Contractor - Zero tax paid?

Bey0nd · 15-12-2021 03:06AM #1

Not looking for advice as I'm an employee, but I was talking to a friend I hadn't spoken to in a while this evening and we got to talking about old school pals.

He mentioned one guy working in IT who is now supposedly minted. He alluded to him working as a contractor for a US company from Ireland, and that they paid him a very high gross figure into his Revolut account that he just never paid any taxes on for a couple of years.

This obviously seems like tax fraud 101, and my inkling is that this guy is either full of shít, or telling the truth but being incredibly stupid to broadcast it.

Id like to believe it's the former and that someone couldn't get away with something so... basic. I imagined tax fraud/avoidance to be much more nuanced than just not paying it.

What's the story or how likely is that to be true? I've only ever been an employee so absolutely no idea how it works. Do contractors really get paid lump sums like that and just up to them to pay their own taxes?

3DataModem · 15-12-2021 06:42AM

It is extremely easy to do what is described above. Yes, contractors just pay their own taxes. Yes, it is almost certainly tax fraud. By not paying tax they are also almost certainly in breach of their contract (it probably has a "you confirm you'll pay your tax" clause, so that they don't have to be liable for employer taxes in Ireland).

It is possible that the individual may get away with it, but also possible that they will get caught. If they get caught they'll be hit for the max possible income tax plus interest and penalties, and will wish they'd just set up a limited company in Ireland and saved themselves a lot of money in the long run, as they won't be able to do this retrospectively.

Revolut shares info with the Lithuanian tax authorities: https://www.revolut.com/en-IE/help/more/legal-topics/tax-information/will-revolut-share-my-tax-information-with-anyone#:~:text=Revolut%20does%20not%20share%20your,Account%20Information%2C%20developed%20by%20the

The Lithuanian tax authorities share info with the Revenue: https://www.irishtimes.com/business/personal-finance/which-countries-tax-authorities-share-data-with-revenue-1.3023378

15-12-2021 06:08PM

Companies have to provide Revenue with a list of third parties they paid more than €6,000 to during the year, and have to include the names, addresses and tax reference numbers of the people/businesses that the payments were made to.

Pretty straightforward then for Revenue to cross check the PPS numbers against the income tax returns and find out who hasn't paid their taxes.

Contractor - Zero tax paid?

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