Eligibility for exclusion from the new Form RCT 1 process for subcontractors in the Construction, Meat Processing and Forestry Sectors.

Revenue e-Brief No.12/08 gave details of the new Form RCT 1 that is being introduced with effect from 1 April 2008 for new relevant contracts entered into by principals and subcontractors.

Section 31, Finance Act 2007 introduced an enabling provision allowing Revenue to make regulations requiring the Form RCT 1 to be returned to them in certain circumstances. Section 35, Finance Act 2008 introduced a further enabling provision allowing Revenue to make regulations excluding a principal and subcontractor from the requirement to make an RCT 1 declaration, where one of them comes within a class or classes of persons to be specified in the regulations. These regulations entitled the Income Tax (Relevant Contracts) (Amendment) Regulations 2008 have now been made and will be available on www.revenue.ie tomorrow (Friday 28 March 2008).

Who can apply for exclusion & how will it operate?

Contractors whose average annual sales arising from relevant operations exceeds €6.34m in the last three years (ending with the end of the last period of account ending prior to the date of application) can apply for exclusion from the RCT1 process on a Form RCT 1-E. A copy of the application form is attached. It should be completed and returned to the Construction Section in their Revenue District. If the contractor qualifies, he/she will be issued with a “notice of exclusion” which will be valid for a period of up to three years from the date of issue. Where a contractor (in his/her capacity as a subcontractor) presents a notice of exclusion to a principal before entering into a relevant contract, an RCT 1 declaration need not be made.

Can the Notice be cancelled?

Revenue may cancel the notice of exclusion at any time - e.g. if it is found that a notice of exclusion was issued to a person on the basis of false or misleading information, or if a person to whom a notice was issued has permitted it to be misused. Where a notice has been cancelled, Revenue will confirm this in writing to the contractor and he/she will be obliged to return the notice to Revenue.

Communication Plans:

Letters are currently issuing to individuals and companies (currently registered for RCT) who may qualify for exclusion based on the latest turnover figures returned. Please note, however, that receipt of a letter does not entail a right to a notice of exclusion. Similarly, some individuals and companies that do not get letters may qualify. You will be advised in writing of the names of your clients that were sent letters if you are registered as their agent for RCT. Please advise all other relevant clients of the option to apply for the exclusion.

Details will be published on www.revenue.ie. The Construction Industry Federation will also be informing its members.