Dáil Éireann debate -
Thursday, 17 Dec 1998

Vol. 498 No. 6

Written Answers - Black Economy.

Eamon Gilmore

Question:

34 Mr. Gilmore asked the Minister for Finance the progress, if any, made to date by the construction industry sub-group of the black economy monitoring group, particularly in regard to subcontracting in the construction industry and the operation of the C45 system; the number of occasions on which the committee has met during 1998; and if he will make a statement on the matter. [28027/98]

Minister for Finance (Mr. McCreevy)

I am informed by the Revenue Commissioners that comprehensive recommendations made by the construction industry sub-group of the Black Economy Monitoring Group in 1994 resulted in administrative and legislative changes in the operation of the C45 system. The majority of the group's recommendations concerned closer monitoring of the system by the Commissioners, improved information flow between the Department of Social, Community and Family Affairs and Revenue, and the redesign of forms to ensure that sufficient information is available to match records in both Departments.

The legislative changes were made in the Finance Act, 1996 and came under two broad headings. First, a requirement was introduced making it necessary for parties who intend to enter a relevant contract to complete a specific declaration. The declaration confirms that the parties to the proposed contract, having read the Commissioners' guidelines — which are printed on the reverse of the declarations — as to the difference between relevant contracts and contracts of employment have satisfied themselves that the contract which they propose to enter is not a contract of employment.

Second, where a principal contractor makes any payment to a leader of a group he must deduct tax at 35 per cent by reference to each member of the group for whom he has not received a relevant payments card from the Inspector of Taxes. Details of amounts due to individual members must be supplied to the principal contractor to enable him to determine the tax to be deducted from each individual. The RSI number and date of birth of each group member must also be supplied for inclusion on the relevant contracts tax deduction certificate.

During 1997-1998 the Revenue Commissioners undertook a very intensive special project to monitor all aspects of compliance in the construction industry. In the course of that project more than 7,000 principal contractors were visited. No problems were found in 52 per cent of cases. Of the balance, 76 per cent agreed with Revenue rulings. The remainder are subject to different aspects of follow up action which many include additional visits, a comprehensive Revenue audit and assessments of additional tax where necessary.

The construction industry sub-group did not meet during 1998 but, of course, as I mentioned in my reply to the Deputy on 17 November 1998 any member of the sub-group may call for a meeting of the group if he or she considers that there are black economy issues relating to the construction industry which could usefully be dealt with by the sub-group. However, I must point out that black economy issues relating to the construction industry are also dealt with by the main Black Economy Monitoring Group which meets approximately every two months and met on six occasions in 1998, the most recent such meeting being on 8 December 1998.