Vol. 442 No. 5
93 Mr. Gregory asked the Minister for Finance if he recently met with representatives of the ICTU Construction Industry Unions regarding the widespread abuse of the C45 system; if he made commitments to introduce measures to combat the abuse; and if he will make a statement on the matter.
The C45 scheme for sub-contractors was introduced in 1970 to counter tax evasion in the building industry. The sub-contract system has always been a feature of the building industry. The 1970 legislation recognised this and sought to ensure that tax due from the sub-contracting section of the industry would be collected. The mechanism for collection was a withholding tax deducted from payments made to sub-contractors unless those sub-contractors had received a certificate from the Revenue Commissioners authorising payments to be made gross.
The C45 system should not be availed of in situations where the employer-employee rules should apply. As part of their audit programmes the Revenue Commissioners seek to ensure that the C45 system is not used inappropriately. Since the trade union concerns came to light the Revenue Commissioners have been more vigilant to ensure that there is no abuse of the system.
Allegations of abuse of the C45 scheme were raised with me at a meeting which I had with the Irish Congress of Trade Unions. In my discussions with Congress I explained that arising from the Programme for Competitiveness and Work, I have asked the Black Economy Monitoring Group — composed of employer, trade union, revenue and social welfare representatives — to carry out a thorough review of the operation of the C45 system and to make recommendations on action to curb any abuses and to improve the system generally. The group is due to report in July this year. Any legislative action should be based on full knowledge. The group's recommendations will provide this knowledge following an in-depth review of the entire system.
The Revenue Commissioners have also been asked to take measures to ensure that the system is applied only to genuine sub-contract situations and are having discussions with the Department of Social Welfare to see if procedures can be strengthened further.
