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.
Last 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.
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