wrongly being subjected to RCT

darth_maul

Hi,
I am satellite tv and aerial installer, I was recently asked by a Hotel to quote to upgrade the TV system in the hotel, I quoted them for the job using the hotels name in the quote, completed the work and invoiced them. Now I had stated in both that 7 days was the terms but over 30 days has gone by,

Now the hotel have rang me today looking for a c2 number, which obviously I don't have, I am registered for Tax under my own name as a sole trader, They now want to deduct 35% from my payment to cover RCT (relevant contracts tax). No contract was entered. From reading up on RCT my type of business is not considered construction nor should they be considered a principle as they too are not in the construction industry.

Before I stated the job no mention was made to any of this, they never previously asked me if I had a C2, and no contract was entered into other that a written quote and a phone conversation from them to say go ahead.
I have done work for many businesses and even some hotels and never have any made this request, I suspect they are trying it on, anyone got any opinions or info to help.

Robus

darth_maul wrote: »

No contract was entered. .

My understanding is that if the principle and sub-contractor signed an RCT1 then RCT applies, if they didn't then RCT does not apply, sounds like they just want to stall payment longer

J.Ryan

Grab the 65% off of them and submit the RCT to the Revenue for a refund as soon as you receive it.

You can spend a month arguing with them or agree with them and get paid, the revenue won't penalise you.

mkdon05

J.Ryan wrote: »

Grab the 65% off of them and submit the RCT to the Revenue for a refund as soon as you receive it.

You can spend a month arguing with them or agree with them and get paid, the revenue won't penalise you.

The hotel are not going to be able to produce a RCT cert as they are not a principal contractor, therefore they wont be in possesion of them.

Ask to speak to their accounts department and demand an explanation as to why they are posing as a principal contractor looking for a C2. Explain that you entered into a contract directly for services with them and there are no 3rd parties involved. If they still dont play ball, speak to the manager and tell them you are goin to sell the debt on to a debt collection agency within a certain period, i.e give them 14 days to pay up.

J.Ryan

Is the hotel a ltd Company or a sole trader?

Is the Hotel part of a group that contains a Construction Company?

mkdon05, they are upgrading the TV system for their guest's if they also upgraded the building it may qualify them as principal contractors, uless you've reviewed the legislation, you would be better off refraining from making sweeping statments.


A director of a construction company has to register as a principal contractor in a personal capacity for all transactions including waste disposal (the bin collection at his/her home).

County Councils have to register as principal contractors.



The OP stated that the payment terms had been ignore, I suggested simply agreeing with them to get the money, rather than spending weeks arguing with them.


OP, contact the RCT section of the Hotels Revenue District and pose the query to them, at a guess (and it is only a guess), I would imagine that it is because they are not the end users of the work that you did.

mkdon05

J.Ryan wrote: »

mkdon05, they are upgrading the TV system for their guest's if they also upgraded the building it may qualify them as principal contractors, uless you've reviewed the legislation, you would be better off refraining from making sweeping statments.
QUOTE]

I think you need to review your understanding of Subcontractor Tax.
The instalation of Satellite TV is not considered construction for a start therefor its not covered under RCT system.
Even if the OP was providing a service through the RCT system, An RCT1 form needs to be completed and signed by both parties entering into the contract.
Should have a look at your own sweeping statements mate.

J.Ryan

http://www.revenue.ie/en/tax/rct/construction-operations.html

See
C. A.

"The installation in or on any building or structure of systems of telecommunications;"

A TV system would be considered a telecommunications system

mkdon05

J.Ryan wrote: »

http://www.revenue.ie/en/tax/rct/construction-operations.html

See
C. A.

"The installation in or on any building or structure of systems of telecommunications;"

A TV system would be considered a telecommunications system

Your clutching at straws here.
I have prepared accounts for Sky installers before and they were never subjected to RCT
Also see note above re RCT1

Robus

A principal contractor in the construction, forestry and meat processing industry is a person who takes on a subcontractor and who:
• Carries on a business which includes the erection of buildings or the development of land or the manufacture, treatment or extraction of materials for use, whether used or not, in construction operations;
"Construction operations" means operations of any of the following descriptions:
1. The installation in or on any building or structure of systems of telecommunications;

Thus i still believe the Hotel is not a principal, even if there is a sub-contractor involved

dbran

Hi

Interesting situation....

Im with MKdon on this one chaps......

The hotel is not in the construction industry so it is not a relevant contract for RCT.

