Brian Cowen (Laois-Offaly, Fianna Fail)

I do not accept that such practice is prevalent. The Revenue Commissioners have responsibility for administering and operating all taxes in the construction or any other industry and ensuring that all operators within that sector comply with their taxation obligations. They recently advanced a number of key developments that are having a significant impact on tax compliance, which I outlined in my reply.

It is not simply a question of 35 site visits. To suggest that is the level of activity in the Dublin district of the Revenue in regard to the construction industry is to miss the point completely. There has been ongoing monitoring of this sector. For example in 1998 and 1999, in a major resource-intensive project the tax status of some 63,000 subcontractors was reviewed involving approximately 7,000 visits. The results of that exercise indicate that 88% of principal contractors visited had either correctly classified their employees or contractors or agreed to abide by Revenue's ruling as to the correct classification. They undertook a further programme of visits to 142 construction sites during 2001 and 2002 to examine the employer-employee classification. In the sites visited, 2,998 individuals were classified as employees and 984 as subcontractors. Of the 984 subcontractors examined only 65 were found to be misclassified.

On an ongoing basis based on risk assessment, Revenue auditors audit the books and records of a considerable number of contractors and subcontractors. The matter of employee and subcontractor status is always examined as a routine part of such audits. In each case the auditors examine the RCT1 forms that a principal contractor and a subcontractor complete in respect of each contract. These forms contain details of the duration and type of contract and a statement that the contracts are not contracts of employment.

Some 1,500 audits, 10% of all audits, were conducted on building contractors in 2004. There has been a substantial increase in the level of Revenue's activities around the construction industry this year, enhanced by a number of special new compliance initiatives. As I said, in the east and south-east region almost 50% of available audit resources have been devoted to a special investigation of construction industry projects. As part of that, in the first six months of this year, the status of some 500 subcontractors was examined and it was found that only three should properly have been classified as employees.

In the Dublin region, a designated contact officer has been appointed to receive information from trade unions and others where there are suspicions that employees have been misclassified as subcontractors. Similar arrangements are being considered for the other regions. A national RCT monitoring group has been established with contacts in every district. That has proved highly successful in intensely monitoring and tracking suspect principals and subcontractors.

On any fair analysis the Revenue Commissioners are doing everything they possibly can. They are bringing forward very pragmatic proposals which are working on the ground and they are liaising with others to make sure they deal with any misclassification that has taken place.

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