Revenue update on flat rate expenses review

Today (5/12/2019), Revenue announced its decision to defer the implementation of any planned changes to the flat rate expenses (FRE) regime until 1 January 2021, pending the outcome of a review relating to the tax deductibility of expenses in employment by the Tax Strategy Group (TSG). Revenue’s decision has been taken in light of the Minister for Finance, Paschal Donohoe, supporting plans to examine policy and legislative options in relation to several aspects around the entitlement to tax relief for expenses incurred in employment.

A comprehensive review of the FRE regime by Revenue has been underway for the last 18 months and is scheduled to conclude shortly. The review has highlighted a number of inconsistencies throughout the regime including:

  • the different treatment between the self-employed versus employees
  • ineligible registration fees claimed
  • the nature of expenses claimed.

On Tuesday (3/12/2019), the Minister for Finance wrote to Revenue Chairman, Niall Cody, noting that

'the review has raised a number of aspects in the current FRE regime where further policy consideration may be warranted'.

Responding to Revenue's suggestion that a number of tax policy matters relating to employment expenses might be best considered by the Tax Strategy Group, Minister Donohoe indicated his support that the TSG would be

'an appropriate forum in which the issues in question can be fully considered'.

Having regard to the Minister's views, the Revenue Chairman confirmed by letter to the Minister today that

'Revenue has decided to defer implementation of any planned changes to the FRE regime until 1 January 2021, pending the outcome of the review by the TSG of the issues concerned and subsequent further legislative considerations, if any'.

To support the TSG in its considerations of various matters relating to employment expenses, Revenue will make its report on the review of the FRE regime available to the TSG as soon as it is finalised.

Ends [5/12/2019]

Notes for the editor:

Copies of the letters between Minister for Finance, Paschal Donohoe and Revenue Chairman Niall Cody can be found from the press section of the website.