They cant deduct 35% or ask you for a C2. Even if it was there has to be a third party involved. ie a customer, a principle and a subcontractor for there to be an RCT relationship. The hotel guests, in my opinion, are not contracting with the hotel for satalite installation (construction) but for accomodation services. Therefore the fact that people stay at the hotel is irrelevant and it does not make the relationship an RCT relationship.

I believe there is some anti-avoidance legislation which you are referring to where a non constructing group company is used as the contractor to get out of paying RCT. I dont think it applies here.

Accepting 65% of the money and an RCTDC form in lieu of payment when it is not actually RCT would be a very bad move. ........BAD BAD BAD BAD!!!!!

The revenue would not refund the RCT because you are not registered as a subcontractor for RCT. In order to register as a subcontractor for RCT the principle (Hotel) would need to register you as his subcontractor and then submit an RCT1 to revenue.

Good luck getting them to so that!!!!

Finally. the errecting of satalite dishes is considered construction

Kind Regards

dbran

J.Ryan

mkdon05 wrote: »

Your clutching at straws here.
I have prepared accounts for Sky installers before and they were never subjected to RCT
Also see note above re RCT1

The RCT1 responsibilities are on the principal, not the subcontractor.

The Sky Installers, you have prepared accounts for, were they working in the domestice end of the market?

dbran

J.Ryan wrote: »

A director of a construction company has to register as a principal contractor in a personal capacity for all transactions including waste disposal (the bin collection at his/her home).
.

Rubish!!!

Its not a construction operation.......

J.Ryan

Robus wrote: »

A principal contractor in the construction, forestry and meat processing industry is a person who takes on a subcontractor and who:
• Carries on a business which includes the erection of buildings or the development of land or the manufacture, treatment or extraction of materials for use, whether used or not, in construction operations;
"Construction operations" means operations of any of the following descriptions:
1. The installation in or on any building or structure of systems of telecommunications;

Thus i still believe the Hotel is not a principal, even if there is a sub-contractor involved

http://www.revenue.ie/en/tax/rct/principal-contractors.html
Who is a principal contractor

A principal contractor in the construction, forestry and meat processing industry is a person who takes on a subcontractor and who:

• Carries on a business which includes the erection of buildings or the development of land or the manufacture, treatment or extraction of materials for use, whether used or not, in construction operations;
• Carries on a business of meat processing operations in an establishment approved and inspected in accordance with the European Communities (Fresh Meat) Regulations, 1997. Carries on a business of meat processing operations in an establishment approved and inspected in accordance with the European Communities (Fresh Poultry-meat) Regulations, 1996;
• Carries on a business of forestry operations which includes the processing (including cutting and preserving) of wood from thinned or felled trees in sawmills or other like premises or the supply of thinned or felled trees for such processing;
• Is connected with a company which carries on any of the above businesses;

The Hotel doesn't have to be a construction company, just connected to one.

J.Ryan

dbran wrote: »

Rubish!!!

Fair enough, I was told that at a IATI CPD on the changes in RCT in October 2008, but they could have been wrong.

J.Ryan

dbran wrote: »

Rubish!!!

Its not a construction operation.......

J.Ryan wrote: »

http://www.revenue.ie/en/tax/rct/principal-contractors.html
Who is a principal contractor


A principal contractor in the construction, forestry and meat processing industry is a person who takes on a subcontractor and who:

• Carries on a business which includes the erection of buildings or the development of land or the manufacture, treatment or extraction of materials for use, whether used or not, in construction operations;
• Carries on a business of meat processing operations in an establishment approved and inspected in accordance with the European Communities (Fresh Meat) Regulations, 1997. Carries on a business of meat processing operations in an establishment approved and inspected in accordance with the European Communities (Fresh Poultry-meat) Regulations, 1996;
• Carries on a business of forestry operations which includes the processing (including cutting and preserving) of wood from thinned or felled trees in sawmills or other like premises or the supply of thinned or felled trees for such processing;
• Is connected with a company which carries on any of the above businesses;

The Hotel doesn't have to be a construction company, just connected to one.

A heated debate on RCT, what a life we lead

mkdon05

J.Ryan wrote: »

The RCT1 responsibilities are on the principal, not the subcontractor.

The Sky Installers, you have prepared accounts for, were they working in the domestice end of the market?

