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| Changes to the operation of Relevant Contracts Tax (RCT) |
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Work is well advanced on developing the new scheme, which will be subject to a commencement order to be signed by the Minister of Finance but is expected to be introduced on 1st January 2012.
To ensure a smooth transition to the new RCT scheme, principal contractors will be able to register contracts on-line in the new scheme from 28th November 2011 (‘contract registration’). This will be the only part of the new scheme that will be accessible prior to 1st January 2012. Principals will be expected to make payments to subcontractors and notify these payments to Revenue on-line from
1st January 2012.
Principals and their agents will have the following options for interacting with Revenue: |
 | Revenue On-Line Service (ROS) |
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| New web services accessed by third party software |
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| Off-line application e.g. Adobe AIR
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| Key benefits of the new RCT scheme for principals: |
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| 1. The administration burden will be reduced, for example, principals will no longer need to: |
 | Order stocks of RCT forms |
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| Complete Forms RCTDC/RCT 46/RCT 46A |
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| Manually record payments on Forms RCT48/RCT 47 |
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| Complete the annual RCT 35 Return |
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| Complete the paper copy of Form RCT 1 with the subcontractor – a streamlined contract registration procedure is incorporated into the new scheme
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| 2. There will be clarity on the RCT rate for each subcontractor: When a principal notifies Revenue of a relevant payment to a subcontractor on-line, Revenue will confirm the subcontractor’s RCT rate and the amount of RCT to deduct from the payment, via an on-line ‘deduction authorisation’ for the payment by return. A copy of this authorisation should be provided to the subcontractor. |
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| Key benefits of the new scheme for subcontractors: |
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| The standard RCT rate of 35% will be reduced to 20%. (In certain limited cases a subcontractor will be placed at 35% e.g. subcontractors who are not registered with Revenue or where there are serious compliance issues to be addressed). |
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| 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. |
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| There will no longer be a requirement to jointly complete Form RCT 46 with the principal in order to receive gross payments. |
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| Subcontractors will no longer have to submit RCTDC claims to Revenue. When a principal notifies Revenue of relevant payment, Revenue will automatically put credit for any RCT deducted onto the subcontractor’s tax record. This RCT credit will be available for offset against other tax liabilities as they arise or for repayment annually. |
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| If you require more information in relation to this matter please email or call us on +353 1 6120580 today. |
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