Employers face benefit in kind difficulties
And the proposals to include company vans as well as other items such as health insurance, creche support and lunch vouchers were condemned as totally inequitable.
Mark Fielding, chief executive, of the Irish Small and Medium Enterprise Association, (ISME) said the outlined proposals are “crazy” and he warned that employers may refuse to implement the plan.
The bottom line is that workers could be substantially worse off, but the reality is that employers who have to deduct the money weekly or monthly from their staff have been presented with an “administration nightmare”, said Mr Fielding.
“This thing is so complicated that you would need a double honour in mathematics and accountancy to be able to understand the mileage part of the package alone”, he said.
For thousands of employers it will mean an up-date of their pay roll software if they are to implement the new changes due to come into force on January 1, 2004, he said.
Some areas in particular are going to create mayhem for owner managers trying to work out liabilities of the staff under the new ruling.
Up to now BIK was assessed and charged the year after it was incurred.
Tax allowances were adjusted by the Revenue for the new financial year.
Until the proposed change, employees assessed their own liability on company cars and preferential loans. In the 2003 Budget the Minister for Finance decided to put the Benefit in Kind liabilities on a PAYE footing.
Last week the Revenue published the list liable to BIK from January 1 to include company vans, meal vouchers, health insurance on top of existing BIK liabilities.
For employers the major difficulty is the impact the changers will have on their accounting systems and the administrative headaches involved in putting the BIK on a PAYE footing.
Employers have been landed with over 40 pages of guidelines on how to calculate individual workers’ liability under the new Revenue changes.
These pages are 16 columns across and require a page per week, 52 weeks of the year to calculate some of the new liabilities to create this administrative monster, said Mr Fielding.
“It is just absolutely crazy stuff,” he said.
“The major thing that we have been banging our heads with the minister on is bringing vans in under the scheme. Up to now a van was a van and you used it , but now if a fella is working for you and he brings it home it could be assessed under BIK.”
It will be up to the employer to make that judgement.
Employers will be “judge and jury and many will be forced to seek an expression of doubt” when they submit their annual accounts because of the uncertainty the new directive creates, he said.
That is common when companies submit accounts where tax liabilities are uncertain.
The “expression of doubt” clause removes any threat of action against the company subsequently, he said.
