Contract money sent abroad - Tax question

seeyou

Hi,

One of the companies in Ireland wanted some work done to their website and looking for contractors. I'm a PAYE employee in another company talked to them and got the work done by my friend who is in a Non-EU country (Non-EU citizen). All the dealings were done through me but no contracts (or agreements) were written between me and the company. The company didn't even take my PPS number or any other tax details. Actually company doesn't know that the guy in Non-EU country has done the work. Company made a payment to my bank account in the Non-EU country directly and I have transferred that money to my friend. This happened in Nov 2010. My questions are

- Where the tax needs to be paid - in Non-EU countru or Ireland?
- Who is liable to tax in Ireland? Money was paid to my Non-EU account but my PPS number or tax details weren't recorded by the company.
- If I'm liable then how I should pay the tax and by when (money was transferred in nov 2010)?

I have no intention to evade the tax. I have done this help my needy friend and if I need to pay the tax in Ireland I need to request my friend to send the money back for tax.

can you please answer these questions and help me?

Thanks

ssbob

Did you make any money from this? If not then you are not liable for tax as long as you didn't charge VAT. Is their big amounts involved?

seeyou

I didn't charge any money for this. The money was transferred to my acct in Non EU country and from there it was given to my friend. No money was credited to my Irish bank account. The total amount was Euro 10500.

My friend said he'll declare for tax returns in the Non EU country. My worry is that the company in Ireland has recorded my name (not the PPS number), information that I had worked from them (as they don't know about my friend) and send the money to my Non EU bank acct, will the revenue come after me for tax?

ssbob

Well you can account for it here......have you a business set up yourself? Did you charge them VAT? I need more details about you personally.

If you are a PAYE worker and this is the only transaction you have completed outside of this then I reckon you would just need to keep a record of you making the payment to your friend etc if anyone comes looking however if you have a business set up then you will need to put this through your accounts ie:

You invoiced the company and subbed the work out therefore making no profit and paying no tax however you will be laible for the VAT if you are VAT registered or if this work brought you over the VAT exemption limit.

seeyou

I'm a PAYE employee and don't have any business set up here. As its a software which my friend developed I just delivered the files to the company. I have given the cash to my friend and I can get a letter from him saying that total money was given to him.

I'm wondering how revenue comes after me for tax ? I haven't given my pps number to the company and the company dealt with me only on my name/address and mostly through emails. The money was not transferred to my Irish account. Am I correct in thinking revenue traces people based on PPS number and bank accounts in Ireland?

ssbob

seeyou wrote: »

I'm a PAYE employee and don't have any business set up here. As its a software which my friend developed I just delivered the files to the company. I have given the cash to my friend and I can get a letter from him saying that total money was given to him.

I'm wondering how revenue comes after me for tax ? I haven't given my pps number to the company and the company dealt with me only on my name/address and mostly through emails. The money was not transferred to my Irish account. Am I correct in thinking revenue traces people based on PPS number and bank accounts in Ireland?

I wouldn't be 100% sure how they trace these things but as long as there is a paper trail then you should be fine, basically all the money went straight to your friend. Strange situation though, did you transfer from your bank account to his or did you take out cash?

seeyou

yes its a strange situation. My friend was in need for money at that time and I have given him the cash (in fact little more than what was trasferred to my account). Actaully I did this to help my needy friend without thinking that I would be in trouble but I'm still happy taht I helped my friend.

Do you think it would be ok if I mail revenue explaiing this situation (without giving my details) and ask them what to do?

I really thank you ssbob for taking time to read my posts and responding them.

ssbob

seeyou wrote: »

yes its a strange situation. My friend was in need for money at that time and I have given him the cash (in fact little more than what was trasferred to my account). Actaully I did this to help my needy friend without thinking that I would be in trouble but I'm still happy taht I helped my friend.

Do you think it would be ok if I mail revenue explaiing this situation (without giving my details) and ask them what to do?

I really thank you ssbob for taking time to read my posts and responding them.

If I were you I would be straight up with them. You would never know down the line when this may come back to bite you in the ass. Explain as you have explained to me and see what they come back with. Does your foreign bank account have other money running through it?

seeyou

yes my foreign bank acct has some amount for my parents medical expenses. I send money to it once in 1-2 years just for parents hopsital/medical expenses.

ssbob

seeyou wrote: »

yes my foreign bank acct has some amount for my parents medical expenses. I send money to it once in 1-2 years just for parents hopsital/medical expenses.

Well thats fine because you are being taxed on that money here anyway so at least everything is above board, you should contact revenue as soon as possible really.

seeyou

Sure I'll contact them next week and see what they say. thank a mil. for your help.

Mr. Incognito

Well thats fine because you are being taxed on that money here anyway so at least everything is above board, you should contact revenue as soon as possible really.

This is pretty silly. Seriously. Contact them to say what exactly?

There is no tax liability. You introduced a third party to a company that wanted work done. From the companies perspective you are an undisclosed agent. You are not in business and have made no profit from it. You have received no income. Revenue will not come knocking for anything and if you think they are going to audit every single company transaction they simply do not have those sort of resources. Don't worry a bit about it.

seeyou

I haven't introduced the third party to the company. Company just wanted the work (website code) to be done and I asked my friend to do it. I have given the artifacts (code)to the comapny. The company paid to my Non EU bank acct assuming that I have done the work, anyway it doesn't matter for them. I have given that money straight away to my friend. I haven't written any contract, haven't signed any papers and not given my PPS number to the company.

Mr. Incognito

well technically you would be oblidged to file a form 11 noting income received and expenses to the same cost but there is flexibility where no loss to revenue arises so you can basically forget about it.

ssbob

Mr. Incognito wrote: »

well technically you would be oblidged to file a form 11 noting income received and expenses to the same cost but there is flexibility where no loss to revenue arises so you can basically forget about it.

Hi mr. Incognito from what I read, he gave his friend cash so there is no paper trail and if revenue went digging, "Seeyou" could not prove that he handed the money over to his friend. In my experiences with the revenue, it's things like these that really annoy them, it is better to be up front I think.

Would love to hear the opinion of an expert.

pigeonbutler

Mr. Incognito wrote: »

well technically you would be oblidged to file a form 11 noting income received and expenses to the same cost but there is flexibility where no loss to revenue arises so you can basically forget about it.

I wouldn't agree. He's not carrying on a trade since this is only a one-off thing. And he's not in receipt of any income since he was only an intermediary.

There is no liability arising to the OP at all. Given the amount in question, no VAT issues arise or anything like that. Unless perhaps the company has to self-account (still getting my head round new place of supply rules!) but nothing for the OP to worry about.

No need to contact Revenue either. You'll only waste your time trying to explain this to them.

1. OP has no liability to tax arising from this.
2. Revenue are highly unlikely to ever enquire about this (only visibility they'd have of the transaction is if company involved includes the details on their Form 46G)