Gerald Nash (Louth, Labour) | Oireachtas source

This amendment is designed to address the pernicious phenomenon of bogus self-employment. This particular instance was brought to my attention by the Irish Air Line Pilots' Association and I belatedly forwarded the Minister some correspondence on this to give him some context on Revenue's approach to these issues. Bogus self-employment is alive and well in a number of economic sectors but it is particularly prevalent, according to the Irish Air Line Pilots' Association, in aviation. It estimates that up to 5,000 pilots registered under corporate entities here over the last decade or so have been engaged or are still engaged through what are known as intermediary structures. The Minister will know what intermediary structures are.

The fact of the matter is that a significant number of pilots operating in the Irish market are given a Hobson's choice by the airline that engages them. One can work with an airline as a pilot but pilots and those in personal services companies have to create company structures to allow them to work for particular airlines. One must set up a structure to hire oneself to a firm and the firm then has an arm's length relationship with that person. The pilots themselves would portray all the characteristics of direct employees. They look after their own tax affairs, including PRSI and so on, even though the airline itself is, for all intents and purposes, the employer. As I said at the outset, this practice is prevalent in Ireland. This is one of few countries in the European Union, and maybe the only one, that operates these kinds of structures and where the tax authority does not have the capacity to look through these kinds of arrangements.

The almost exclusive purpose of these company structures is to misrepresent or misclassify the employment status of the pilot or the individual employer, regardless of what the sector might be. However, Revenue says that it has no power to look through these personal services company structures as they are generally described. This has a significant impact. The 2018 report from Revenue and the Department of Social Protection shows that these arrangements have a significant impact on reductions in PRSI, in revenue to the Social Insurance Fund and in revenue to the Exchequer more generally through taxes. It is quite extraordinary that the Revenue Commissioners says it does not have any function in looking through these companies.

When one looks under the bonnet of these relationships one sees that they are designed to misrepresent the classification of the employee. They also deny revenue to the State because of these complicated structures and the masking of the actual and real relationship between the employer and the employee. These arrangements are matters of form and not substance and it is high time that the Revenue Commissioners had a clear function in determining that relationship and had the power in law to carry out investigations of these kinds of structures. As the Minister will know, it is a matter for the scope section of the Department of Social Protection to determine employment status.

When so much tax revenue is at stake because of these structures one would imagine that the Revenue Commissioners would have a role in investigating these structures and determining whether they are lawful or not. It is up to us as a Parliament to define whether these arrangements are lawful or not. I proposed this particular amendment to give powers to Revenue to investigate these types of structures.