Childminder wants to do it by the book !

RacingSilver

Hi
We will be employing a childminder soon who will work 30 hours per week.
She is from Poland.
We have agreed a price, but now she wants the income she receives to be reckonable when it comes to pension contributions, etc.
She said there are 2 things we can do :
1. Employ her as a normal employee, and pay her tax, prsi, etc., or
2. She well set herself up as a sole trader (or a company ?), and we will employ her as a contractor. So she will then be liable for all tax, prsi, etc.
She says that she will get the necessary forms for us to sign !

We don't really want to get involved in that side of things, as we're a bit unsure of where our responsibility starts and ends.

Any comments appreciated.

Jo King

You should not let her set up as self employed. The Revenue are cracking down on that kind of thing and you could find yourself in trouble. You are better to register her as an employee and pay her through the books. Get an accountant to organise it for you. If you give her cash in hand you could be stung down the line. I am aware of Poles who worked for cash in hand and when they wanted to go back to Poland they reported the employer to the Revenue. The employer had to pay all the outstanding taxes, penalties and interest.

Moonbeam

if she works in your house then you have to treat her as you would any employee.
If she minds the child in her own house then this does not apply and she can earn p to 15k tax free.

Grawns

Tell her to go jump and get somebody else.

Cabaal

Grawns wrote: »

Tell her to go jump and get somebody else.

Ok so she's being employed 30 hours a week and you think its ok to do it under the table?

If it was any other industry this would be seen as unacceptable why is it seen as ok here?

D rog

Is the childminding in your home or hers?
As someone already said if it's in your home you are liable for employer status and all the things that go with it. Revenue have good info on their website.
If it's in her home, she can earn up 10k I think without paying tax, but it's all her business what she does and no concern of yours.

smelltheglove

If you pay her tax and prsi etc you have to register as an employer. If she registers as a sole trader you dont need to worry about that and she is free to earn up to 15k without having to worry about taxes, I'm not sure the ins and outs but I remember seeing it from when I was completeing my forms. Here is a link I found. http://www.childminding.ie/publications/2009/Keeping%20Records%20and%20Submitting%20Tax%20Returns%20FHM.pdf

Jo King

smelltheglove wrote: »

If you pay her tax and prsi etc you have to register as an employer. If she registers as a sole trader you dont need to worry about that and she is free to earn up to 15k without having to worry about taxes, I'm not sure the ins and outs but I remember seeing it from when I was completeing my forms. Here is a link I found. http://www.childminding.ie/publications/2009/Keeping%20Records%20and%20Submitting%20Tax%20Returns%20FHM.pdf

You do not have a choice about it. The Department of Social welfare and the Revenue decide themselves on the facts of the situation whether or not the person is an employee or self employed irrespective of the agreement between the people involved. They are trying to stop a lot of the abuse of the situation by people masquerading as self employed when in reality they are employees. Tread carefully1
paying a person under the table is also risky from a liability point of view. If they are injured at work there will be serious difficulties with insurance.

the_syco

If they set up the childminder as an employee, and they then set them themselves up as employers, what is their situation regarding their employment status? By this, I mean if they were to be made redundant from their job, would they be classed as being self-employed as they were an employer to the childminder? Or what?

RacingSilver

Cabaal wrote: »

Ok so she's being employed 30 hours a week and you think its ok to do it under the table?

If it was any other industry this would be seen as unacceptable why is it seen as ok here?

To me child minding is different to other industries. If we have to pay tax and prsi, then it is just not worth it, and my wife would give up her job to stay at home, with the resultant loss to the Revenue of the tax my wife is paying. So, who wins in that case ?
There are loads of people who employ a childminder and pay cash. It seems to be quite acceptable in this country. These stories of 'I heard of a childminder who ratted on the parents, whcih resulted in taxes and penalties, etc' seem to be a bit over the top to be honest.

RacingSilver

Thanks for the responses. Jo King mentions that "You should not let her set up as self employed" ,and seems pretty sure about it.
So, I either set her up as an employee, or I just pay her under the table, like the rest of the country.
By the way, she is minding the children in our home.

Any more comments appreciated.

deisemum

RacingSilver wrote: »

To me child minding is different to other industries. If we have to pay tax and prsi, then it is just not worth it, and my wife would give up her job to stay at home, with the resultant loss to the Revenue of the tax my wife is paying. So, who wins in that case ?
There are loads of people who employ a childminder and pay cash. It seems to be quite acceptable in this country. These stories of 'I heard of a childminder who ratted on the parents, whcih resulted in taxes and penalties, etc' seem to be a bit over the top to be honest.

