New VAT & RCT Guidance for School Boards

May 23, 2016

Revenue have issued new Guidance Notes for School Boards of Management on how Relevant Contracts Tax (RCT) and VAT affect school building projects and repairs & maintenance works.

Revenue Guidance Notes for Boards of Management on RCT and VAT.jpg

The RCT tax system applies to construction contracts where a principal contractor deducts tax from payments due to building contractors and tradesmen.

Since 2012, school Boards of Management have been counted as ‘Principal Contractors’ for RCT purposes.

Where a Board of Management undertakes construction works (including associated repairs or alterations to a building or structure), they  must operate RCT procedures on all payments to contractors.

In addition, they must file VAT returns, and make VAT payments in respect of VAT withheld under the Reverse Charge system.

There are serious penalties for failing to comply with these obligations, so school Boards should take special care to ensure that their VAT and RCT affairs are fully in order.

If you’re not fully certain of what exactly to do, avoid a potential nightmare by getting proper professional advice.


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.

Tonight’s Tax Return & Payment Deadlines

January 23, 2013

Don’t forget that midnight tonight (23 January) is the deadline for filing the following tax returns:

  • Employer PAYE/PRSI P30 monthly return for December 2012 & quarterly return for the period October – December 2012
  • VAT3 return for periods ending in December 2012
  • RCT December 2012 monthly return for December 2012 & quarterly return for the period October – December 2012.

You must file each return online using ROS, and each return must be accompanied by your corresponding tax payment.

Tax Deadlines

In addition, tonight is also the deadline for

  • payment of Preliminary Corporation Tax, if your 2012/13 company accounts year ends in February 2013; and
  • filing of your Corporation Tax Return and payment of any remaining tax owing, if your 2011/12 company accounts year ended in April 2012.

For a full list of all Revenue tax deadlines in 2013, see the Revenue Key Dates Calendar. Note the extended filing dates for returns filed electronically via ROS.

Less Frequent Business Tax Returns on the way

November 4, 2011

Revenue have this week announced that more small businesses will be qualify for reduced frequency VAT, PAYE/PRSI, & RCT tax returns and payments in 2012.

With effect from 1 January 2012, businesses whose annual VAT bills are less than €3,000 will only be required to file VAT returns and pay VAT liabilities every 6 months. If their annual VAT bills are between €3,000 and €14,400, they will file and pay every 4 months.

In addition, employers and contractors whose annual PAYE/PRSI or RCT liabilities are less than €28,800 will be eligible to make quarterly P30 & RCT30 returns and payments.

Revenue state that this will mean improved cashflow and less form-filling for eligible businesses.

They will soon be writing to businesses that they believe to be eligible for these new arrangement. If you don’t hear from them, but feel that your business should be eligible, (for example due to falling turnover), you should get in touch with Revenue before the end of December.

Today is P35 & RCT35 Deadline Day

February 15, 2011

Today, 15 February, is deadline day for 2010 annual returns by employers and  construction, forestry and meat processing contractors.

15 February is the annual deadline for filing of paper-format P35 returns with Revenue. A later deadline of 23 February applies to P35 returns filed online, where the liability is also paid online using the  ROS system.  The site contains some useful guidance in relation to P35 returns.

This year’s P35 deadline is also the final opportunity for employers to make Self Corrections to PAYE underpayments for 2009 under Revenue’s Self Correction rules.  This is especially relevant in the case of locum doctors engaged to work in GP practices and possible exposure to PAYE/PRSI arrears if  they are subsequently deemed to be working as employees.

Revenue have previously warned affected General Practitioners to regularise their 2009 PAYE/PRSI position, if appropriate, by today, 15 February, otherwise they may face penalties for non-compliance.  See this recent Revenue eBrief for more on this topic.   The ‘if appropriate’ qualification is important as in many instances the question of GP’s liability to PAYE/PRSI is not at all clear-cut.

Finally, today is also the deadline for principal contractors to file 2010 annual RCT35 subcontractors returns with Revenue.  A similar deadline extension to 23 February applies also to the RCT35 return.  Again this later deadline applies only where both the return and the RCT liability payment  are submitted to Revenue using  ROS.  A recent Revenue eBrief stresses the importance to contractors of filing the RCT35 return on time.

Contractors – Renew 2011 Payments Cards Now!

December 15, 2010

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.

RCT Payments Cards due for Renewal at year-end

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.