- Typical building trade services supplied with the construction sector such as electricians, plumbers, bricklayers, plasterers, carpenters, glaziers, labourers, painters, etc.
- Refurbishment or fit out projects
- Contracts providing installation services, e.g. power supply, heat, light, air-con, telecom systems
- Repair, demolition, site preparation and clearance services (including skip hire) Haulage services in relation to construction materials
- Crane hire with operator
- Scaffolding hire with erection services
- Site clearance and provision of access routes
- Operation and maintenance contracts which include repairs
- Any operations necessary to rendering complete the development work
- Where a new building is under construction or an existing building is being refurbished, all the activities necessary to render the building complete would be considered to be construction operations
- In general, all construction operations that form part of ‘rendering a building complete’ are subject to RCT. This is why the likes of cleaning, laying carpets, plastering, painting, fitting, tiling, kitchens and bathrooms all fall under the RCT rules when they form part of a contract to build or renovate a building.
Before entering into a relevant contract with a subcontractor, you are obliged to satisfy yourself that the proposed contract is NOT a contract of employment. You are also required to satisfy yourself as to the identity of the subcontractor.
Once the above requirements have been met, you are obliged to provide Revenue with details of the subcontractor (name and tax reference number) and contract (location, start/end dates, estimated contract value, etc) through ROS. You should provide the “official” name of the subcontractor – this is the name that is recorded on Revenue’s record. The subcontractor’s “official” name would be included in correspondence or other documentation (e.g. a relevant payments card) received from Revenue concerning the subcontractor. This process is known as “Contract Notification“.
- Notify Revenue of all contracts with subcontractors online
- Notify payments online-before making the payments
- Receive deduction authorisation from Revenue in relation to that payment, indicating which rate (0%, 20% or 25%) of RCT to apply (which broadly will depend on the subcontractor’s tax compliance position). This is again prior to making the payment.
- Provide a copy or details of the Deduction Authorisation to the Subcontractor
- Submit monthly/quarterly returns online
- Make payments to Revenue of RCT deducted
If you have no tax reference number for the subcontractor when you notify the contract, you will be asked to provide additional details for the subcontractor (name, address, phone number, date of birth, etc) so that Revenue can contact the subcontractor directly. You will also be obliged to advise the unknown subcontractor in writing within seven days of notifying the contract or before you pay the subcontractor (whichever is earlier) that:
- Revenue were unable to verify the subcontractor’s identity
- RCT at 35% will apply to payments to the subcontractor
- The subcontractor should contact Revenue with a view to clarifying his/her identity
If the VAT Reverse Charge applies to the payments on the contract, then the VAT exclusive amount should be input as part of the Contract Notification (i.e. you do not include VAT in the payment to the subcontractor). However if the VAT Reverse Charge does not apply (e.g. haulage, meat processing or forestry operations) then the VAT inclusive amount should be input.
Yes. You will be required to notify each contract separately in the new system unless they are considered to be part of an ongoing contract with the subcontractor (see next question). Each contract will be given a unique contract reference number and payment notifications should be made to Revenue under the relevant contract reference number.
Yes. A Principal contractor (School Boards of Management) will not be authorised to deduct tax from a payment until he/she has notified Revenue of the payment and received authorisation to make the deduction. Failure to properly notify Revenue will leave the principal (School Boards of Management) liable to penalties.
Immediately before making a payment to a subcontractor you should advise Revenue online of the amount of the gross payment to be made. This process is known as “Payment Notification“. You should select the subcontractor from the list of contracts you have already notified to Revenue. You will not be able to complete a Payment Notification on a contract unless the contract has already been notified to Revenue.
Revenue will issue an acknowledgement to you in response to the Payment Notification. This acknowledgement will include the “Deduction Authorisation” which will set out the gross amount, net amount, the rate of tax (RCT) and the amount of tax to be deducted from the payment. This Deduction Authorisation (DA) relates specifically to the payment notified. You should provide a copy or details of the DA to the subcontractor (where tax has been deducted). You can provide a copy of the DA in writing or in electronic format.
You should provide the following to the subcontractor (in writing or in electronic format):
- Name and tax reference number of the principal (School Boards of Management)
- Name and tax reference number of the subcontractor
- Gross amount of the payment including the amount of any RCT deducted
- Amount of the RCT deducted
- Rate at which RCT was deducted
- Date of the payment
- Unique ID number issued by Revenue on the related Deduction Authorisation
The pre-populated Deduction Summary is created by Revenue based on the payment notifications made by the principal (School Boards of Management) during the period covered by the return. It will be available on ROS shortly after the end of the return period, which can be monthly or quarterly (depends on the filing frequency of the principal (School Boards of Management).
To view the Deduction Summary, go to the “My Services” page on ROS and:
- Click Online Return
- Select Tax Type: RCT and Return Type: RCT Return
- Click next
- Select the period (e.g. 01/02/2012 – 29/02/2012 for monthly filers) and click next
You should check the Deduction Summary (DS) to ensure that all payments made to subcontractors have been notified to Revenue and that the amounts notified were correct. Guidance on checking and amending the Deduction Summary (PDF, 33 KB) is available on the website.
If the DS is not correct, you should make the necessary amendments online and file (submit) the return by the due date. Whether the return is filed by you or deemed filed, you should arrange for payment of the RCT deducted on or before the due date.
School Boards of Management have until 23rd day following the end of the return period to pay and file online.
If you file the return you will receive an acknowledgement from Revenue (in your ROS inbox). However, if you choose not to file your return (Revenue deems the return to have been filed), you will not receive an acknowledgement in your ROS inbox.
No, you cannot amend line items (payment details) on the return, once it has been filed or deemed filed. You can only add unreported payments to the return. Where amendments need to be made to line items after the return has been filed or deemed filed (if not filed by the due date), you should contact your local Revenue District (PDF, 25 KB). A surcharge of €100 will also apply to any amendments made after the due date for the return, and you may also be liable for interest and penalties. Guidance on checking and amending the Deduction Summary (PDF, 33 KB) is available on the website.
Treat the subcontractor as if they were resident – same RCT rules apply.
RCT/VAT payments are recorded against the same expense code as the construction service they relate to. For example; if the payment to the contractor is posted to Minor Works expense then the RCT/VAT payment is posted to Minor Works expense. Similarly, if the construction payment is posted to repairs and maintenance, then the RCT/VAT is posted to repairs and maintenance.
A capital construction project of €10,000 excluding VAT, with a 20% RCT deduction would be posted as follows:
3900 Capital Building Grant Income €11,350 (Total funds received from Department)
3940 Capital Building Grant Expense €8,000 payment to Contractor
3940 Capital Building Grant Expense €2,000 RCT deduction
3940 Capital Building Grant Expense €1350 VAT payment to Revenue