Revenue Note for Guidance

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Revenue Note for Guidance

530A – 530V New Scheme of Relevant Contracts Tax


The following is an overview of how the new scheme of RCT which was introduced from 1 January 2012 will work. Communications between Revenue and principals will be by electronic means.

  • Upon entering into a relevant contract, the principal will advise Revenue of the subcontractor and contract details, including confirmation that the contract is a labour only contract where that is the case.
  • Immediately before making a payment to the subcontractor, the principal will advise Revenue of details of the payment.
  • Revenue will issue a deduction authorisation setting out the rate of tax and the amount of tax to be deducted, if any. Where tax is deducted, the principal will give a copy of that deduction authorisation, or appropriate details from that deduction authorisation, to the subcontractor with the payment.
  • Credit for the tax deducted will be recorded on the subcontractor’s tax record. That credit will be available for offset against other tax liabilities of the subcontractor or for repayment annually.
  • On a monthly or quarterly basis, Revenue will issue to the principal, a transaction summary for the return period. If the summary correctly reflects transactions, the principal pays the tax due. In that circumstance, the return will be deemed to have been made by the principal.
  • If the summary requires amendment, the principal will amend it.
  • Revenue may assess the liability of a principal where returns (including deemed returns) appear not to have been correct. A notice of assessment will issue in such cases and appeal rights exist.


Section 530A defines the categories of principal to whom RCT applies. This section specifies the same categories of principal as are specified in section 531 (under the scheme of RCT which applied in respect of payments to subcontractors prior to 1 January 2012) but includes a new definition – “a person who carries out the installation, alteration or repair in or on any building or structure of systems of telecommunications”

Section 530B sets out the obligations on a principal when notifying the Revenue Commissioners of having entered into a relevant contract. Before notifying Revenue, principals must satisfy themselves as to the identity of subcontractors and, for this purpose, principals must require production of documentary evidence and retain details of the relevant evidence. It also includes provision for the making of regulations in relation to the notification of a contract by a principal.

Section 530C sets out the obligations on a principal in terms of notifying the Revenue Commissioners of his or her intention to make a payment under a relevant contract. It also includes provision for the making of regulations in relation to the notification of a payment by a principal.

Section 530D provides for the issuing of a deduction authorisation by the Revenue Commissioners authorising a principal to deduct tax from a relevant payment. It also provides for the issue by Revenue of a deduction summary, effectively a summary of deduction authorisations issued during the return period to a named principal.

Section 530E sets out the circumstances in which the Revenue Commissioners will authorise a principal to deduct tax at the various rates- zero, the standard rate or 35%. It also provides that the rate of deduction for a partnership will be determined on the basis of the highest rate that would apply to any of the individual partners in a partnership.

Section 530F sets out the obligations on principals to deduct and to pay tax to the Revenue Commissioners. This includes, for years up to and including 2014, an obligation to pay tax at 35% of the amount of a payment where for example payment is not notified to Revenue in advance of making the payment or an appropriate deduction is not made from the payment to the subcontractor. It provides for a maximum penalty of €5,000 in the event of non-compliance for these years. It also provides for adjustment of the tax liability of principals who have not complied with their obligations under the scheme. The penalty amount will not be affected by any adjustment to the tax liability. It also allows for Revenue to require contract details to be supplied where a principal gives notification of a previously unreported payment.

For 2015 and subsequent years, a revised scheme and penalties were introduced for principals who failed to operate RCT on payments to subcontractors. Penalties are now linked to the status of the subcontractor with penalties of 35%, 20%, 10% and 3% applying to the relevant payment. Where the subcontractor is not known to Revenue a penalty of 35% applies and for other categories of sub-contractors the penalty is linked to the status of the sub-contractor. Where the sub-contractor is compliant by reference to S530G the penalty rate is 3%. Where the sub-contractor is substantially compliant by reference to S530H the penalty rate is 10% and where a determination has been made by reference to section 530I and the sub-contractor does not come within either section 530G or section 530H the penalty rate is 20%. A principal is obliged to submit an unreported payment notification.

Where a payment is made to a subcontractor, the section also requires a principal to give the subcontractor a copy of the relevant deduction authorisation or details from the deduction authorisation. This section also allows for payment to be made to a subcontractor in advance of notifying Revenue where a principal is unable to give advance notification due to a “persistent technology systems failure” (as defined in section 530).