Fair point, they were domestic installers but overall thats irrelevant.
THE RCT1 responsibilities do lay with the principal, but the fact is, if the principal does not have a completed RCT1 with the sub-contractors details and signature, its not a valid RCT contract in the eyes of the revenue.

mkdon05

J.Ryan wrote: »

A heated debate on RCT, what a life we lead

only monday to friday, Im mental on the weekends. ha ha:p

J.Ryan

mkdon05 wrote: »

Fair point, they were domestic installers but overall thats irrelevant.
THE RCT1 responsibilities do lay with the principal, but the fact is, if the principal does not have a completed RCT1 with the sub-contractors details and signature, its not a valid RCT contract in the eyes of the revenue.

If the principal doesn't have the form complete and kept on file its a fine of €1,230 (I think) per breach, if the revenue view it not to be a valid contract then they will argue that the subcontractor was an employee.

Legend100

You are not entirely wrong in what you said J Ryan.....but you are not right either

The change in 2008 you are referring to is the connection of a construction operation in which the director is involved in the construction also.

The most common example of this is where a director will purchase for eg a house on a site from its construction company, the director is obliged to register for RCT and will have to deduct RCT on the development company unless a payments card is held by the director (personally) for his construction company.

The point about registering for RCT as a principal for waste charges as you said is only applicable in the above case where the above purchase is taking place and the contract(purchase) is not yet completed. Waste companies will invoice personal waste collection for the director but the director should deduct RCT here as the director is still technically connected to the construction site since the purchase has not yet completed.

To the OP, can't really see why a hotel would be looking for a C2 but telecommuncations are becoming a real grey area for RCT recently and there might just be someone in accounts trying to cover themselves by thinking its an RCT contract

dbran

J.Ryan wrote: »

http://www.revenue.ie/en/tax/rct/principal-contractors.html
Who is a principal contractor

A principal contractor in the construction, forestry and meat processing industry is a person who takes on a subcontractor and who:

• Carries on a business which includes the erection of buildings or the development of land or the manufacture, treatment or extraction of materials for use, whether used or not, in construction operations;
• Carries on a business of meat processing operations in an establishment approved and inspected in accordance with the European Communities (Fresh Meat) Regulations, 1997. Carries on a business of meat processing operations in an establishment approved and inspected in accordance with the European Communities (Fresh Poultry-meat) Regulations, 1996;
• Carries on a business of forestry operations which includes the processing (including cutting and preserving) of wood from thinned or felled trees in sawmills or other like premises or the supply of thinned or felled trees for such processing;
• Is connected with a company which carries on any of the above businesses;

The Hotel doesn't have to be a construction company, just connected to one.

Yes indeed:D

My point is though, they are not taking on a subcontractor in this instance. The Hotel is the customer. OP is only the contractor. Otherwise you are correct.

Kind Regards

dbran

dbran

Legend100 wrote: »

Y Waste companies will invoice personal waste collection for the director but the director should deduct RCT here as the director is still technically connected to the construction site since the purchase has not yet completed.

Hmmmm

So....Is personal waste collection of the directors considered a construction activity? Or does it have to be connected with the site that they are working on?

Kind Regards

dbran

Legend100

Oh sorry...read my post and saw it wasn't very clear,

The RCT deducted on the waste company will only be for an invoice for the house on the site that is part of the construction.

It was introduced as many directors would move in to the house but delay some part of the total payment to the construction company when purchasing their house

Seems a bit of pointless anti avoidance but what can you do!!

darth_maul

Thanks for all the information guys, I will go bck to them today and highlight why RCT should not be taken.

- A hotel cannot act as a principle.
- No thrid party involvement. as I qouted and invoiced the hotel directly.
- My industry is not considered construction
- No RCT1 was completed prior to works being carried out.
- I would have difficulty recouping the 35% as I can't register for RCT.

darth_maul

Thanks everyone here for their input

Well went down to them this morning, met the 2 owners who stated the same thing again, I had a printout done up with all the points that the lads on the taxation forum had given me, I told them that I was talking to my brother in law who works for the revenue in Dublin and these are the points as to why c2's and RCT don't apply.
As soon as Revenue was mentioned they went weak in the knees and I walked out with a cheque for the full amount with their apologies ringing in my ears, Funny thing is that they said yesterday that they couldn't do up any cheques for the next 2 weeks as the girl is away. Went straight to the bank and cashed the cheque and then lodged it.

I think they were trying it on with me hoping that I wasn't properly registered and that I would get scared and accept the 65%, which they wouldn't declare.

Anyway job done, my next tactic was to threaten them over their use of non commercial SKY TV in the bar, but that wasn't needed.

dbran

Great to hear it all worked out in the end for you.

Kind Regards


dbran

J.Ryan

dbran wrote: »

Great to hear it all worked out in the end for you.

Kind Regards


dbran

+1