Information Note No. 2 provided an overview of the new RCT scheme. Work is well advanced on developing the new scheme, which will be subject to a commencement order to be signed by the Minister for Finance but is expected to be introduced on 1st January 2012.

To ensure a smooth transition to the new RCT scheme, principal contractors will be able to register contracts on-line in the new scheme from 28th November 2011 (“contract registration”). This will be the only part of the new scheme that will be accessible prior to 1st January 2012. Principals will be expected to make payments to subcontractors and notify these payments to Revenue on-line from 1st January 2012.

Principals and their agents will have the following options for interacting with Revenue:

• Revenue On-Line Service (ROS),
• New web services accessed by third party software,
• Off-line application e.g. Adobe AIR.

Key benefits of the new RCT scheme for principals:

The administration burden will be reduced, for example, principals will no longer need to:

• Order stocks of RCT forms,
• Complete Forms RCTDC/RCT 46/RCT 46A,
• Manually record payments on Forms RCT 48/RCT 47,
• Complete the annual RCT 35 return,
• Complete the paper copy of Form RCT 1 with the subcontractor – a streamlined contract registration procedure is incorporated into the new scheme.
• There will be clarity on the RCT rate for each subcontractor: When a principal notifies Revenue of a relevant payment to a subcontractor online, Revenue will confirm the subcontractor's RCT rate and the amount of RCT to deduct from the payment, via an on-line “deduction authorisation” for the payment by return. A copy of this authorisation should be provided to the subcontractor.

Key benefits of the new scheme for subcontractors:

• The standard RCT rate of 35% will be reduced to 20%. (In certain limited cases a subcontractor will be placed at 35% e.g. subcontractors who are not registered with Revenue or where there are serious compliance issues to be addressed).
• Only one rate will apply to a subcontractor at any point in time. Principals will be obliged to apply this rate to payments to the subcontractor.
• There will no longer be a requirement to jointly complete Form RCT46 with the principal in order to receive gross payments.
• Subcontractors will no longer have to submit RCTDC claims to Revenue. When a principal notifies Revenue of a relevant payment, Revenue will automatically put credit for any RCT deducted onto the subcontractor's tax record. This RCT credit will be available for offset against other tax liabilities as they arise or for repayment annually.

Communicating with stakeholders:

Every effort is being made to ensure that all stakeholders are made aware of the proposed RCT changes so that they can prepare for these changes well ahead of the 1st January 2012 implementation date.

Since the RCT changes were announced in December 2010, Revenue has consulted with key stakeholders, including industry representatives (construction, forestry and meat processing sectors), tax practitioners, third party software providers and some public service bodies. Consultations with stakeholders will continue over the coming months as the development on the new scheme progresses.

Regular information updates on the new RCT scheme will be posted on this website. Revenue will write to all principals and subcontractors on record to outline the main RCT changes, the potential implications for their business and what they should do to prepare for these changes. Seminars will be held in major centres around the country in the Autumn. Revenue will issue invitations to these seminars to all principals and subcontractors.

Frequently asked questions (FAQ's) on the new scheme will be published on this website (Revenue website-www.revenue.ie) shortly. If you have any questions or comments, please email Revenue at eRCTInfo@revenue.ie. Although it will not be possible to reply to individual questions, Revenue will provide answers to the main questions being raised by stakeholders in the FAQ's. The FAQ's will be updated regularly as further information becomes available on the new scheme and as comments are received from stakeholders.

Important note for principal contractors-mandatory electronic communication:

If you are a principal and have an in-house RCT software system this will need to be updated to cater for the new RCT system. Please contact us at eRCTInfo@revenue.ie and we will ensure that you receive the necessary information.

It should be remembered that all contacts between the principal (or agent on behalf of the principal) and Revenue will be through an on-line process. All principals will be obliged to submit information, data, payments and returns to Revenue electronically. You should ensure you are registered for ROS well ahead of the go live date for the new scheme (visit www.revenue.ie and follow the instructions to register for ROS).

Broadband services are now available throughout the country, but there are still some un-served rural premises. The Rural Broadband Scheme is designed to identify those premises through a public application process and, ultimately, to bring a broadband service to them either through existing private sector service providers or through a service provider procured by Government. Applications should be made to the Department of Communication, Energy and Natural Resources. The Department will be accepting applications from 9 May 2011 until 29 July 2011.

As outlined in eBrief No. 32/2011, in keeping with Revenue's commitment to reducing the regulatory burden on business, Revenue does not propose to place a burden on Phase 3 Mandatory eFiling taxpayers to develop the capability to electronically file the annual RCT 35 return form for the reporting period 2011. Revenue will accept all RCT 35 returns on paper for periods up to 31/12/2011 from any principal contractor who has been informed that they are mandated to file returns and make payments electronically to Revenue. Revenue would of course, prefer if the return was made electronically using ROS.

Revenue will continue to keep customers informed as developments emerge.

Source: Revenue Commissioners. www.revenue.ie Copyright Acknowledged