Taxback CEO Joanna Murphy tells John Kennedy how the Irish fintech has pivoted to help businesses ensure employees impacted by the Covid-19 crisis can offset hefty tax bills later this year.

As the old saying goes, there are only two certainties in life: death and taxes. But there is another certainty: people don’t always collect their dues when it comes to taxation. The Byzantine and austere nature of taxation either confuses or frightens people from claiming back what is rightfully theirs, and as a result lots of people do, in fact, overpay the taxman. And that’s a truism in more than 23 countries, not only Ireland, where Irish fintech Taxback.com is active.

At the helm of this global business is Joanna Murphy, a seasoned business executive who has always had a global and local outlook as can be seen from her time in leadership roles with Connect Ireland and the Irish Diaspora Loan Fund. Murphy is among 16 business leaders who have been chosen to vie for the annual Irish Times Business Awards this year.

“Young people receiving the €350-a-week payment up to September think they are in clover. But there’s no such thing as a free dinner and up until now nobody has really mentioned the bill”

The global pandemic, spurred on by the world’s disconnectedness, has in a way been an enormous leveller, socially and economically. Locally in Ireland the impact of the outbreak and lockdown has been harsh, ripping the economy from full employment to a situation where 400,000 people are now unemployed. It created a situation where the Irish Government had to act promptly to underwrite the wages of more than 1m workers with the special pandemic unemployment payment and the temporary wage subsidy.

Practical at the time, it could turn into a double-edge sword for workers who could end up with tax bills on average of up to €2,800 each at the end of this year, by Taxback.com’s calculations. January could see up to 1m people scramble to balance their tax affairs as a result.

There are few options. Workers may be able to offset any payment due against reliefs unclaimed going back four years. Others may be able to spread the taxes owed out over the next two years.

Murphy explained that if employers tried to cover this cost – which effectively amounts to a pay cut – the employee would be hit with Benefit in Kind.

Avoiding a winter of discontent

The conundrum has set the stage for a shrewd move by Taxback.com to effectively automate the recovery of tax rebates as a service that employers can offer to employees.

“We’ve gone into companies and said to employers ‘Look, we’ll do your tax returns for all of our employees’. There are a host of things people don’t claim rebates for whether it is medical or dental bills, renting a room, having somebody in college, bin collections, the list goes on.”

Another benefit of this, Murphy explains, is that the process is hugely educational as most people aren’t aware of what they are entitled to claim tax relief on.

“For companies, on one hand, it lets them show employees that they care, are listening and want to help them.

“The crisis opened a door for us in terms of a new commercial avenue to be able to engage with employers on an ongoing basis to help make sure their employees are tax-healthy.”

The traditional model for Taxback.com is to take a commission of around 10pc on tax refunds for individuals, but people also have the choice to pursue it themselves for no charge while armed with the knowledge of what they can claim as a refund.

“At the very least we have given these people the knowledge of what they are entitled to, and we work on a no-win, no-fee basis. Most people are more than willing to pay 10pc of the refund for not having to do anything about it.”

According to Murphy, six-out-of-10 people that come to Taxback.com receive a refund.

The move to supporting companies to enable tax refunds for their employees where appropriate is to all intents and purposes a pivot for the business which was established by Irish fintech supremo Terry Clune, the Kilkenny businessman who also operates TransferMate.com. Clune established Taxback.com in 1996 after he found himself paying about 50pc to 60pc tax in Germany and so he gave up his construction job and started figuring out how to get that tax back.

“With this new venture we are selling to employers, we will do the tax returns for their employees,” explained Murphy. “For example, we could do 400 tax returns for 400 employees at a set fee. So, its much more of a commercial arrangement. The appetite for this has been enormous as a lot of employers want to help employees avoid tax bills they wouldn’t otherwise have had if not for this crisis.”

Crucially, it fits neatly into the narrative of financial wellbeing being a core part of overall wellbeing and happiness.

“There has been a significant adjustment in terms of people coping with working remotely and people who aren’t working at all. There has been enormous stress. People are deeply worried about the future, they are worried what’s going to happen next year and when all of this will pass.

“For employers that want to be two-streets ahead and particularly in terms of the acquisition of talent, they want to communicate to employees that they actually care and are doing something important to help with their financial wellbeing.

“As a business we see this as something that we will provide as a service to companies long into the future.

“The thing that separates good businesses from bad businesses is how they view their employees. Bad businesses view employees as just a function of the P&L, whereas the good businesses that will last are the ones that care enough about their employees and their financial wellbeing, too.

“There are few households that this crisis hasn’t hit. If you’re lucky to have a job or if you’ve been paid through the temporary wage subsidy scheme to September that’s going have an impact. Your spouse could be out of work or may work in the hospitality or tourism sector. It has all been a tsunami. And the best thing we think for employers is to try and get in front of that. Understand what the implications of these schemes will be for your employees and simplify it for them.”

Taxback.com works with tax offices all over the world, its services made necessary by the fact that most ordinary citizens struggle to understand their rights and entitlements. Few countries actually get it right. “New Zealand has an amazing tax system that actually renders our services unnecessary,” says Murphy.

For Ireland, Murphy would like to see a more-informed populace and in many ways the Covid-19 crisis will provide a bittersweet education in taxation.

“Young people receiving the €350-a-week payment up to September think they are in clover. But there’s no such thing as a free dinner and up until now nobody has really mentioned the bill.”

Pictured: Joanna Murphy, CEO of Taxback.com

Written by John Kennedy (john.kennedy3@boi.com)

Published: 14 July, 2020

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