Significant reforms of the RCT scheme were announced in the Budget and a legislative basis for this reform was provided for in section 20 of Finance Act 2011. The Act inserts twenty two new sections into the Taxes Consolidation Act 1997 and these sections comprise a new scheme of RCT which will replace the current scheme. The date of the new scheme is yet to be decided and until then the existing scheme continues to apply. Chartered Accountants Ireland is engaging with Revenue through the TALC forum on the practical design and operation of the new RCT system.

The key elements of the new scheme as outlined in Finance Act 2011 are as follows:

• The new electronic scheme will have three withholding rates: 0%, 20% and 35% and the rate applied will depend on the subcontractor's tax compliance record
• The existing monthly repayment system will be replaced with an offset and annual repayment system
• The transfer of information, data, payments and returns must be made by electronic means

Revenue's eBrief No. 12/11 which is available here sets out an overview of how the new scheme is expected to operate. A key point to note on the new scheme is that all contact between the principal and Revenue will be through an on-line process.

In this issue of tax.point, Niamh Higgins writes on the new RCT scheme and what it will mean for practitioners.