Large numbers of workers employed by public organisations on both sides of the Border but often working from home are in danger of falling foul of tax rules that could cost them dearly, a conference has been told.
Cross-Border public-sector employees avoid complications with tax, welfare and pensions if they physically travel to work across the Border under article 18 of the 1977 British-Irish double taxation treaty, tax expert Rose Tierney warned.
“But as soon as they start working from home, they’re kicked out of article 18,” Ms Tierney told the Centre for Cross-Border Co-Operation conference in the Ballymascanlon Hotel in Co Louth.
A significant number of jobs in local authorities, colleges, the Civil Service or quasi-government bodies are now filled by cross-Border workers, mostly, but not entirely, by people from Northern Ireland employed by organisations in the Republic.
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“Some are on very high-level salaries. Some have begun to realise that they have issues, saying, ‘Oh, God. We’re in a trap here. We didn’t realise this. We didn’t realise we had responsibilities. What should our employer have been doing?’,” she said.
“What was happening is they were getting bad advice. They weren’t necessarily following what [they] should have been doing or realising the risks of what they were doing.”
For example, cross-Border workers paying tax in one jurisdiction do not get pension tax relief if they work for an employer on the other side of the Border and make the pension contributions on the other side of the Border.
Many people from Northern Ireland have taken high-paying jobs in the Republic in recent years because of worker shortages south of the Border, she said. “A lot of these people thought they were going to get a big lift to bump up their pensions.
“Yes, they’ll get [tax relief] south of the Border, but when they go to file that on self-assessment basis north of the Border, they don’t get that relief. So basically, they’re getting relief on one side and handing it to HMRC on the other.
“And vice versa, it’s the other way around as well if people go in the opposite direction. There’s no tax relief on those pension contributions if you’re a cross-border worker,” said Ms Tierney, who runs TierneyTax.
A bilateral agreement between Ireland and the UK is possible and the European Union has already said it would accept such an agreement: “We don’t have to wait for the EU or the OECD to say what we can or can’t do,” she said.
Meanwhile, companies on both sides of the Border are now increasingly using IT filters to reject cross-Border job applications because of the difficulties employers face in dealing with two systems, Ibec has warned.
“We now have lots of members coming to us to say that they will no longer hire cross-Border. That for me is an absolute travesty,” Ibec executive Fergal O’Brien told the conference.
“They will hire in some exceptional cases, if there’s a skill that they cannot get anywhere well. But a large proportion of them are now saying no. If they have an alternative, they won’t hire cross-Border,” he said.
An all-island agreement to cover taxation, pension, banking and welfare issues facing cross-Border workers must be urgently agreed, a series of speakers told the conference.
“If we can’t provide all-island mobility within that evolving and changing workforce, then we’re really missing the trick. The opportunity is stronger than ever because the world of work is changing, but there are very significant obstacles,” Mr O’Brien said.
