed is an offence under the social welfare acts. It is social welfare fraud. When the State is complicit, it is Illegal State Aid.
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