17th October 2017
Budget airline Ryanair has certainly had a tough time of late as it came under fire just last month for its cancellation of thousands of flights due to an error with its pilot roster. And it looks like the firm’s troubles are far from over. The company has once again made headlines, this time due to its complex working models which are causing some pilots a tax nightmare.
Complex working models
According to the reports, Ryanair has imposed a system whereby pilots applying for a position are referred to accountants in Ireland. These professionals are then informed that they need to set up an Irish limited company which they become directors of. These limited companies then ‘supply’ the pilots to a number of agencies – including Brookfield Aviation – who then supply them to Ryanair.
This rather complex structure means that the airline has fewer obligations to pilots such as sick and holiday pay. It also means that the individuals are responsible for ensuring they pay the correct taxes as they are, in essence, self-employed.
Pilots under investigation
The big concern in this case is the impact this activity is having on the pilots themselves. Many of these individuals have little tax experience or knowledge and are instead relying on the recommended accountants to manage their finances.
Given how complex cross-border employment taxes can be, it’s no surprise that HMRC has begun investigations into numerous pilots who are operating under this self-employment structure. Even those that have left their payments in the hands if the Irish accountants have faced investigations. One professional, for example, was informed by HMRC that they should have been paying taxes in the UK even though they are paid by an Irish-based limited company.
For those pilots claiming to have been forced into this complex working model, stress and worry is commonplace. An article in the Guardian quoted numerous pilots that are facing investigations and all alluded to the anxiety they are facing on a daily basis over something they feel they have no control of. One individual even went so far as referring to those affected by this as ‘broken men’.
There’s no place to hide
While investigations into these potentially non-compliant working models are on-going, the fact that HMRC is going over employment structures with a fine-toothed comb really does highlight that the authority will leave no stone un-turned in the battle against tax evasion. For firms and individuals alike, remaining compliant in a complex world of employment tax is only going to become more important and arguably more difficult.
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