Responsibilty for contractor paying tax?

FewFew

Hi, just a quick question...

Whose responsibility is it to ensure a contractor pays the appropriate taxes?

If I agree to pay a contractor amount X, do I just pay them the amount where directed and mark it down in my books, or do I have to ensure that they're registered as a sole trader/ company etc.

srsly78

Special rules apply to construction and public sector I think.

However usually contractors they are responsible for paying their own tax. This also includes employers prsi contribution as well as other paye.

If they are a sole trader you should note their PPS number. If they are a company you should make sure they are legit.

Methods for checking stuff:
Check eu vat number: http://www.vatcheck.eu/
Check company reg: http://www.cro.ie
Check publicly filed accounts etc: http://www.duedil.com - can also get info from cro but gotta pay.

MickWallace

Construction, foresty and meat processing have tighter conditions in that sub contractors must have c2 cert (tax clearance) in order to get paid without tax being held by employer.
If you are just a private individual employing a building, it would be in your own interest to employ someone who has all the proper insurances. These people would more than likely be legit also from a tax point of view. Either way, it is not your problem if they mess up on their taxes.

FewFew

It's an internet based thing, planning to source out certain bits of specialist content.

So, and forgive me if I took this up wrong, I'm getting their pps or checking they're registered with the CRO in order for me to go "Hey tax-person, here's where my money went" but that's where my liability ends.

What if it's a private individual who isn't registered as a sole trader, can I pay them with the expectation that they're going to declare it, or do I need proof that they're already declared as a sole trader?

srsly78

You should just note down their PPS number in that case. Make sure it's not fake tho (not sure what is best way to check this). Then make sure they know that this is not a "cash in hand nixer" and that you are declaring what you paid them along with their PPS number to the taxman etc.

smeharg

The first thing you need to consider is whether they will be contractors in the eyes of Revenue, or de facto employees.

Regardless of what you say the relationship is Revenue will look at the facts and determine what the actual relationship is. See here for some guidance:

http://www.revenue.ie/en/tax/it/leaflets/code-of-practice-on-employment-status.pdf

It would be advisable to get proper professional advice on this as it could be costly if you get it wrong.

Once you're satisfied they are contractors only pay them on presentation of an invoice (showing their name, address and PPSN).

FewFew

smeharg wrote: »

The first thing you need to consider is whether they will be contractors in the eyes of Revenue, or de facto employees.

Regardless of what you say the relationship is Revenue will look at the facts and determine what the actual relationship is. See here for some guidance:

http://www.revenue.ie/en/tax/it/leaflets/code-of-practice-on-employment-status.pdf

It would be advisable to get proper professional advice on this as it could be costly if you get it wrong.

Once you're satisfied they are contractors only pay them on presentation of an invoice (showing their name, address and PPSN).

Thanks, yeah, went through the various regulations and it's definitely a contractor gig.

Invoice is the best way, it'd make sense that if I'm invoicing the people contracting me, that my sub-contractors invoice me and so the chain continues.

Excellent, thanks gang!

mickdw

Fewcifur wrote: »

smeharg wrote: »

The first thing you need to consider is whether they will be contractors in the eyes of Revenue, or de facto employees.

Regardless of what you say the relationship is Revenue will look at the facts and determine what the actual relationship is. See here for some guidance:

http://www.revenue.ie/en/tax/it/leaflets/code-of-practice-on-employment-status.pdf

It would be advisable to get proper professional advice on this as it could be costly if you get it wrong.

Once you're satisfied they are contractors only pay them on presentation of an invoice (showing their name, address and PPSN).

Thanks, yeah, went through the various regulations and it's definitely a contractor gig.

Invoice is the best way, it'd make sense that if I'm invoicing the people contracting me, that my sub-contractors invoice me and so the chain continues.

Excellent, thanks gang!

There is no obligation on anybody to put pps number on an invoice. If they are vat registered, vat number must be shown but if they are sole traders with very small turnover, they are not required to be vat registered, just registered for income tax.
If that is the case, the invoice would only need name or business name, address, date, invoice number and amount being invoice. Again if not vat registered, they will not be charging vat. If charging vat, as I said vat number must be shown.

nompere

mickdw wrote: »

There is no obligation on anybody to put pps number on an invoice. If they are vat registered, vat number must be shown but if they are sole traders with very small turnover, they are not required to be vat registered, just registered for income tax.
If that is the case, the invoice would only need name or business name, address, date, invoice number and amount being invoice. Again if not vat registered, they will not be charging vat. If charging vat, as I said vat number must be shown.

On the contrary - Section 885 Taxes Consolidation Act 1997 makes it obligatory to quote a tax reference number on a variety of documents, including an invoice. So a small trader, not registered for VAT must indeed quote a PPS number.

mickdw

nompere wrote: »

On the contrary - Section 885 Taxes Consolidation Act 1997 makes it obligatory to quote a tax reference number on a variety of documents, including an invoice. So a small trader, not registered for VAT must indeed quote a PPS number.

It seems you are correct. I had been professionally advised not to include it when not vat regd to avoid any confusion as to whether I was vat regd or not.

nompere

mickdw wrote: »

It seems you are correct. I had been professionally advised not to include it when not vat regd to avoid any confusion as to whether I was vat regd or not.

You need to have some hard words with your professional adviser. He or she doesn't seem to be up to it.

We're approaching 30 years since this requirement was introduced - Finance Act 1983.

mickdw

nompere wrote: »

You need to have some hard words with your professional adviser. He or she doesn't seem to be up to it.

We're approaching 30 years since this requirement was introduced - Finance Act 1983.

True. Strangely, I've invoiced businesses, large and small in this manner and it has not be mentioned.