Revenue provides disclosure opportunity to regularise misclassification of self-employment
On 11/09/2025, Revenue announced employers can correct payroll tax issues for 2024 and 2025 arising from bona-fide classification errors, without imposition of interest and penalty. Employers who, acted in good faith relying on the case law and guidance available prior to the Supreme Court judgment, but who may have misclassified employees as contractors are encouraged to take this opportunity to regularise their tax affairs.
Revenue is providing this opportunity following the Supreme Court judgment in Revenue Commissioners v Karshan (Midlands) Ltd t/a Domino’s Pizza which introduced a five-step framework to be applied when determining if a worker is an employee or self-employed for income tax purposes. This judgment has important and wide-reaching implications across all sectors and is not limited to the individual workers or sector involved in the specific case.
Revenue previously encouraged all businesses that were engaging contractors, sub-contractors or other workers on a self-employment basis to familiarise themselves with the detail of the judgment and review their workforce model in light of same.
In May 2024, to assist businesses in carrying out this review, Revenue published detailed guidance (accessible here) explaining each of the steps involved in the decision-making framework and setting out a number of practical examples to assist businesses in determining the taxation of workers they engage.
The Supreme Court judgment, in addition to Revenue’s guidance provides clarity on the appropriate classification of workers for income tax purposes. However, Revenue recognises that the judgment changed the understanding of the correct legal principles and legal tests to apply in determining whether an employer had correctly classified workers as employees or as self-employed. In this context Revenue invites employers impacted by the Supreme Court judgment to make a disclosure in respect of 2024 and 2025.
Revenue has today published guidance to assist employers in calculating any adjustment needed. This guidance is set out in Tax and Duty Manual Part, ‘Settlement arrangement arising from Revenue v Karshan (Midlands) Ltd. trading as Domino’s Pizza’ and is accessible here. Any necessary adjustment to income tax, USC or PRSI liabilities due in respect of 2024 and 2025 will be treated as a “technical adjustment” under the Code of Practice for Revenue Compliance Interventions.
Disclosures should be submitted no later than Friday 30 January 2026 and all liabilities should be paid in full, via REVPAY. Employers may also request a Phased Payment Arrangement (PPA) to pay the liabilities, but any request to enter a PPA should be made at the time the disclosure is submitted.
Where an employer fails to take this opportunity to review its workforce practices and make a relevant disclosure, and the liabilities from misclassification subsequently come to light, tax, interest and penalties will be applied in full.
[END 11/09/2025]