C45 how and who?

DubTony

Hi guys,

A friend has recently started in the property maintenance business and is hiring sub contractors to do work for him. While he understands the basics of the c45 system, he's confused about when it should be applied.
The example he gave me is as follows.
He gets a guy in to fit tiles, labour only as his customer is supplying the materials. He believes he should with-hold the 35% tax in this instance.
His confusion is when he hires somebody to, let's say, pick up a load of supplies and drop it off to another location. Is there C45 deduction required here?

I would have thought that his subcontractor would have to be registered for the C45 "system" through something like the C2 system, (my understanding here is weak), but my friend is unsure.

I've searched Revenue.ie, but it just confuses me further. I did find this

revenue.ie wrote:

An uncertified subcontractor is a contractor who does not hold a C2 card (certificate of authorisation) or if they hold a C2, the principal contractor has not received a relevant payments card (RCT 47) for the subcontractor. RCT (curently 35%) must be deducted from all payments to a subcontractor where the principal does not hold a relevant payments card for that subcontractor.

If anyone could clear this up, I'd appreciate it.
Thanks

Clanket

Hi Tony,

A subcontractor has the option to apply for a C2 certificate for a tax year. If Revenue give them one, it entitles them to be paid without deduction of RCT.

However, the principal contractor has to apply for a relevant payments card for the subcontractor with a C2. Once he gets this, he can pay without deduction of RCT.

The revenue site here http://www.revenue.ie/en/tax/rct/principal-contractors.html contains all the information you will need.
Your friend should also note there are changes being made to the system in 2012 that he will need to be familiar with.

If in doubt, get an accountant.

alex23

1.If you ring revenue and ask about that 50% of the people will tell you that the c45 rule applys only in the construction & wood & meath industry and 50% will tell you that all the subcontractors should be taxed 35%.The truth is they dont know.

2.The c45 rule is one of the worst in the world that s why they will change it from the 1st of january.The rule is bad for the contractor and subcontractors.First the subcontractors,even if they get the c45 they will be able to claim tax back only if the contractor sort out he s taxes.Or doest go burst.So its a matter of luck.
Its also bad for contractors.Instead of having an small tax bill they end up with millions in taxes at oance.

3.This rule cannot be consitutional.The contractor has to deduct 35% from the subcontractor invoice but then its up to it if an c45 will be ever issued.As an subcontractor is nothing what u can do.Pay 2k for solicitors to recover 1.5k.It doesnt add up.Hundreds of subcontractors are covered in debt.Revenue has a law but not the system to apply the law.People are loosing milions becouse of this

4.Is not clear how to apply the rule.We are a cleaning company and no1 deducts 35% only 50% of our construction customers.Getting the c45 is very hard and huge amounts of papers are required.Working with the same company on 20 projects will require 20 forms rct1.Crazy