Revenue’s Disclosure Opportunity: Why Employers Can Regularise Misclassification Without Penalties

A clear and time-limited path to correct employment status issues with certainty

Revenue’s recent announcement offers employers a unique and valuable opportunity to correct the misclassification of workers as self-employed without facing interest or penalties. This once-off disclosure window recognises the real impact of the Supreme Court’s landmark Karshan (Domino’s Pizza) judgment, which reshaped how employment status must be assessed for tax purposes.

For many businesses, the judgment introduced clarity. It also introduced change. Revenue acknowledges that employers acted in good faith under the previous legal understanding, and this new process gives organisations the chance to regularise their position with confidence.

Understanding the reason behind the disclosure

The Supreme Court’s decision set out a new five-step test for determining whether a worker is an employee or genuinely self-employed. This framework now guides all tax assessments of employment status in Ireland, and its implications span every industry.

Because the judgment updated the legal principles that businesses had relied on for years, Revenue recognises that honest, bona-fide classification mistakes may have occurred. The disclosure window is designed to support employers who want to correct issues for 2024 and 2025 without fear of penalties.

This is not an enforcement trap. It is a practical and fair response to a major shift in the law.

What Revenue is offering

Revenue will allow employers to:

• Review their contractor and self-employed engagements.

• Reclassify workers where necessary under the new five-step test.

• Calculate any PAYE, USC or PRSI adjustments for 2024 and 2025.

• Submit a formal disclosure by 30 January 2026.

Crucially, where a disclosure is submitted on time, Revenue will treat any corrections as a technical adjustment. That means:

No interest. No penalties. No publication.

Adjustments must be paid via REVPAY, or employers may request a Phased Payment Arrangement at the point of disclosure.

Why employers can trust the process

This is a genuine once-off opportunity created specifically because the legal landscape changed. Revenue needs employers to engage openly so that the correct classification framework is applied across the economy going forward.

If Revenue were to penalise employers who voluntarily disclose, trust in the compliance system would collapse. Voluntary disclosure initiatives rely on transparency and collaboration, and Revenue has a long track record of honouring these commitments.

The message is clear:

Act now and resolve the issue safely. Delay, and the full weight of tax, interest and penalties will apply.

What employers should do now

To use this window effectively, businesses should take the following steps:

Review

Examine all contractors, subcontractors and self-employed roles using the five-step Karshan test.

Reassess

Determine whether any individuals should be considered employees under the new legal framework.

Calculate

Use Revenue’s updated guidance, including the new Tax and Duty Manual, to quantify any adjustments.

Disclose

Submit the disclosure before the 30 January 2026 deadline to benefit from the penalty-free settlement.

Moving forward with clarity and certainty

This disclosure window is a valuable opportunity for employers to correct issues, strengthen compliance and build confidence in their workforce practices. It ensures that businesses are aligned with the updated legal framework and protected from future risk.

At UHY Farrelly Dawe White, we bring together deep tax expertise, practical industry insight and a collaborative approach that makes complex situations easier to navigate. We support employers through every stage of this process, from reviewing contractor arrangements to applying the five-step test, preparing calculations and submitting disclosures with precision.

Our team is hands-on, responsive and focused on giving you the clarity and confidence you need to move forward.

If you would like tailored support preparing your disclosure, our tax specialists are ready to guide you. Together, we will help you stay compliant, minimise risk and achieve a better future for your business.

Get in touch!