Carbon tax relief needed to stop black market contractors
An FCI survey suggests the black economy makes up to 60% of all contract work on farms in some parts of the country, though just 10% in other parts. It says Government inaction is costing the State heavily in unpaid PAYE, PRSI and Vat, while also undermining registered, compliant agri contractors.
FCI says the carbon tax relief on fuel afforded to farmers should also be extended to agri contractors. It also wants the Finance Act 2013 revised to require all invoices issued for farm contracting services to carry a Vat number or PPS number to discourage undeclared payments.
Finance Minister Michael Noonan has already denied FCI’s request for carbon tax relief. He also said the Dáil discussed Revenue’s challenge in tackling the black market economy, but said a change of legislation was not a “proportionate” response.
Mr Noonan said: “There is no requirement under Vat legislation to include a PPS number on any invoice issued to a customer. I am conscious the need to tackle the black economy must be balanced against imposing additional administrative burden on business.”
FCI chairman Timmy O’Brien said farmers have written names of legitimate contractors into the stubs of their chequebooks, but then issued the cheques to black market workers.
The farmers, he says, then claim tax relief on these payments while avoiding Vat.
Mr O’Brien said: “I know one accountant who told a contractor he should be careful with his books as he was inviting a Revenue audit. When the man asked why, he learned his name was in the stubs of farmers’ chequebooks, suggesting he had received fees which he then failed to declare for Vat.
“The man was stunned. He neither did the work nor got the cheques. If, say, a farmer is doing work to his house, he should take the money out of personal drawings; but if he does that, he won’t get the tax relief on the work. That’s why they’re making it look like contract work, and putting the names of legitimate contractors in the stubs of their chequebooks — to get the tax break.”
Mr O’Brien says a €5,000 cheque of this kind can cause a contractor to be hit with a tax penalty of up to €25,000 if Revenue estimates he has done 10 similar jobs.
“He then has a real fight to prove he didn’t do the work as the taxman doesn’t have to give him an explanation why he is being investigated,” he said.
The Revenue Commissioners refute this view. They urge FCI and anyone else who knows of any farmer incorrectly recording payments, to inform Revenue, who will then conduct an investigation.
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