When sub-contractors within the Construction, Forestry and Meat Processing industries register for RCT, they are allocated an RCT rate of 0%, 20% or 35% by Revenue. This RCT rate can be increased or decreased by Revenue, subsequent to allocation, depending on the tax compliance record of the sub-contractor.
Revenue normally carry out an RCT Bulk Rate Review (BRR) twice a year. However, due the pandemic the BRR scheduled for September 2020 and March 2021 were not carried out. The next BRR is scheduled for September 2021.
As part of the BRR, Revenue review the current tax compliance position of each sub-contractor. In the event that payments and/or returns are outstanding the Revenue can increase the RCT rate. This could give rise to cash flow implications for sub-contractors where they are expecting to receive a 100% payment where they had a 0% RCT rate but may only receive 80% or 65% if the RCT rate is increased to 20% or 35%. On the upside, RCT rates may be reduced also.
Revenue on-line Services (ROS) provides a “self-review” function whereby you can check your RCT rate and also check to see if there are any outstanding payments or returns that may negatively affect your RCT rate. Therefore we would recommend that you do this now to ensure that all your tax affairs are up to date and you are not negatively impacted by the rate review.
We can provide assistance in this regard if you are unsure how to access this function or if you have any questions in relation to the above or RCT in general by contacting Ivor Feerick, Partner (email@example.com) or Deirdre Padian, Senior Manager (firstname.lastname@example.org).
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