Contractors in the construction, forestry and meat processing trades must observe Relevant Contracts Tax (RCT) on payments to subcontractors. If a contractor holds an RCT Payments Card for a subcontractor, they can make payments to the subcontractor without deducting tax, otherwise 35% tax must be deducted on all payments, and paid over to Revenue.
Payments Cards are renewable annually and contractors who currently hold 2010 Payments Cards for subcontractors, should now apply to Revenue as soon as possible to renew all such Payment Cards for 2011.
All payments to subcontractors must be paid net of 35% unless the contractor making the payment holds a current RCT Payments Card for the subcontractor. This applies even if the subcontractor holds an up-to-date C2 certificate.
All 2010 Payments Cards expire on 31 December 2010 and it is up to the contractor to apply for new payments cards for 2011.
Form RCT46A can be used to renew a 2010 Payments Card for an ongoing contract, while Form RCT46 may be used to apply for a Payments Card for a new subcontractor.
There are heavy penalties for non-operation of RCT on subcontractor payments, and failure to observe RCT rules can cost contractors dearly. Therefore, contractors should take extreme care to ensure that they are in full compliance at all times.
Thomas McGibney & Company 
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