Revenue acknowledges that employers may have struggled to adjust payroll systems and is now allowing them to correct any genuine payroll tax classification errors for 2024 and 2025.
Ireland Revenue published eBrief No. 172/25, a new Tax and Duty Manual (TDM), Karshan Disclosure Opportunity Guidance on 11 September 2025, to provide guidance on the settlement arrangements arising from the Supreme Court decision in October 2023 in the case of The Revenue Commissioners v Karshan (Midlands) Ltd. trading as Domino’s Pizza.
The judgment provided employers with further clarity regarding the correct approach to employment classification for tax purposes.
Revenue recognises that employers may have faced difficulties in making the necessary adjustments to their payroll systems. Revenue is now providing employers with an opportunity to correct any payroll tax issues in respect of 2024 and 2025 arising from bona-fide classification errors.
Revenue Guidelines – Settlement arrangement arising from Revenue v Karshan (Midlands) Ltd. trading as Domino’s Pizza.
On 21 May 2024, Revenue published guidance outlining the tax implications of the Supreme Court judgment in ‘The Revenue Commissioners v Karshan (Midlands) Ltd. t/a Domino’s Pizza’ on determining employment status for tax purposes.
The Tax and Duty Manual, Revenue Guidelines for Determining Employment Status for Taxation Purposes, explains the five-step decision-making framework that businesses are required to use to determine whether a worker is an employee or self-employed for taxation purposes.
The manual also includes a number of practical examples which will assist businesses in determining what the Supreme Court decision means for the taxation of workers they engage.
Revenue previously encouraged all businesses that were engaging contractors, subcontractors or other workers on a self-employment basis to familiarise themselves with the details of the judgment and review their workforce model in light of the same. Revenue also reminds businesses that they are responsible for ensuring that the correct taxes are deducted from their employees’ pay and reported through the PAYE system.
With effect from the date of the Supreme Court judgment on 20 October 2023, employers have further clarity regarding the correct approach to employment classification. While it is clear that employers are obliged to operate Income Tax, USC, and PRSI and all employers must ensure that they are properly deducting and remitting all relevant payroll taxes, consideration must be given to Justice Murray’s comments.
In para 284 of the judgement, Justice Murray stated, “In the course of the judgement I make some comments about the potential injustice of Karshan being disproportionately penalised by one arm of the State for conducting its business in accordance with the law as it was found by another department of government.”
Employers looking to settle must ensure all disclosures are submitted to Revenue by 30 January 2026. They have two options for addressing the liability for income tax, USC, and PRSI (both employee and employer contributions): either pay the full amount through REVPAY or request a phased payment plan when submitting the disclosure.
Additionally, employers taking advantage of this settlement should inform their employees not to include the disclosed income in their 2024 and 2025 income tax returns.
