Peadar Tóibín (Meath West, Sinn Fein)
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74. To ask the Minister for Finance his plans to alter the tax registration process in the construction industry from employer registration to employee-subcontractor registration. [48847/14]

Michael Noonan (Limerick City, Fine Gael)
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Under the Tax Code there is an obligation placed on the person making a payment to register for tax where either the payment is made in the capacity of an employer (Regulation 7 of the Income Tax (Employments) (Consolidation) Regulations 2001 or in the capacity of a principal contractor (Section 530J Taxes Consolidation Act 1997). There is, of course, a separate requirement placed on subcontractors to notify Revenue of their self employment status and to pay and file under the self-assessment regime.

It is essential to retain the requirement that an employer or principal, as a person who is deducting tax, should register.  Putting the onus on an employee/subcontractor to register instead could make it harder to follow up defaulting employers/principals and lead to considerable tax being placed at risk and I therefore do not propose to change the registration process.

It may be that the Deputy believes that registration by the principal results in a recipient of a payment being treated as a self-employed contractor rather than an employee and that putting the onus of registering on the individual recipient would change this.  This is not correct.  The individual s status as an employee or a self-employed contractor derives, not from any registration by one or other of the parties with the Revenue Commissioners, but from the nature of the contract concerned. 

If the true relationship between parties is that of an employer/employee then the employer is required, under the Tax Code, to operate PAYE on payments made to the employee. If, however, the true relationship is not that of an employer/employee then, where the relationship relates to construction operations, as defined within the Tax Code, there is a requirement to operate the relevant RCT provisions.

I would also add that determining the true nature of the contract is essential not alone to the proper functioning of the tax system but also in establishing employment rights.

I wish to advise the Deputy that the was created to assist both parties to an engagement including engagements in the construction sector - in determining whether a contract is, by its nature, either a contract of service (that is, an employer and employee arrangement) or a contract for services (that is, not an employer and employee arrangement). The Code is not a Revenue Code but rather was compiled by the Hidden Economy Monitoring Group, consisting of the Irish Congress of Trade Unions/Department of Jobs, Enterprise and Innovation/National Employment Rights Authority/Department of Social Protection/Department of Finance/Small Firms Association/Irish Business and Employers Confederation/Construction Industry Federation/Revenue Commissioners.

I am advised that under the current arrangements for the construction industry, where the principal believes that a contract with a subcontractor is one of self-employment, the subcontractor is notified of that fact in writing by the Revenue Commissioners.  The subcontractor is fully entitled to clarify with the Revenue Commissioners any matters they are unsure about and if in the course of this, the Revenue Commissioners form the view that the contract is, in fact, a contract of employment they will take such action as they deem appropriate to ensure that PAYE is operated.