The time was for the Revenue Commissioners to campaign to encourage taxpayers to properly claim the tax breaks and breaks they were entitled to.
In many cases, you have been reluctant to contact the tax office because you feared that the consequences of previous mistakes could outweigh the benefits of a tax refund if you brought your case to the attention.
It may turn out that one of the lasting effects of the pandemic experience is a change in the general public’s attitude towards the tax authority.
The revenue plays a key role in providing wage and business support through the employer wage subsidy and other programs, and is even the back office for the HSE’s Covid-19 vaccination certificates.
The ratio between the average taxpayer and income has also been improved by online and tax law changes.
Technological change has made it easier for taxpayers to access their data through the revenue website and adjusts payroll more quickly.
From a legal point of view, there are relatively few tax breaks that an individual employee can take advantage of today.
If the marital status and family situation of a person is correctly recorded, most employees can only claim a tax reduction for pension contributions or medical expenses.
However, the widespread use of home work makes taxation difficult for many workers.
Even after public health restrictions are lifted, many workers will continue to bear the cost of providing their own work environment at home.
The tax rules that control which costs an employee can and cannot claim on their income tax statement are very restrictive.
Only “completely, exclusively and unconditionally” costs are permitted. This difficult condition means, for example, that an employee cannot claim the cost of his work clothes without a special permit.
Some industries, such as healthcare and hospitality, have had flat-rate arrangements for many years; modest fixed amounts can be claimed that reflect the service costs for employees based on the requirements of the job.
Currently, employees can claim 10% of the cost of electricity and heat, the time is divided according to the number of working days from home; a 30 percent allowance for broadband is also temporarily considered a concession.
In most cases, the resulting tax breaks will not be very large. Nevertheless, the law provides for this. It is reported that over 50,000 taxpayers have already made individual claims.
The employer’s certificate stating that the employee is working from home should be sufficient evidence of eligibility.
Such a simplified procedure would also avoid situations, for example in the UK, where a thriving industry has been set up to seek large-scale tax relief on all types of expenses on behalf of workers, which the authorities do not always believe to be justified are .
Before the pandemic, the tax office tried to limit the scope of the existing flat-rate expenditure regulation; this was a short-sighted policy because it had a disproportionate impact on low-wage workers and was not followed up.
The changed economic conditions of everyone as a result of the pandemic now require an expansion of the lump-sum expenditure concept for home workers.
It’s an easy way to underline the principles of simplicity and fairness in the tax system.
- Brian Keegan is Director of Public Policy at Chartered Accountants Ireland