Relevant Contracts Tax (RCT): When does it apply?

22 July, 2019

There is a common misconception that RCT relates solely to the construction industry.  In fact, RCT applies to any organisation which engages contractors. You may be surprised to learn that 90% of our RCT clients are outside the construction sector. The main challenge for Irish organisations is as straightforward as recognising when RCT applies to them. The cost of non-compliance can be severe.

What is RCT and when does it apply?

RCT is a withholding tax which applies to certain payments by principal contractors to their subcontractors.

This covers activities from the construction, forestry and meat processing sectors. Whilst this may appear to have a narrow focus, this is a misconception, as any organisation can fall within the scope of RCT.

It is therefore particularly important that organisations consider RCT before undertaking any property or development related activity. In our experience, most penalties for non-compliance have stemmed from a fundamental misunderstanding of when RCT should be applied.

Most commonly, this is as a result of organisations not realising they have an obligation to operate RCT. Almost all of our RCT clients are outside of the construction sector and come from such diverse areas as  the healthcare industry, retail, banking the energy sector, and many more.

What is the challenge for organisations today?

The biggest challenge for organisations today is recognising when RCT should apply. Revenue are taking a hard line in this area - the cost of non-compliance can be up to 35% of the relevant payment. Because of this, our clients are eager to engage with us in order to avoid unnecessary penalties.

How can we help?

Our expert team of RCT specialists has extensive knowledge and experience of all technical developments, current hot topics under Revenue scrutiny and practical approaches to Revenue audits.

The team also have significant experience in delivering RCT training sessions to clients, so that organisations have the skills they need to address RCT issues and reduce the risk of future error. Contact us today to make sure your organisation is RCT compliant.

Contact us

Emer O'Sullivan

Director, PwC Ireland (Republic of)

Tel: +353 1 792 6695

Jim Kinahan

Senior Manager, PwC Ireland (Republic of)

Tel: +353 1 792 8641

Emily Bourke

Senior Manager, PwC Ireland (Republic of)

Tel: +353 1 792 6796

Elaine O'Rourke

Senior Manager, PwC Ireland (Republic of)

Tel: +353 1 792 5098

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