Section 530G sets out the conditions that a subcontractor must satisfy to receive a payment under a relevant contract without deduction of RCT. These are, essentially, the ’C2’ conditions that applied under section 531 in respect of payments prior to 1 January 2012.

Section 530H sets out the conditions that a subcontractor must satisfy to qualify for the 20% deduction rate. The subcontractor must have complied ’substantially’ with tax obligations.

Section 530I provides for determination by the Revenue Commissioners as to whether a subcontractor satisfies the ’zero rate’ criteria of section 530G, the ’standard rate’ criteria of section 530H or neither. The section provides an appeal mechanism for subcontractors aggrieved by a Revenue determination. It also removes the need for Revenue to make a determination (i) until 30 days after a previous determination; (ii) while an appeal is awaiting determination; or (iii) until 30 days after an appeal determination.

Section 530J requires the Revenue Commissioners to keep and maintain a register of principals for RCT purposes and obliges principals to register. It also includes provision for the making of regulations governing the registration of principals.

Section 530K provides that a principal shall make a return by electronic means to the Collector-General of all relevant payments made during a return period. A principal to whom a deduction summary has issued for the period will be deemed to have made such a return unless he or she is required to amend the details on record to properly reflect all payments made by the principal and so submits an amended return. The section also includes provision for the making of regulations governing the making of a return by a principal.

Section 530L provides that tax for a return period shall be due on the due date relating to that period; the 14th day of the following month or the 23rd day of the following month where a principal files and pays electronically.

Section 530M provides for the making of a late monthly or quarterly return or the amending of a return and that a principal who makes or amends a return after the due date for the period concerned shall be liable to a surcharge of €100. However, no amendment is allowed after the due date to the details of any payment which was the subject of advance notice to the Revenue Commissioners (i.e. a principal may only make such amendments before the due date). The section also includes provision for the making of regulations governing the making of a late return or the amending of a return.

Section 530N provides that where a Revenue officer has reason to believe that a principal has not declared his correct liability for a period, the officer may make an assessment on the principal covering one return period or a number of consecutive periods. A principal aggrieved by an assessment has a right of appeal subject to making a return or returns for the period assessed and paying the tax, interest and any surcharge declared.

Section 530O provides that, in computing profits or gains for the purposes of Schedule D, a subcontractor who suffers deduction of RCT from a payment, shall treat the payment as the amount actually received plus the RCT deduction.

Section 530P provides that RCT deducted shall be treated as a payment on account of income tax or corporation tax; that RCT deductions will be available for offset against other tax liabilities of a subcontractor; that RCT deductions which are not required to meet the income tax or corporation tax liability of a subcontractor, or are not required to meet other tax liabilities of a subcontractor will be available for refund, subject to the provisions of section 865 governing the repayment of tax; that no amount of RCT deductions shall be treated as a payment on account, set off or refunded more than once; and that no amount of RCT deductions set off or refunded shall be treated as a payment on account.

Section 530Q provides that interest shall be payable to the Collector-General on overdue RCT.

Section 530R introduces a mechanism to ensure that members of a gang, group or partnership are properly identified for the purpose of determining their individual entitlement to credit for RCT suffered.

Section 530S requires a principal, prior to notifying the Revenue Commissioners of a payment, to obtain from the subcontractor a statement setting out details of the work giving rise to the payment and the cost of the work. It requires a subcontractor to keep and maintain records of all relevant payments and to supply a principal with all such information and particulars as are necessary for the principal to comply with the Chapter. The section also includes provision for the making of regulations governing the creation, keeping and retention of records by principals and subcontractors.

Section 530T requires principals and subcontractors to produce RCT records for inspection to a Revenue officer on request.

Section 530U allows a Revenue officer to give certain evidence by certificate in proceedings for the recovery of a penalty in connection with RCT and extends the penalty procedures of Part 47 to a penalty under section 530F.

Section 530V contains miscellaneous provisions in relation to the making of regulations, the authority of another person to act on behalf of a principal, obligations following the death of a principal, the authority of Revenue officers to carry out functions under the Chapter and the application of RCT to payments to a liquidator or and receiver.

Relevant Date: Finance Act 2021