Relevant Contracts Tax (RCT) is a withholding tax that is applied to certain payments made by principals to subcontractors in the construction, forestry and meat processing sectors. The tax deducted is a payment on account against the subcontractors final Income Tax or Corporation Tax liability for the year, with the amount of RCT deducted credited against the tax liability for that year. The rate of deduction to be applied to payments to subcontractors can be zero, 20% or 35% depending on the circumstances of the subcontractor.I am advised by Revenue that RCT applies to all relevant contracts carried out in the State, irrespective of whether the principal or subcontractor or both are resident outside the State, and is operated by a principal on payments to a non-resident subcontractor in the same as they would operate it for a subcontractor who is resident in the State. Non-resident contractors are obliged to register for and pay relevant taxes, including RCT, where activities are carried out in the State. A subcontractor who is not registered with Revenue is initially automatically allocated the 35% RCT deduction rate. I am further advised by Revenue that a subcontractor who is non-resident and has no income or corporation tax liability in the State may apply to Revenue for a refund of RCT that has been deducted. The subcontractor must complete a questionnaire regarding their activities in the State and submit an application form which includes certification, by the tax authority in the State in which they are resident, of their residency in that State.Refunds to non-resident subcontractors are dealt with in accordance with Revenue’s customer service standards, which provide for 80% of refund applications to be processed within 10 working days and for 100% of applications to be processed within 20 working days, unless the claim is selected for further checking. Revenue do not apply the Construction Industry Scheme (CIS) on behalf of HM Revenue and Customs to subcontractors from the UK which operate in this State and accordingly do not make any refunds under that scheme.
