asked the Minister for Finance if he is aware that the requirement in regard to an established place of business for the issue of a certificate to a subcontractor under section 17 (7) of the Finance Act, 1970, can in certain circumstances place individual tradesmen who carry out subcontracting work at a disadvantage as main contractors prefer to deal with subcontractors who have certificates; and if he will consider amending the section to delete this requirement.
Ceisteanna—Questions. Oral Answers. - Subcontractors Tax Deductions.
78.
Section 17 of the Finance Act, 1970, is an anti-evasion measure. It provides that a principal contractor must deduct tax from payments made by him to a subcontractor under a construction contract unless the subcontractor holds a certificate under subsection (7) of the section entitling him to receive the payments without deduction of tax. Such certificates are granted by the Revenue Commissioners in cases where the subcontractor satisfies them that he has an established place of business and has delivered, or has undertaken to deliver, accounts of his business for purposes of assessment to tax.
The requirement in relation to an established place of business is to ensure that the subcontractors to whom the certificates are issued have a fixed place of business so that the inspector of taxes may effectively be able to trade them and assess them to tax.
I am not aware that these provisions have the effect suggested by the Deputy and I am satisfied that any easing of the requirements in relation to certificates would result in a return to the type of evasion which the legislation was brought in to stop. I do not therefore propose to amend it.
Will the Minister accept my assurance to him that I am aware of a number of cases in my own constituency—in fact I am somewhat surprised that he has not similar cases in his—of reputable tradesmen who are attempting to build up businesses of their own and who are seriously prevented from doing so by the necessity for having an established place of business? I have concrete statements from such people that main contractors will give preference to subcontractors who have a certificate and to that extent this regulation militates against the smaller man who is attempting to establish himself as a self-employed subcontractor.
I am aware that the allegation has been made from time to time that people who are unable to obtain this certificate are thereby debarred from a subcontract from the main contractor, but inquiries which have been made do not seem to bear out that this is the real reason. After all, main contractors are deducting tax in respect of hundreds of employees in many cases and there is not any really good reason why they should refuse to deal with a person on this basis. The inquiries which I have made suggest that, in some cases at least, there are other reasons why the main contractor does not want to employ the particular subcontractor and uses this as an excuse.
I should perhaps also add that, despite the admittedly fairly rigid conditions which are operated by the Revenue Commissioners in these cases, there have been perhaps a few hundred cases in which certificates have been given where the undertaking to furnish accounts has not been satisfactory and the people concerned will not be given the certificate again. I mention this to show that, although, as the Deputy appreciates, it is fairly rigid, there are still loopholes in it and that I would be extremely wary of opening the gap any further.
I would like the Minister to accept my assurance that I am quite satisfied that the manner in which the Revenue Commissioners attempt to administer this particular provision—they are very flexible and very helpful—in regard to this requirement about a permanent established place of business seems to me to cause difficulty in a number of cases. I hope the Minister will accept some correspondence which I will send on to him to establish this. I would also like if he could indicate to me whether or not an ordinary residence in which a tradesman lives would in certain circumstances be accepted by the Revenue Commissioners as an established place of business?
Firstly, I would be glad to receive any correspondence which the Deputy has on this which would tend to support the argument that was made. Secondly, I believe that an ordinary private dwellinghouse could be accepted in certain circumstances but the circumstances would probably have to be those in which the particular subcontractor had been carrying on business from that address for a considerable time. In those circumstances I think it could be accepted.
The remaining questions will appear on next Tuesday's Order Paper.