Gerald Nash (Louth, Labour)
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275. To ask the Minister for Finance in view of the recent guidance from the Revenue Commissioners which provides employers an opportunity to correct any payroll tax issues arising from the Supreme Court Karshan ruling of 2023, his plans to enforce the Karshan ruling to ensure that all workers who should be classified as employees have such a classification; the means by which he intends to ensure there is a level playing field for those employers who take the opportunity to make these corrections; and if he will make a statement on the matter. [65773/25]

Gerald Nash (Louth, Labour)
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276. To ask the Minister for Finance following on from the recent guidance from the Revenue Commissioners which provides employers an opportunity to correct any payroll tax issues arising from the Supreme Court Karshan ruling of 2023, the means by which the Revenue Commissioners will ensure that all employers who have previously classified their employees as self-employed are adhering to the ruling, the means by which the Revenue Commissioners intends to enforce this; whether more staff will be required to enforce this adequately; and if he will make a statement on the matter. [65774/25]

Simon Harris (Wicklow, Fine Gael)
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I propose to take Questions Nos. 275 and 276 together.

On 20th of October 2023 the Supreme Court, in a unanimous decision, delivered an important judgment on the key factors to be considered when classifying an individual’s employment status for income tax purposes.

The detailed judgment was delivered by Mr. Justice Brian Murray in The Revenue Commissioners v. Karshan (Midlands) Ltd. t/a Domino’s Pizza. The case was concerned with whether the delivery drivers were independent contractors under a “contract for service”, and therefore taxable under Schedule D of the Taxes Consolidation Act 1997, or employees under a “contract of service”, and taxable under Schedule E of that Act (PAYE).

The judgment sets out an extensive review of relevant caselaw and succinctly summarises it through the provision of a five-step decision-making framework. The decision-making framework consists of five questions that are to be used to resolve the question of whether a contract is one of service (employee) or for service (self-employed). Under the self-assessment tax system, each business making payments to individuals is obliged to correctly determine whether those individuals are employed or self-employed, based on the facts and circumstances of each relationship and by applying the five-step framework. While the judgment related to a company engaging individuals as delivery drivers, as a decision of the Irish Supreme Court, the judgement has application across all sectors.

I am advised by Revenue that a detailed Tax and Duty Manual (TDM), to provide guidance in relation to the application of the judgment, and to assist businesses who engage individuals to carry out work, is available. The TDM, Part 05-01-30, was published on 21 May 2024 and is available at: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-01-30.pdf.

In September 2025, following on from the Supreme Court judgement in the Karshan case, Revenue announced that employers can correct payroll tax issues for 2024 and 2025 arising from bona-fide classification errors, without imposition of interest and penalty, if they do so before 30 January 2026. Employers who acted in good faith, relying on the case law and guidance available prior to the Supreme Court judgment, but who may have misclassified employees as contractors, are encouraged to take this opportunity to regularise their tax affairs.

Guidance on this disclosure opportunity is set out in Tax and Duty Manual ‘Settlement arrangement arising from Revenue v Karshan (Midlands) Ltd. trading as Domino’s Pizza’ which is available at: www.revenue.ie/en/tax-professionals/tdm/compliance/audit-and-other-compliance-interventions/karshan-settlement-guidance/karshan-disclosure-opportunity-guidance.pdf.

Where an employer fails to take this opportunity to review its workforce practices and make a relevant disclosure, by 30 January 2026, and the liabilities from misclassification subsequently come to light, Revenue will form the view that the default has arisen from a complete failure to operate fiduciary taxes, PAYE, PRSI and USC, and will apply the relevant legislation to address this. Interest and penalties will apply in full in line with Revenue’s Code of Practice for Revenue Compliance Interventions which is available at: www.revenue.ie/en/tax-professionals/documents/code-of-practice-revenue-compliance-interventions.pdf

I am further advised by Revenue that it allocates significant resources to manage tax compliance. Revenue's risk-based compliance programme collates and assesses information from multiple sources to build profiles and assess overall risk. Risk associated with misclassification is taken into consideration, along with other risks identified, to target and confront the riskiest cases.

The tax risks associated with misclassification are not new, and in terms of Revenue compliance interventions, it is important to note that each compliance intervention is different, and the facts and circumstances of each case will inform Revenue’s response. Coupled with that, employment classification is a complex area, and each determination must be made on the facts and circumstances of each individual case.

Through detailed guidance, the provision of the disclosure opportunity and targeted risk-focused compliance interventions, Revenue has a comprehensive framework to support voluntary compliance for taxpayers with their self-assessment obligations, as well as to detect and challenge misclassification. Revenue is focused on continuing to maximise the use of its extensive resources to identify misclassification non-compliance and quantify risk while minimising the administrative burden on compliant taxpayers.