C2 Payment Card

Kildare78

Hi

Wondering if anyone can shed a bit more light on the C2 payments for me?

I have applied for a payments card for a subcontractor but have not yet received it. Invoices from sub contractor have come in stating that VAT is payable by principal contractor (us) of X amount - what do I do from here - do I wait for a payments card or do I return it as an RCT30??

Confused

smcgiff

Kildare78 wrote: »

Hi

Wondering if anyone can shed a bit more light on the C2 payments for me?

I have applied for a payments card for a subcontractor but have not yet received it. Invoices from sub contractor have come in stating that VAT is payable by principal contractor (us) of X amount - what do I do from here - do I wait for a payments card or do I return it as an RCT30??

Confused

What industry are you in - Building?

Kildare78

Hiya

Yea -we use electricians, plumbers etc but this is the first time I have had to deal with the C2.

Thanks

smcgiff

Howdy,

It is my understanding that if you are in the construction industry you should not pay VAT to sub-contractors under relatively new Reverse VAT rules (Google is your friend) - Also if my understanding is correct you would need to withhold 35% in RCT (until the payment card comes through). You would also need to give the contractor a green slip (there's a name for this form that escapes me) so they can reclaim the RCT.

You'll also need to get the contractor to re-issue a zero rated VAT invoice.

Separately, if you are in the construction business you would need to do this for all sub contractors to remain compliant.

You'd probably be doing yourself a favour to do some research on RCT - The revenue website would be a good place to start.

Good luck

dbran

Hi

Ok first things first.

1) When you receive an invoice from a subcontractor there should be no VAT on the invoice. There should be a sentence on the invoice to the effect that no VAT is charged on the invoice and it should be dealt with by the principle contractor (you) on the reverse charge mechanisim.

This means that you work out the VAT that would have been charged by the subie and add this VAT to your sales figure on your VAT 3 return as you are responsible for paying it. You are also allowed a VAT credit for this VAT you have suffered. So therefore if the subbie invoices you €100, you add 13.5% vat to the sales figure on your return ie €13.50 and €13.50 to the purchase figure. Thus there is no net effect on the VAT you have to pay.

2) If you pay a subcontractor gross without authorisation of a payments card you are required to deduct 35% RCT and pay this over to the revenue. Therefore I would advise that you wait for the payments card to issue and pay him once it arrives. This way you can pay him gross.

Hope this helps


Kind Regards


dbran

Kildare78

That's great - you have both been very helpful and have cleared up allot for me - I really appreciate your help.

Thanks again
Ro