The thing is they're not over the top, it's a reality. Childminding might be different to other industries to you but it's not to the Revenue. Years ago Revenue usually turned a blind eye to this but times have quite rightly changed and they're out to source revenue wherever they can.

The cheaper alternative is to either have a live-in au pair or send your child to a childminder who minds children in the minder's home and that way you avoid breaking the law.

Barracudaincork

RacingSilver wrote: »

So, I either set her up as an employee, or I just pay her under the table, like the rest of the country.

Dont pay her under the table, it can come back to bite you and you could end up being liable for PAYE on the grossed up pay, PRSI, fines, penalties, holiday pay, insurance etc etc

The way most people i know do it, is via an agency and it takes away all the employer hassle for you.

RacingSilver

Barracudaincork wrote: »

Dont pay her under the table, it can come back to bite you and you could end up being liable for PAYE on the grossed up pay, PRSI, fines, penalties, holiday pay, insurance etc etc

The way most people i know do it, is via an agency and it takes away all the employer hassle for you.

Thanks for the info.
What type of agencies do this ? Do you have any links ?

RacingSilver

deisemum wrote: »

The thing is they're not over the top, it's a reality. but times have quite rightly changed and they're out to source revenue wherever they can..

Thanks for the input, but saying that times have quite rightly changed is your opinion. If this turns out to be too expensive for us, then my wife will have to give up her job, which I would say is what a lot of couples have to do. So, the revenue are just cutting off their nose to spite their face in that case.
I realise they won't see it like that, but that's the bottom line for us and many others.

Sleepy

I think this is something a lot of Irish couples need to face up to tbh: if the lesser earning partner isn't earning enough to pay for professional, legal child-minding they can't afford to work. Unless they're fortunate enough to have family who are happy to child mind for free or their partner earns enough to subsidise their choice to work without impacting on the family they're going to have to stay at home with their child(ren).

Barracudaincork

RacingSilver wrote: »

Thanks for the info.
What type of agencies do this ? Do you have any links ?

Not to hand, but i will try and dig them out and post then.

Rabidlamb

OP, take a look at the article below:
http://www.irishtimes.com/newspaper/ireland/2009/0704/1224250039773.html

The vast majority of childminders work for cash in hand despite what the moral scaremongers on here will tell you.
For years people have been paying their family, friends & neighbours to mind their kids, it's how the country works.
Yes revenue is lost but more would be lost if the parent gave up their job to mind the children.

The government tried to get childminders to declare & 99.4% decided to stay anonymous, that says it all.
I personally know of 2 families who childmind to supplement their dole in an effort to meet their mortgages.
Illegal yes, immoral . . . . I'm not so sure.

I await the Helen Lovejoy's with great anticipation.

Nevyn

http://www.irishtimes.com/newspaper/...250039773.html

Most childminders not declaring income


CARL O'BRIEN, Social Affairs Correspondent

THE VAST majority of the State’s 37,000 childminders are not declaring their income to the Revenue Commissioners, new figures indicate.

Just 229, or a mere 0.6 per cent of all childminders, have opted to avail of a €15,000 tax exemption for minding children in the home, according to official figures released to The Irish Times.

The Government raised the exemption from €10,000 to €15,000 in recent years in the hope of attracting more people out of the black economy.

However, childminding groups say the low take-up is because many individuals fear being subjected to official scrutiny by health authorities. In addition, many worry they will lose money if they earn more than the tax exemption threshold.

Childminding Ireland, the main representative group, said it was disappointed that more people were not tax-compliant, although it said some may be declaring their income and not availing of the exemption.

“We do encourage people to declare their income and to be registered, because it’s good for their status,” said Childminding Ireland’s chief executive Patricia Murray.

“It’s important to remember that childminding has been a hidden part of the economy for a very long time, so we’re not surprised at the numbers . . . it also suits society to have it this way, to have cheap, accessible childcare available.”

Ms Murray said there was no obligation on the 1,000 members of Childminding Ireland to be tax-compliant.

“We’re only interested in children and the quality of care. Our members must have clearance from their GP to say they are suitable to care for children. I think the Revenue are well funded to police this sector.”

Childminding, despite being one of the most common forms of childcare in the Republic, is one of the most loosely regulated.

Individuals caring for fewer than four children in their own home are not subject to any regulation, mandatory training or Garda clearance.

Yet an estimated 70,000-80,000 children are placed with childminders every working day, making it the most popular form of childcare in the State.

This loose regulation stands in contrast to the UK, where all childminders’ homes are inspected regularly to ensure they are safe and suitable for young children.

