Company not letting worker pay tax

Kintarō Hattori

Guys and Girls,

I have an immigrant friend whose Boss pay's them cash in hand for their services. They work a regular job, 5 days a week with regular hours. My mate wants to be registered for tax, but the employer won't register them. Is there someone to report this guy?

Also why do companies do this? Isn't it illegal and not worth the hassle if they were caught?


apologies eo980 - I hit edit button instead of quote
beruthiel

Borzoi

Yep, the revenue commisioners. But expect your mate to lose his job

Stark

eo980 wrote:

Also why do companies do this? Isn't it illegal and not worth the hassle if they were caught?

It saves them a lot of paperwork and they don't have to pay employer PRSI or benefits.

posiedon

If your friend is being paid cash, then it means he most likely has no contract whatsoever. The main reason an employer would do this is so that when there is less work around, then he simply will not have to pay idle staff and can let them go without any redundancy etc...

The flip side of this, could be that your friend is seen as an independent contractor in which case he should be declaring his income to the revenue.

So if you rat up the employer, I would think he'll take the second option and say that they are not his staff but contractors, and hence your friend will lose his job, get a big fat bill from the revenue, and possibly be flown home if he's not from an EU country.

Unfortunately, just because your employer is paying you cash, doesn't mean you should not be paying tax, so the law is being broken on both sides, one could argue.

I would suggest your friend sets himself up as a sole trader or a comapny and pay his own tax, and then everything will be fine for him. And sure once he's registered, doesn't mean he has to pay tax, if he can expense some amounts and bring himself under the tax brackets

But for his own sake, don't rock the boat with his employer, or he could end up losing his job, and not working in that line of work in Ireland, as most employers will not hire someone who has grassed up their previous employer. It's a small world, and Ireland is even smaller.

Best of luck with it.

seamus

posiedon wrote:

I would suggest your friend sets himself up as a sole trader or a comapny and pay his own tax, and then everything will be fine for him. And sure once he's registered, doesn't mean he has to pay tax, if he can expense some amounts and bring himself under the tax brackets

This would be difficult for a non-EU immigrant, but seeing as he's here and not had much issue with getting a job, I'll assume he's legal.

http://www.oasis.gov.ie/employment/starting_work/tax_and_starting_work.html

Tell him to apply for PPSN, and apply for a cert. of tax credits from the tax office.

If he's an EU citizen, he would definitely do well to set himself up as a contractor/sole trader.

Beruthiel

Also why do companies do this?

because they get cash in hand, which probably comes out the same after tax (if they were paying it in the first place)
it means your company saves money by paying less

Isn't it illegal and not worth the hassle if they were caught?

yes it is illegal and if they get caught they will be in trouble. However, as soon as this happens your friend looses his job, unless of course your company decide to pay him more and put him on the books.
I detest the way some companies treat people like your friend, second class citizens who don't know their rights.

seamus

Beruthiel wrote:

because they get cash in hand, which probably comes out the same after tax (if they were paying it in the first place)
it means your company saves money by paying less

It also means that they don't have to make a contribution to PRSI, and they can write his wages off as a business expense, cutting their tax bill.

It's the domain of scumbags and cowboys.

Beruthiel

seamus wrote:

It also means that they don't have to make a contribution to PRSI.

correct
PRSI is useful if you need to go to the dentist or hospital.
It also means you build up credits as you were paying tax, so if you become unemployed you get more in your dole payout each week.

madramor

Beruthiel wrote:

because they get cash in hand, which probably comes out the same after tax (if they were paying it in the first place)
it means your company saves money by paying less

when people are payed cash in hand,

the employer is usually using cash that they got in hand to pay them.

so its a double scam

illegal payment in to employer
illegal payment out to worker

Nuttzz

seamus wrote:

It also means that they don't have to make a contribution to PRSI, and they can write his wages off as a business expense, cutting their tax bill.

It's the domain of scumbags and cowboys.

I dont know how they can right off his wages as an expense, if it could be done you would see a lot more people doing it

Paperwork really isnt an issue here its employers PRSI contributions, for example some one on €23k a year will cost their employer €2472 in PRSI expense alone, so that makes their "real" wage (from the employers point of view) is €25472. Where as if he doesnt register them then they only cost him €23k.

It is unusal to see someone want to be registered, most unregistered workers are because they want to be.

It is a hassle if you are caught as a company, you dont hear of it happening much because the revenue will chase bother parties, the employer and employee will be liable for tax, penalties and interest, thats why most employees keep quite about the practice.

So if your mate does report him, he'll need a stash to pay off his liability too

seamus

Nuttzz wrote:

I dont know how they can right off his wages as an expense, if it could be done you would see a lot more people doing it

A mate of mine was written off as an expense for years. This was a trucking business. It takes little or no effort to hide €500/week wages on a balance sheet when you've got twenty or thirty times that amount going out in expenses.

chump

Sundry Expenses?

I was actually paid for a few weeks one summer like this too.

Nuttzz

seamus wrote:

A mate of mine was written off as an expense for years. This was a trucking business. It takes little or no effort to hide €500/week wages on a balance sheet when you've got twenty or thirty times that amount going out in expenses.

thats true, im surprised that a company of that size would do something like that, its normally the smaller lads that do it I find

the_syco

Nuttzz wrote:

It is unusal to see someone want to be registered, most unregistered workers are because they want to be.

One or two people I know quit their jobs cos they could pay tax or PRSI. THis meant if they got in an accident on the way to work, theyed be fúcked (hostipal bills wise), as according to the system, they weren't paying PRSI.

luckat

Lots of companies do this kind of thing, and it's extremely difficult for workers to get any help. The government body tasked with enforcing workers' rights is the Department of Enterprise, which is more interested in employers' rights.

To make any complaint you have to fill out a big official form, and I doubt anyone's going to want to do that.

Mostly what companies do is claim that casual workers, expected to work in a specific place following orders for specific and regular hours, are "contractors".

The only way this will end is (a) if casual workers must automatically be paid a higher rate than staffers, and (b) if a few prominent companies - for instance, media companies or bodies - were prosecuted with accompanying fanfare.

Kintarō Hattori

Hi Guys,

Thanks for the great advice, it was very insightful. My mate worked in the service industry, so it is not anything too fancy, very basic stuff indeed. The employer in question is a very shady character. Two or three years ago there was a fire on his premises in very questionable circumstances. He reopened and continued his business under a different name. He's employed a number of peopl, my friend being one, and refuses to put them on the books and pay tax.
Despite numerous requests to make it all above board, as they wanted to pay tax and be a recognised worker he refused. Oh and the person in question is an EU citizen, so no worries about being deported!!!

magpie

If your friend is really eager to pay tax they could talk to their 'employer' about registering as self-employed and then invoicing the employer for their wages on a monthly basis. A lot of companies have this arrangement as it saves them the PRSI and other contributions that add about 20% onto the salary bill. Of course, you have to be 'laid off' for one month every 12 so as not to count as a fulltime employee.

Depends how much your friend is being paid, but cash is king as they say - unless they need to be registered for tax for some other reason?