Mr. Niall Cody:

I have spoken about bogus self-employment at this committee and at the Committee of Public Accounts for the past five years. We have to be careful because bogus self-employment has a cachet. There are various different forms of employment, self-employment and working relationships. We pay particular attention to it, we do a significant number of real-time business visits and site visits and we interview probably thousands of people every year on their employment status in the construction sector and other sectors.

I mentioned the review in my opening statement. The review tried to put a framework around the potential social insurance and tax loss if certain scenarios pertained. The real challenge is that the nature of that bogus self-employment is now mostly done through different corporate structures such as the personal service companies and the managed service companies. We do not have look-through provisions to look through a limited company. One of my colleagues was telling me about their nephew who recently began work in a particular sector and he signed various documents, including one to establish himself as a limited company. These were the terms of engagement and that is not bogus self-employment. It is a legal corporate structure, and if we want to have a provision to look through that legal structure, change has to take place in the law. We carried out a contractors project a few years ago and it was subject to study by the Comptroller and Auditor General. In that, we looked at personal service companies and managed service companies, and while there were challenges around overclaiming of expenses etc., we were not looking through the limited liability corporate structure, and things that flow from that. This report was done in parallel with the work that the Taylor commission carried out in the UK. There have been recent cases in the UK that have looked through because they have provisions that allow them to look through.

The big challenge is that there is a fiscal advantage to having a self-employed structure in employer's PRSI. That is the monetary driver. There are other drivers that I do not need to tell the Deputy about because I know he has paid close attention to the whole area in recent years. There are different workers' rights involved which sometimes are a driver in some of this. The nature of what an employee, employment or self-employment is includes situations which are very advantageous to people because they are high earners in a particular structure, and we would have seen more of it as the recovery started in some of the more precarious sectors. We pay close attention to the construction sector, obviously, where the subcontractor model is well established and very positive for those who are subcontractors. As the construction sector started to come back in about 2011 or 2012, we would have had a lot of complaints around bogus subcontracting, but as the construction sector has improved, the nature of the changes in the power relationship become different. We pay a lot of attention to this, we reclassify people, we will respond to information and we will interview, but the issue around addressing corporate structures is really a legislative one.