Childminders must be insured, have first-aid training and be checked by the police – as must anyone aged over 16 who lives or works in a childminder’s home.

As well as induction training, many childminders undertake childcare qualifications or attend workshops on subjects like nutrition or business management.

However, authorities in Ireland are trying to encourage more people to register with the Health Service Executive as part of a drive to improve care standards and avail of training and tax exemptions.

To avail of the €15,000 tax exemption, childminders must notify their local county childcare committee that they are providing a childminding service.

Childminders in the State who take care of three or fewer children under the age of 18 are entitled to earn up to €15,000 tax-free, providing their annual childminding income does not rise above this level.

Jo King

RacingSilver wrote: »

To me child minding is different to other industries. If we have to pay tax and prsi, then it is just not worth it, and my wife would give up her job to stay at home, with the resultant loss to the Revenue of the tax my wife is paying. So, who wins in that case ?
There are loads of people who employ a childminder and pay cash. It seems to be quite acceptable in this country. These stories of 'I heard of a childminder who ratted on the parents, whcih resulted in taxes and penalties, etc' seem to be a bit over the top to be honest.

It is happening quite often. There are situations where foreign workers were paid under the table and when they are out of work discover that there is a gap in their social insurance contributions. Next thing there are inspectors calling on the former employer. If the childminder is injured at work who is going to be liable? The public liability on your house insurance is unlikely to cover it.
It is also very unfair to the childminder to expect her to work for cash in the hand. She will lose pension and other rights because of it.
You can take the attitude "everyone is doing it" and "t'will be alright".
It may work out and it may not. You will have the worry of it all the time and it will be a source of stress.

Moonbeam

If the tax and prsi is such an issue get the minder to mind the kids in her own home and it solves the problem.

John Mason

Childminding is the largest sub-sector within childcare in Ireland, and is generally undertaken by self-employed people in their own homes. Childminding is legislated for by the Childcare Act 1991, which is interpreted by the Childcare (Pre-School Services) Regulations 2006.

Over 73,000 families with pre-school children rely on childcare providers to enable them to work. It is estimated that up to 70% of children minded in this way are minded by a Childminder. The National Childcare Strategy estimated that there are 37,900 Childminders in Ireland.

Childminding is the traditional model of day-care in Ireland. For decades this method has ensured the economic survival of two families. Research shows children benefit from the small group family setting, with continuity of care from one person - often from infancy through to starting secondary school. Like most families, the minded children vary in age which promotes empathy rather than competition for attention. A family home, with regular outings, provides children with opportunity to experience the world in a real way. They get to know their locality and interact there with the local community with positive outcomes in the teenage years. They can develop lasting friendships with the Childminding family and other minded children.
Parents benefit from flexibility and an individually tailored childcare arrangement which will change over time as the child grows. Childminding offers the opportunity for close communication with the person who has sole responsibility for the child during the Childminding hours.


Childminders benefit by being self-employed as they can use their own homes to provide a service, earn an income and still care for their own children. By contributing RSI under Class S, they can avail of certain State benefits, principally the Contributory Pension entitlement.

Childminders can earn up to €15,000 exempt from tax.

Legislation

Childminding in Ireland is governed by the Childcare (1991) Act and the Pre-School Regulations (2006). Childminding is regulated only where four or more children under the age of six are minded.
A single handed Childminder can mind up to five children under the age of six.
A Childminder can mind no more than two children under 15 months (except in the case of siblings).
Childminders must notify their local Health Service Executive if they mind four or more children (excluding their own) under the age of six.
Childminders who are not required to notify, may voluntarily notify to their County Childcare Committee to avail of tax allowances, grants and training.
There is no regulation at present of school age (6+) childcare services, although the Report "School Aged Childcare in Ireland" published by the National Childcare Co-ordinating Committee recommends a ratio of one adult for eight children.
Guide to Pre-School Regulations (2006)

http://www.childminding.ie/childminding.htm

RacingSilver

Moonbeam wrote: »

If the tax and prsi is such an issue get the minder to mind the kids in her own home and it solves the problem.

That's not an option. If it was, I wouldn't be looking for further advice.
Thanks anyway.

LegacyUser

I have a childminder. My child is in primary school - she takes him after school.

I was reading this post and decided to count the number of people I know (through school for instance) who have a similar set-up to me.

Offhand, I know 12 people who have either full time minders, or part time.

ALL 12 of these people pay the minder 'under the table' as some of you have put it. I don't know anyone who has a minder (usually a neighbour or sahm/friend looking for a few bob extra) who pays tax/prsi etc.

