Relevant Contracts Tax (RCT)

A school board of management, in its capacity as a body established by statute and funded wholly or mainly from funds provided by the Oireachtas, is designated as a “principal contractor”.

Boards of Management can be involved in a range of activities including: Construction Projects, Summer Works, Emergency Works, Major Devolved Projects, Additional Accommodation Schemes as well as day to day repairs that bring them within the scope of Relevant Contracts Tax (RCT) and, as a consequence, Value Added Tax (VAT). The board of management is responsible for complying with RCT requirements and VAT returns when making payments to the building contractor.

It is important that boards are aware of and understand their obligations in relation to these taxes. The regulations also apply to minor works if they are construction operations where the board of management is the client regardless of how they are funded.

Principal contractors must register with Revenue and all transactions with Revenue must be made electronically through Revenue Online Service (ROS).

Detailed information on the operation of RCT by principal contractors is available in Revenue’s Tax and Duty Manual for principal contractors

IMPORTANT NOTE:

1. RCT does not apply to professionals such as architects, surveyors etc.
2. Schools are not entitled to reclaim the VAT on goods or services
3. All transactions with Revenue must be conducted electronically through Revenue Online Services (ROS)

• 1. Inform the Revenue at the design stage that the school is undertaking a building project and seeking confirmation that the school’s board of management will be treated as the principal Contractor for the building/construction contract
  2. If not done so already, register online for ROS (Revenue Online Service)
  3. If not done so already, register for VAT and RCT as a principal contractor
  4. Obtain a contractor’s tax reference number and proof of identity
  5. Prior to commencement of construction, notify the Revenue of the contract (Contract Notification)
  6. Notify the Revenue prior to making any payment to the building contractor (Payment Notification)
  7. In response to the Payment Notification submitted Revenue will issue to you a Deduction Authorisation specifying the tax to be deducted from the payment to the building contractor.
  8. Provide the contractor with a copy of the Deduction Authorisation
  9. Deduct the applicable amount of tax from payments due to the contractor
  10. Revenue will prepare a Deduction Summary at the end of each return period which will have details of all the Payment Notifications submitted by you. This should be checked by you.
  11. File RCT returns and pay the deducted amount (if any) to the Revenue
  12. File bi-monthly VAT returns and pay the VAT to the Revenue
  13. Place a copy of the contract notification, payment notification, contractor invoice and deduction summary on the RCT file.