Since 1st January 2012, all relevant contracts including ongoing contracts must be registered on line. PRINCIPALS must notify all payments on relevant contracts to Revenue from 1st January 2012. All contracts between the principal (or agent on behalf of the principal) and Revenue will be through an on line process.

 

All principals in the construction, forestry and meat processing sectors will be obliged to submit information, data payments and returns to Revenue electronically.

 

Mandatory electronic communication

The new system will have three rates: 0%, 20% and 35%.

Subcontractors who satisfy the current criteria for a C2 card will qualify for the 0% rate.

Subcontractors who are not registered with Revenue or who have serious compliance issues which need to be addressed will be placed on the 35% rate.

All other subcontractors will be eligible for the standard 20% rate.

 

Overview of how the new system will work

When a principal enters into a relevant contract with a subcontractor he/she will be obliged to provide Revenue with details of the subcontractor and contract online, including confirmation that the contract being entered into is not a contract of employment.

 

Immediately before making a payment under the contract, the principal must notify Revenue (by electronic means) of his/her intention to make the payment and must state the gross amount to be paid.

 

Revenue will issue a deduction authorisation to the principal. This authorisation will set out the rate of tax and the amount of tax to be deducted from the payment. The Principal must provide a copy of the authorisation to the subcontractor.

 

Revenue will automatically credit RCT deducted to the subcontractor's tax record. The RCT credit will be available for offset as it arises or for repayment annually.

 

Revenue will now have all the details of the payments notified to them by principals. Depending on the filing frequency of the principal, a deduction summary will be issued to the principal, either monthly or quarterly, listing all of the payments Revenue has been made aware of. If the summary is correct, the principal needs only to arrange payment on or before the due date for the return. The return will be deemed to have been made on that date.   If the summary requires amendment the principal will amend it on-line and arrange for payment on or before the due date. Payment should be made on-line by the due date (23rd day after the end of the period covered by the return).

 

Key benefits of the new RCT system for principal contractors

The administration burden will be reduced; Principals will no longer need to:

  • Order stocks of RCT forms.
  • Complete Forms RCTDC/RCT46
  • Manually record payments on Forms RCT48/RCT47
  • Complete the Annual RCT 35 return
  • Complete the paper copy of Form RCT1 with the subcontractor
  • Only one rate will apply to a subcontractor at any point in time. Principals will be obliged to apply this rate to payments to the subcontractor.

 

Subcontractors will no longer need to submit RCTDC claims to Revenue. When the principal notifies Revenue of the relevant payment, Revenue will automatically credit RCT deducted to the subcontractor's tax record. This RCT credit will be available for offset against other tax liabilities as they arise or for repayment annually.