Tradesmen: Revenue Big Brother Is Watching You

February 28, 2014

Revenue have recently used aggregated data from their electronic Relevant Contracts Tax (eRCT) system, to monitor and adjust the tax compliance rating of thousands of construction tradesmen and other sub-contractors.

The eRCT system came into operation on 1st January 2012, and applies to contractors in the construction, forestry and meat processing sectors.

It enables Revenue to pre-approve payments to sub-contractors, and have tax deducted from these payments.

Contractors must use the Revenue ROS platform to notify Revenue of each individual payment to their sub-contractors.

Depending on each sub-contractor’s individual tax record, Revenue will instruct their contractor to deduct zero, 20% or 35% tax from each gross payment.

RCT eRCTLast Friday, 21 February, Revenue conducted a “Bulk Rate Review” of their eRCT data, and have now used the results of this review to upgrade or downgrade the tax compliance rating of 19,130 sub-contractors.

There are 3 ratings used:

  • No tax deduction will apply where a subcontractor is fully compliant with his/her tax obligations
  • A 20% deduction will apply where a subcontractor is “substantially compliant”, and
  • a 35% deduction rate will apply where the subcontractor is unknown to Revenue or has outstanding tax compliance issues.

Revenue are now writing to affected sub-contractors to notify them of the changes to their eRCT ratings.

Meanwhile, in today’s Revenue eBrief, Revenue also confirmed that sub-contractors on the 35% deduction rate (ie, those with outstanding tax compliance issues) will NOT qualify for the Home Renovation Incentive (HRI) scheme.

The HRI scheme allows householders to claim a 13.5% tax credit on the cost of improvement works in their homes.

The message to tradesmen and sub-contractors is clear: Be very careful, Revenue’s Big Brother is watching you.

Today’s eBrief is here. See also Revenue’s Guide to Electronic RCT.

Corporation Tax Exemption for StartUps – Updated

February 27, 2014

Did you know that your new company can be exempt from Corporation Tax for up to three years?

Back in 2010, the Government introduced a Corporation Tax exemption for new start-up companies.  This allowed companies to earn annual profits of up to €320,000 per year for 3 years, with no liability to Corporation Tax.

The relief has since been capped at the amount of employers’ PRSI paid by the company in a given year.

This applies subject to a maximum of €5,000 per employee and an overall limit of €40,000.

On the other hand, companies who fail to use up their exemption in their first three years are now allowed to carry forward unused relief to future years.

The Corporation Tax exemption for Start-ups

In calculating the capped amount, credit is given for any employers’ PRSI exempted by the Employer Job (PRSI) Incentive Scheme.

This means that the exemption is now only worthwhile to companies who employ staff (excluding directors) within the first 3 years of operation.

However, it can still be useful even if your company doesn’t make profits until year 4, or later.

If you have a new or recent startup company, it is well worth doing the sums to see if you can benefit by hiring a new staff member.

The relief currently applies only to companies that start trading before the end of 2014, so if you’re planning a startup, don’t delay.

As always, professional advice is recommended before making any major decisions.

My previous blog post explains how the exemption initially worked. See also the Revenue 2011 Tax Briefing and 2013 Tax Briefing updates, each with worked examples.

Charlie Weston Nails Revenue’s Customer Service

February 18, 2014

Personal finance expert Charlie Weston has quite rightly taken umbrage at an insensitive letter he received from Revenue, following his father’s death.

He outlined his experience in his column in last weekend’s Sunday Independent.

Charlie’s concluding remarks are damning:

“Revenue officials are good at dealing with tax practitioners and the self-employed.

Where consumers are concerned, the tax authority is very poor.”

One might add that tax advisors and self-employed people are consumers too.

As a tax practitioner myself, I find Revenue’s customer service is usually quite good – this morning I received fantastic assistance from a relatively junior official in Dundalk Revenue who was extremely helpful in resolving a query – but occasionally it is very, very bad.

So much so, that I am often reluctant to advise customers to contact Revenue directly, in case their experience is similar to Charlie’s.

Charlie Weston

Charlie’s article is here. He is also well worth following on Twitter at @CWeston_Indo

The Revenue Customer Service Charter is here.

Coming Soon: Companies Office Full Online Filing

February 7, 2014

The Companies Registration Office (CRO) is ready to adopt new accounts filing rules that will allow companies to file their annual returns and accounts entirely online.

At present, it is possible to file a CRO annual return online, but this must also be supplemented by the submission of paper-format accounts and a separate signature page, each containing the directors’ original signatures.

CRO Companies Registration OfficeThis rather cumbersome procedure was necessary as the Companies Acts had never previously been updated to facillitate electronic filing.  The Companies (Miscellaneous Provisions) Act 2013 was passed into law late last year and is expected to come into effect in March.

This will allow company accounts to be filed with typed signatures. It will no longer be necessary for the accounts to have original handwritten signatures.

This means that they can be uploaded directly to the CRO website, avoiding the postal and other delays that current bedevil companies who are obliged to have their returns filed before their Annual Return Date deadline.

The CRO will in the coming weeks announce instructions for the new online filing facility.

The Companies Office Ezine announcing this change is here.