Relevant Contracts Tax (RCT) in Liquidation, Receivership or Examinership

Tax law provides no exemption from the operation of RCT in the case of liquidation, receivership or examinership. Revenue takes the view that all aspects of RCT law – including deduction by the principal contractor and offset by Revenue of RCT against outstanding taxes – must be applied as normal, notwithstanding the fact that a liquidator, receiver or examiner has been appointed to the subcontracting company.

As such, any RCT deducted from a company in liquidation, receivership or examinership and remitted to Revenue will be offset against outstanding taxes in the order statutorily provided for, with any balance being repaid to the liquidator, receiver or examiner.

Revenue does, however, distinguish between RCT deducted on foot of a contract entered into by a company prior to receivership or liquidation and new contracts entered into by the receiver/liquidator (in his capacity as receiver/liquidator of the company) should the receiver/liquidator continue to trade the business. In such cases, if the contract which gave rise to the RCT deduction was entered into by the liquidator/receiver following their appointment, the RCT deducted should be offset only against liabilities of the post-appointment period, with any balance being repaid to the liquidator/receiver. If it is not clear whether the relevant contract was entered pre- or post- appointment, the receiver/liquidator should be asked to clarify the position. The tax number of the subcontractor shown on the RCT Deduction Card might be informative in this situation.

It should be noted that where a company successfully exits examinership and tax has been written off in line with the Court-approved scheme of arrangement, these taxes cannot be subsequently written back in for the purposes of offset.

Any queries on specific cases should be directed by email to Mary McPaul, Collector-General’s Division Insolvency Unit: mmcpaul@revenue.ie or telephone 061-488741.