RCT for Principal Contractors Transitional Arrangement

This eBrief is of interest to principal contractors who have engaged a subcontractor on more than one contract at the same time.

A principal who has entered into more than one contract with a subcontractor and who is making a single payment to the subcontractor in respect of more than one contract, is required to make a separate payment notification to Revenue for the payment due under each contract. See Regulation 5 (3) (b) of the Income Tax and Corporation Tax Regulations 2011 (Relevant Contracts Tax).

This requirement was relaxed to 30th June 2013 to assist principals in their transition to the new RCT system. eBrief 58/12 refers.

Following the formal extension of the transitional arrangement to 30th June 2013, Revenue engaged in a consultation process with some of the businesses affected by the arrangement and with our own staff. Recognising that some principal contractors, due to how their internal accounting systems are configured, will continue to have difficulties in meeting their obligations, and, having investigated the risks to the integrity of the system, Revenue now proposes to amend the RCT Regulations.

The amended Regulations will allow a principal contractor the option of notifying a payment to Revenue using any valid contract notified to Revenue for that subcontractor. There will however, continue to be an obligation on the principal to notify each contract to Revenue.

The RCT Regulations will be amended later in the year. In the meantime, principal contractors will have the option of availing of an extension to the transitional arrangement to 31st December 2013.

Principal contractors are reminded that the transitional arrangement is optional and principal contractors who are in a position to meet their obligations should continue to do so. Principal contractors who have availed of the transitional arrangement must, on or before 31st December 2013, notify Revenue of each individual contract that is still in existence as at 31st December 2013.

Principal contractors should also familiarise themselves with Questions 9 and 10 on the RCT FAQs page on the Revenue website where there is further information on notifying contracts where a principal contractor has engaged a subcontractor on multiple contracts.