Completion of new Form RCT 1 and ongoing contractual relationships – Information for Principals and Subcontractors in the Construction, Meat Processing and Forestry Sectors

Revenue eBrief No.12/2008 and Revenue eBrief No.16/2008 gave details of the new Form RCT 1 (effective from 1 April 2008), which must be completed for each new relevant contract that is being entered into between a principal contractor and a subcontractor.

Completion of the form where there is an ongoing contract between the parties

Where there is an ongoing contractual relationship (also known as a rolling contract) between the parties a single Form RCT 1 will normally suffice. This includes situations where the jobs do not succeed each other immediately. An ongoing contract can also cover work to be carried out on a number of sites provided that the parties to the contract do not change. However a new Form RCT 1 must be completed if any of the following apply:

• The subcontractor has to compete (e.g. tender) for new work.
• The contractual relationship between the parties has changed e.g. the principal sets up a new entity (e.g. a limited company) for each site.
• The contractual terms have changed significantly e.g. the payment arrangements have changed from fixed price to piece work.
• No payments were made in the preceding year to the subcontractor (generally speaking this can be taken as being that there is no record of the subcontractor in the Form RCT 35 submitted by the principal contractor to Revenue for the previous year).

With regard to ongoing contracts, the old version of the Form RCT 1 should have been completed and retained for contracts entered into prior to 1 April 2008. It is recommended that the new version of Form RCT 1 should be completed now, where it is discovered that the old version of the form had never been completed.

Previous Practice Superseded

The information in this eBrief supersedes the position set out in the article titled ‘Relevant Contracts Tax: Forms RCT1 – Requirements’ in Tax Briefing 26.