Vol. 434 No. 6
75 Mr. Broughan asked the Minister for Social Welfare his views on the widespread and growing use and abuse of C45's especially in the building, security and cleaning industries; if he will give an estimate of PRSI revenue losses to the State from this subcontracting device; and if he will consider the introduction of PRSI deductions by main contractors of all sub-contractors and the use of ID cards in these industries.
The Revenue Commissioners are not aware of any significant increase in the numbers of subcontractors in the building industry who do not qualify for a C2 certificate. Those who do not qualify for this certificate, unregistered sub-contractors, are obliged to have income tax deducted at the 35 per cent rate by their principal contractors who supply them with a C45 receipt which the subcontractor will use to make any claim for a refund that would be due to him. All self employed persons are obliged to file a return of income and PRSI contributions are levied at the rate applicable. The Revenue Commissioners are not aware of any abuses operating in this area.
The C2/C45 system does not operate in the security and cleaning industries. However, last year the system was extended to include operators in the forestry and the meat processing industries and as a result the overall issue of C2 certificates has increased. At the same time additional security measures have been built into the C2 certificate system by converting it into a secure plasticated card with photograph and signature of the holder. The card must be presented personally to each principal contractor with every contract given to a subcontractor. These procedures have improved the system and should eliminate the abuses related to the misuse of the former C2 certificates e.g., duplicates used by unregistered sub-contractors to obtain gross payments (i.e. without deduction of tax from principal contractors).
Since April 1988 sub-contractors, in common with other self-employed persons, are liable to pay PRSI contributions. These contributions are collected by the Revenue Commissioners. In the case of unregistered sub-contractors in the building, forestry and meat processing industries 35 per cent is deducted at source from all payments made to them by main contractors. This money is paid over to the Revenue Commissioners and held on account against the sub-contractor's eventual liability for tax and PRSI which is assessed at the end of the year. The extension of this system to other subcontractors is a matter which would have to be evaluated in the first instance by the Revenue Commissioners as would proposals for the further use of identification cards.
