Revenue issued letters and guidance to subcontractors recently which overviews the changes to the RCT system, introduced with effect from 1 January this year, and how this reform will affect subcontractors.

The guidance note clarifies that the new electronic RCT system itself does not place an obligation on subcontractors to engage electronically with Revenue. However, under mandatory electronic filing, since 1 June 2012, all VAT registered subcontractors and individual subcontractors who avail of certain reliefs and exemptions are obliged to pay and file electronically.

The guidance note also deals with issues such as; how the RCT rate is determined for subcontractors, entering into contracts and receiving payments, how subcontractors get credit for the tax deducted and subcontractors in partnerships. A useful checklist is also set out in the guidance note.

A copy of the letter and guidance note which was issued to subcontractors recently is published on the Revenue website.