Just my twohapence worth OP.

Grawns

As I said before get someone else. Brazilian or Romanian or Filopino or indeed Irish childminders won't be so fussy and if they are Irish you should be able to get their references and your child will hear English rather than Polish. The idea of your wife giving up work because childcare is too expensive is a reason enough to get someone more reasonable.

smelltheglove

I agree with the above, childminding in the community helps make this country work, a stay at home mom with one kid who can take in an extra and earn a few extra quid to spend shouldnt be illegal. As the quoted article shows this is not regulated.

OP I would advice you, if you are set on using this particular girl, speak to someone who knows more about it, maybe citizens information, queries like this are obviously going to cause a diverse reaction on a forum. At the end of the day, the way I see it, if the girl was self employed it would be up to herself to pay her taxes etc and have herself insured. I'm self employed and I often visit clients houses for work, if something happened in their house to me or to them during the course of my work my insurance would pay for it, I dont see how it would be much different to allowing a minder into your house, or a builder or plumber, just because they do the work in your home does not mean you have to register as an employer and pay their taxes. Now I am open to correction if there is different rules for minders but I doubt it.

deisemum

smelltheglove wrote: »

I agree with the above, childminding in the community helps make this country work, a stay at home mom with one kid who can take in an extra and earn a few extra quid to spend shouldnt be illegal. As the quoted article shows this is not regulated.

OP I would advice you, if you are set on using this particular girl, speak to someone who knows more about it, maybe citizens information, queries like this are obviously going to cause a diverse reaction on a forum. At the end of the day, the way I see it, if the girl was self employed it would be up to herself to pay her taxes etc and have herself insured. I'm self employed and I often visit clients houses for work, if something happened in their house to me or to them during the course of my work my insurance would pay for it, I dont see how it would be much different to allowing a minder into your house, or a builder or plumber, just because they do the work in your home does not mean you have to register as an employer and pay their taxes. Now I am open to correction if there is different rules for minders but I doubt it.

When you are working in other peoples homes you're not working exclusively for that home owner unlike a childminder that would be working in one home.

If the childminder was working for one family in the mindee's home she's working exclusively for that family so is an employee as she is unable to work with other families at the same time.

A childminder working in her own home has the option of just minding one child or working for a small number of families so is self-employed. It's up to her to organise her own tax if she's earning more than €15,000, prsi, insurance etc. so a stay at home parent (there are male childminders as well) with one or a couple of children can still childmind and as long as she/he notifies the Revenue then she/he isn't doing anything illegal. Also if minding less than 3 children in the minder's home the minder is not legally obliged to notify the HSE though this can be voluntary.

D rog

If the person minds in your home then they are your employee.

Whether they want you to do the tax/prsi thing up front or not is one thing, but even if they don't- after the employment ceases they could go looking for social benefits dependant on their tax record and that's when your name could come up and you could get shafted as an under-the-table tax dodger. Just something to be mindful of.

miec

Thanks for the input, but saying that times have quite rightly changed is your opinion. If this turns out to be too expensive for us, then my wife will have to give up her job, which I would say is what a lot of couples have to do. So, the revenue are just cutting off their nose to spite their face in that case.

I realise they won't see it like that, but that's the bottom line for us and many others.

Maybe so but does not your employee deserve to be paid prsi etc and have the same rights as other workers. Cash in hand is not a good option anymore as she won't have stamps for a pension etc in later life, it may not be an issue for you but it is one for her and rightly so.

LashingLady

Not wanting to suggest breaking the law or anything BUT my own opinion is that this Govt was just focussed on getting women out to work during the "boom" and contributing towards large double income mortgages and then do feck all to help us with childcare when we need it. Instead of giving tax credits for our kids or for childcare payments we have this situation where you actually have to pay employer's PRSI on top of the hourly rate to have a childminder in your home. That €1000 a year early childhood supplement was a joke given to everyone including SAHM's and then taken away like a light.....

Anyway rant over. If you like this girl etc is there any chance you could come to some kind of agreement with her where you pay tax and PRSI over for a portion of the income, so that she gets PRSI stamps etc without it being prohibitively expensive for you?

Rabidlamb

D rog wrote: »

After the employment ceases they could go looking for social benefits dependant on their tax record and that's when your name could come up and you could get shafted as an under-the-table tax dodger. Just something to be mindful of.

I'd wager most parents don't carry the fear of getting caught by this legality.
The employee [childminder] in this case is complicit in the arrangement day one.
In fact many of them are also claiming lone parents or jobseekers benefit.
This is how society functions I'm afraid.