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Dáil Éireann debate -
Wednesday, 10 Feb 1993

Vol. 425 No. 7

Written Answers. - Tax Clearance Certificates.

Jim O'Keeffe


130 Mr. J. O'Keeffe asked the Minister for Finance whether his attention has been drawn to the fact that applications for sub-contractors C2 certificates have been refused on the basis that applicants have no fixed place of business in situations where such applicants are farmers' sons working from their parents' farms; and his views on whether this should be a valid ground of objection to the entitlement to C2 tax clearance certificates for those who are setting up as sub-contractors.

The conditions to be met in order to qualify for a C2 certificate, which enables the applicant to receive payments from principal contractors without deduction of income tax, are as set out in Section 17 (7) (a) Finance Act 1970 (as amended). In summary form, these conditions are:

(i) that the person is, or is about to become, a sub-contractor engaged in the business of carrying out construction contracts (which last year — Section 28, Finance Act 1992 — was extended to include forestry operations and meat processing operations),

(ii) that the business is or will be carried on from a fixed place of business and has the equipment etc. required,

(iii) that proper records are kept,

(iv) that the person and his partners etc., have a record of tax compliance over the qualifying period, which is usually three years.

However, the 1970 Act, in Section 17 (7) (b), gives Revenue the discretion to issue a C2 even when the full requirements are not met. Accordingly, each case will be considered by Revenue on its own merits.

I have been informed by the Revenue Commissioners that the question of a permanent address would not be the most likely basis for a refusal of a C2. It is more likely that the reason would be the lack of a tax compliance history over the qualifying period.
In the case of farmers' sons working from their parents' farms, that should normally meet the requirement about a fixed place of business.
In practice, the only category which would definitely not receive a C2 would be those who had not established a tax history. According to the Revenue Commissioners, individuals in this group, if compliant for the tax year 1992/93 and subsequent years, will be considered for a C2 in later years.
It should be noted that the absence of a certificate need not prevent an individual or a company from carrying on a business as a sub-contractor. If a sub-contractor on a construction, meat processing or forestry project does not have a C2 certificate, tax should be deducted from payments at a rate of 35 per cent and remitted to Revenue to be held on account pending finalisation of the tax liabilities of the sub-contractor. Claims should be submitted to the inspector of taxes at four weekly intervals for repayment of any tax over-deducted.