From 1 January 2015, principal contractors who fail to operate relevant contracts tax (RCT) on payments to subcontractors within RCT will be liable for a penalty proportionate to the amount of the tax that should have been deducted.

As per eBrief No. 110/14 the penalty for each instance of non-operation of RCT after 1 January 2015 will be based on the status of the subcontractor:

• Where the subcontractor is liable to the zero rate of RCT, the principal will be liable to a civil penalty of 3% of the relevant payment.
• Where the 20% RCT rate applies, the principal will be liable to a civil penalty of 10% of the relevant payment.
• If a RCT deduction rate of 35% applies, the principal will be liable to a civil penalty of 20% of the relevant payment.
• Where the subcontractor to whom the payment was made is not known to Revenue the principal will be liable to a civil penalty of 35% of the relevant payment.

You can read eBrief No. 110/14 on here.