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Section B – Entering into a relevant contract – Treatment of payments under a relevant contract
Questions frequently arise as to whether a service or supply detailed on an invoice/document is subject to RCT and/or the VAT Reverse Charge. In considering whether a payment is subject to RCT, the contract under which the payment is being made must be examined to determine if it is a relevant contract. If it is a relevant contract, then all payments under that contract must be subjected to RCT. In considering whether the VAT Reverse Charge should apply to a payment, the service/supply on the invoice/document must be examined to determine if it is a construction operation. If it is not a construction operation, then normal VAT rules apply and the payment
is not subject to the VAT Reverse Charge. In practice, the decision on most contracts/payments will be clear cut and the operation of RCT and VAT will be straightforward. Issues are most likely to arise in the case of mixed
contracts (repair and maintenance contracts for example See B11).

1. What is a relevant contract?

A relevant contract is a contract to carry out relevant operations. In the context of Boards of Management relevant operations will solely be construction operations. Examples of construction operations are set out on Page 3 of the guidelines. Contracts can be written, verbal or implied and no distinction is made between them. Where any part of a contract is for relevant operations then the contract as a whole is a relevant contract and all payments under that contract are liable for RCT. The VAT Reverse Charge only applies to payments that are in respect of construction operations, excluding haulage for hire (See Section C).

2. Should all subcontractors have a tax clearance certificate?

Department of Finance Circular 43/2006, as revised, sets out the procedures to be followed in respect to the award of public sector contracts. In brief, in the case of all public service contracts of a value of €10,000 (inclusive of VAT) or more within any 12 month period, the subcontractor will be required to produce either a valid tax clearance certificate or demonstrate a satisfactory level of subcontractor tax compliance. (The subcontractor can demonstrate a satisfactory level of subcontractor tax compliance by producing a Subcontractor’s Notification of Rate Determination showing a rate determined by Revenue of 0% or 20 %.) Any queries on the operation of Circular 43/2006, as revised, should be directed to the Department of Finance. Note that irrespective of whether the subcontractor has a tax clearance certificate or not, the Board must operate RCT,and VAT where appropriate, on sums paid under relevant contracts.

3. Where the main contractor engages subcontractors, who is responsible for ensuring that payments to those subcontractors are accounted for correctly?

Generally the main contractor is responsible for ensuring that the correct procedures are followed in relation to payments made to subcontractors engaged by them, unless there are special arrangements in the contract awarded to the main contractor. Department of Finance Circular 43/2006 contains some provisions in this regard.

4. Must every relevant contract be notified to Revenue?

Principal contractors are required to notify each contract separately unless the contracts are considered to be part of an ongoing contract with the subcontractor (see next question).

5. A school has multiple contracts with the same subcontractor. Must each contract be notified separately?

Strictly each contract must be notified to Revenue. However Revenue is aware that many principal contractors are in ongoing or rolling contracts with subcontractors. In schools, these would mainly be maintenance and repair contracts but could include other relevant operations.
Multiple, ongoing or rolling contracts:
Where there is an on-going contractual relationship (also known as a rolling contract) between a principal contractor and a subcontractor, a single contract notification will normally suffice. This includes situations where the jobs do not succeed each other immediately. The conditions are that
• The terms of the contract do not change;
• The parties to the contract do not change; and
• The subcontractor does not have to compete for the work (i.e. submit a new tender for each contract).
This treatment is covered in more detail in Questions 9 and 10 of the FAQs (Principal Contractors).

6. Will there be only one Site Identification Number for each school/campus?

In general a new site and a subsequent new SIN should be created for each overall Project. Within this there are possibilities where multiple SINs would exist for the same contract locations – this would occur where those contracts are not related to the same Project. Further information and examples are available here.

7. What information must a school get from a subcontractor to enable them register a contract.

The subcontractor must provide the school with their name and tax reference number. Other information that the school must supply to Revenue will be available from the contract. Where the subcontractor does not provide a tax reference number further information will be required. Full details are available at

8. Principal Contractors are obliged to establish the identity of the subcontractor. How should they do this?

There is an onus on the principal contractor to establish the identity of the subcontractor who is party to the contract under RCT legislation. This should be a priority for the school in any case, to satisfy a range of Insurance, Health & Safety and Department of Finance requirements. The Income Tax and Corporation Tax (Relevant Contracts Tax) Regulations 2012 require a principal contractor to be satisfied as to the identity of the subcontractor.
They also oblige a principal contractor to request documentary evidence of identity and to make and retain a copy of the documentary evidence provided, or record and retain relevant details from the documentary evidence given. There are, therefore, two requirements:
– To be satisfied as to the identity of the subcontractor
– To record the check carried out
A board should establish the identity of any subcontractor before awarding a relevant contract. Where there are ongoing contracts, all parties will be well known to each other and there is no issue. However, the principal will need to check documentary evidence. In the normal course of business, subcontractors will have to provide the board with details such as insurance cover, health and safety compliance, VAT document/invoice etc. and this will normally suffice.