+353 (0)74 9321420 info@mlmg.ie

Revenue recently issued guidelines on a new tougher regime for penalties on Principal Contractors who fail to operate RCT correctly on payments to subcontractors. A Principal Contractor must not make a payment to a subcontractor without operating RCT. If they do, they will now suffer penalties on a payment by payment basis. The penalties apply even if a subcontractor has gross status and will not be tax deductible.

The penalties announced will apply to each payment for which RCT is not operated and will be based on the status of the subcontractor:

Subcontractor is liable to RCT at 0% – Principal will be liable to a civil penalty of 3% of the relevant payment.

Subcontractor is liable to RCT at 20% – Principal will be liable to civil penalty o f10% of the relevant payment.

Subcontractor is liable to RCT at 35% – Principal will be liable to a civil penalty of 20% of the relevant payment.

Where the subcontractor is not known to Revenue then the Principal will be liable to civil penalty of 35% of the relevant payment

For further information http://www.revenue.ie/en/practitioner/ebrief/archive/2014/no-1102014.html