Self Employed...quick question

mfceiling

Hi Guys,

I'm self employed in construction.
I did a few jobs at the start of the year where the builder withheld the 35% RCT eg - gross €100, RCT €35, i received €65

Problem is these builders told me they would post out the RCT forms to me but they never did. Now they won't even answer the phone.
I have been chasing them a few months now and none of them are doing a thing about it.

When it comes to my OCT 31st self assessment what happens??
eg above^^ am i liable to pay tax on the €65 or do the revenue go after the unpaid €35 from the builder.

Sorry if it is a bit vague....just want a heads up before i meet my accountant at the start of October.

Thanks, Gary

Legend100

you are liable to pay tax on the 100 unfortunately.

You could try and ring the Revenue and explain that you have work done but have not received any pink slips. They could check if the RCT is paid by the principal in relation to your payments.

just keep onto the principal to get your pink slips. I would pester them as it is effectively money owed to you.

mfceiling

^^Thanks,

Not really what i wanted to hear but i'll keep trying!!

J.Ryan

You can report the principal for not issuing the certs, burning bridges, but maybe worthwhile letting the principal know that you are willing to do it.

Mr. Incognito

You are taxable on the full amount but can take a credit for the RCT withheld, effectively taxing you on the net payment

nedireland

Unfortunately you will need the pink slips in order to make the deduction . However, if you do not have the pink slips then you will be taxed on the 65 received. Essentially you have invoiced for 100 but did not receive 35 of it (assuming they have not paid over the 35 to Revenue - which in this case seems likely). As such the 35 will be classed as a bad debt leaving 65 to be taxed.

Mr. Incognito

Unfortunately you will need the pink slips in order to make the deduction . However, if you do not have the pink slips then you will be taxed on the 65 received. Essentially you have invoiced for 100 but did not receive 35 of it (assuming they have not paid over the 35 to Revenue - which in this case seems likely). As such the 35 will be classed as a bad debt leaving 65 to be taxed.

Bad debts???

You are taxed on the gross with a credit for the TAX with held not bad debts.

Take the 35% with holding credit- pink slips relate to invoices not with holding tax. It is up to the principal contractor to make the annual return ( A C35) and revenue can tally your with held tax against this.

nedireland

Not exactly horse Mr incognito and it is still answering the TAx question raised.

there are two methods to deal with it (as discussed with Revenue on a case)

1 - you take it as a bad debt and are only taxed on the 65 - if you are sure the principal did not pay it over to revenue

2 - you pass the invoices to Revenue and advise them of the situation - they will contact the principal and will chase him. you must outline to revenue the work undertaken and other infomration about your work with the principal. revenue may grant you the 35% on that basis.

Mr. Incognito

What district did you speak to?

First year clerical officers answer the phone and in general. I wouldn't be surprised if some inexperience first year CO who didn't want to appear ignorant may have agreed if you asked him to take this approach but it is totally wrong.

Revenue should never take this approach. RCT is a tax. no tax can EVER be taken as a bad debt. The revenue have a statutory obligation to grant the credit. There is no other approach that could or should be taken. Yes they look for details to verify the credit but you cannot take it as a bad debt in your accounts. The Principal contractor is not oblidged to pay you over the withholding tax without a payments card. On a one off this would not be applied for and you take the credit and are taxed on the gross.

No other approach is acceptable or legal for that matter.

nedireland

I dont wish to get into an argument over this. I am simply explaining what was done in a recent case I had and what was suggested by the relevant district.

A

nompere

nedireland wrote: »

I dont wish to get into an argument over this. I am simply explaining what was done in a recent case I had and what was suggested by the relevant district.

A

I'm not surprised they suggested this!

Tax at 42% on €65 is €27.30. Tax on €100 at 42% is €42, and when the credit of €35 is deducted leaves a net payment of €7.

So Revenue's method, as adopted by nedireland, leaves the poor taxpayer with €37.70 and Mr Incognito's approach leaves the taxpayer with €58.

I'm with Mr Incognito both for practical and pragmatic reasons and because I think he's technically correct.

EwedaMaan

Hi Everybody
Glad to see this post, well not really, but at least I am not the only one in this situation. I have done work, invoiced, received payment less 35% but did not get the pink slips. I have phoned, written, emailed, phoned, emailed, threatened solicitors letters and made as much of a nuisance of myself as possible but still no pink slips. I have called my local revenue office and posted in a file detailing invoices, and bank statements showing 65% payments. I have sent the same file to the principle contractors revenue office still no joy. Now the deadline for returns for 2009 tax year is looming and my accountant is looking in to it but I refuse to be taxed twice.

I have told my accountant that I want to take the outstanding Pink Slips as tax already paid. Problem is due to an overpayment of CGT the previous year I am due to a refund but am afraid that revenue will refuse this if they dont agree.

Any help or advise on this would be great, perhaps a call to Joe Duffy might clarify thigs.

Thanks

EwedaMaan

Well there we go, I had to suck it up, Revenue insisted on viewing it as a bad debt. So I just upped my expensis for the year by a couple of grand, if they come to audit me well they will have to audit the principal contractor also. I just hate being shafted. Anyway I am now non resident, in exile, and delighted with that too. Dont plan on coming back any time soon either, and if I do I will probably insist on cash only.