A few months ago we looked at the general issues arising in situations where a professional contractor is engaged by a third party to provide services but is obliged from a commercial perspective to firstly form a company which then seconds that contractors services to the third party client.

From a tax perspective the issue of concern to Revenue has been the fact that Contractors have in many cases a polar opposite view to what can be legitimately claimed as tax free reimbursement of travel and subsistence expenses from their own company under the generic guidelines set out in It 51 and IT 54, together with a more detailed statement of practice issued in 2007.

As there have been some developments in this area in recent weeks it is worthwhile updating readers as to the latest position.

Latest Revenue Material


In late July 2013 a new Tax Briefing (No 03/2013) was issued by Revenue which reiterated the standard position that no employee can claim tax free reimbursement of expenses in relation to travelling between his/her residence and place of employment. A number of examples were provided of various scenarios in which a typical employee could and could not claim such reimbursement.

This is of course not in any way contentious for the vast majority of PAYE employees who are engaged under standard contracts of employment with totally unconnected Employers.


However as certain Professional Bodies have highlighted in their response to Revenue this poses real and significant issues for contractors who have by necessity set up a Registered Office of their own single person company in their own home AND in addition are obliged to exercise significant duties as  a Director of that company from that address.


Revenue appear to be adopting a “one size fits all” approach and have not on first review addressed the multiple different circumstances that may arise in practice. There is for example an enormous difference in practice between an Engineer who is contracted via his own intermediary company to work 40 hours a week “on site” in the premises of his client, and an Architect who sets up her own Home office replete with Broadband, second phone line etc. and is able to more than adequately provide services from that home office for the majority of the week.


The Engineer,  would find it difficult to justify that daily commute from home to his sole client qualified for tax free reimbursement of expenses but surely occasional visits undertaken 2/3 times each week by the Architect to a client would qualify for reimbursement?


Unfortunately the Revenue guidance is at best vague on this matter quite unlike the equivalent UK guide issued by HM Revenue & Customs which runs to 76 pages and has many helpful and practical examples to assist taxpayers in this area who cannot reasonably be expected to have anything other than a layman’s knowledge of tax law and practice.

Use of Other Intermediary Companies


Even if a taxpayer is not claiming tax free reimbursement of mileage from home to place of work other issues can still arise in practice on a tax audit which can be best illustrated by an example.



Joe an IT expert living in Balinasloe forms Joe Limited and engages with a large independent contractor PLC Limited based in Galway City. PLC limited obtains a contract in Clifden and Joe on a practical basis works with the management team of PLC Limited in Galway and in Clifden to deliver the practical aspects of the assignment. Joe in this case historically claims NO mileage from his company in relation to travel to/from his home to Galway and back but does claim reimbursement for expenses incurred from Galway to/from  Clifden.


In the event of a tax audit Revenue would look for practical evidence that Joe de facto spends most of his working time on site in Galway City in the premises of PLC Limited if a claim for tax free reimbursement of actual expenses incurred from Galway City to Clifden is to be allowable.

The onus of proof is very much on the taxpayer to prove this and in recent times it is noted that Revenue can look for independent confirmation of a person’s physical attendance in various locations before being satisfied that the claims are legitimate.


UK Guidance again on this point is quite clear and concise and many examples are included to highlight when a taxpayer may and may not claim expenses from his/her company in this manner. The Irish guidance from a practical perspective is far less helpful and in any given situation it is up to the taxpayer with hopefully the assistance of a competent professional and experienced advisor to assist clients in defence of a situation that they had in many cases considered to be fully compliant on first principles.


In summary this is in practice a complex and sensitive issue for many independent contractors and it is expected that there will be ongoing issues coming to light for the foreseeable future.

Kilcoyne & Co Accountants

Accountants in Dublin


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