Lisa Lokasto

If you operate in construction, or any sector that regularly uses subcontractors, the message from Revenue is clear and subcontractors may well be the next major focus area. Having succeeded in the landmark Revenue Commissioners v Karshan (Midlands) Ltd t/a Domino’s Pizza case, Revenue has updated its guidance and stepped up enforcement.

In short, now is the time to review your “subbies” and ask whether those workers could be employees.

The Karshan Case

I have a separate post on this: Contractor or Employee? Revenue’s New disclosure opportunity Explained – Lisa Lokasto.

But briefly, In October 2023 the Irish Supreme Court ruled that delivery drivers for Domino’s Pizza who were under contractor contracts, were actually employees, and not independent contractors.

From that decision, the Court established a structured 5-step framework to determine whether someone is engaged under a “contract of service” (employee) or a “contract for services” (self-employed contractor). It doesn’t matter what their contract says, or that they invoice you. The Court emphasised substance over labels.

Revenue has warned that many arrangements previously treated as self-employment may, when reviewed under the tests, be re-classified as employment.

Why Construction could be in the Crosshairs next

Many advisers, myself included, view construction as a potential focus area, where subcontractor arrangements may well meet the criteria for employee status under the 5-step test.

Disclosure Opportunity

Revenue have now offered a disclosure window for businesses who may have genuinely misclassified workers. It’s a rare chance to fix issues for 2024–2025 without interest or penalties but only if you review your subcontractor arrangements before Revenue does. The disclosure opportunity offered by The Revenue Commissioners runs until 30 January 2026.

Where the misclassification was a genuine error, and the employer settles the 2024–25 liabilities through the process, no penalty or interest apply. Where
liabilities are settled by way of a Phased Payment Arrangement (PPA), interest is
applied over the repayment period however, as is usual.

What Construction Firms Should Do Right Now

Take a hard look at your subcontractors and ask yourself just a few key questions:

• Do I use this subbie all the time?
  If they’re on my site most weeks, that starts to look like employment.
• Do I control their day?
  If I set their hours, tasks and supervision, Revenue may see them as an employee.
• Whose tools are they using?
  If they mainly use my tools, plant or PPE, they’re likely integrated into my business.
• Do they actually run their own business?
  If they work mostly for me, don’t price jobs, and rely on day rates, the answer may be no.

If these questions send alarm bells ringing, now is the time to act. If you’re unsure about any of your current subbie arrangements, get in touch and we can help you review the risks, tidy up your records and make sure you’re fully compliant before Revenue comes knocking.

Lisa