Revenue eBrief No. 152/23

Relevant Contracts Tax: Incorrect operation of RCT

Tax and Duty Manual 18-02-05 has been updated to include a new section 9 which deals with the incorrect operation of RCT by a Principal.

Extract:

9 Incorrect Operation of RCT by a Principal

Immediately prior to making a relevant payment to a subcontractor a principal must submit a payment notification to Revenue. Revenue will in turn issue a deduction authorisation to the principal which will show the rate of RCT to be applied to the payment and the amount of RCT to be deducted. If a principal does not submit a payment notification or does not apply the deduction authorisation correctly to the payment any deduction that the principal makes from the payment to the subcontractor is not RCT.

Where this situation arises, a principal is liable for the penalties outlined in section 530F. The principal should also be pursued to submit an unreported payment notification (see Tax and Duty Manual Part 18-02-04 ).

Where a principal does not operate RCT correctly and underpays a subcontractor claiming that the underpayment is as result of RCT, it is a matter for the subcontractor to pursue the principal in respect of these queries.

It should be noted that any subsequent payment made by the Principal to complete a partially unpaid invoice comes within the scope of RCT and that a payment notification should be submitted by the principal prior to this payment being made