Employing sub contractors

Dragon6250

Dear All

I employ plumbers as sub contractors to carry out service/repair and installation work. They invoice me, (including vat at 13.5%) and I pay them.
However I have been told this is incorrect. I want to ensure I don't run into trouble with the tax man.

Any advice would be great.

smcgiff

Do your sub contractors have C2 certificates?

You should google Relevant Contracts Tax to ensure you are complying

ennis81

Hi,
There should be no VAT on the subbies invoices, if they have a C2 they just invoice you for hours by rate + materials etc but no VAT, if they have no C2 then its hours by rate less 35% RCT tax, E.G
30HOURS X €25 = €750
LESS 35% €262.50
PAYMENT DUE TO SUBBIE = €487.50
RCT is given to subbie for the €262.50 deducted and they must claim this back from revenue.
You must be registered as a principal contractor and the subbies must be registered as subbies for your company.
If you google Revenue RCT section you can give them a ring and get them to send you relevant forms, can also be downloaded from revenue on line..
Hope this helps

Littlehorny

You dont charge VAT if you have a C2 since about 2009, i think VAT is the principal contractors responsibility i.e you.

trg

Littlehorny wrote: »

You dont charge VAT if you have a C2 since about 2009

Having or not having a C2 is irrelavent, they are carrying out a trade that is subject to reverse charge mechanism therefore they should not be charging VAT.

C2's are gone now anyway with the introduction of eRCT.

The OP must account for the VAT amount in the T1 box of VAT return and is allowed a simultaneous deduction in T2.

barneystinson

WHOA!!!!

Everyone hold on and stall the digger for a minute!

There seems to be an assumption that everything a plumber does is subject to RCT. That is not necessarily the case. Maintenance work / routine servicing wouldn't necessarily constitute construction operations...

(http://www.revenue.ie/en/tax/vat/property/faqs-reverse-charge.pdf)
How are repair and maintenance contracts treated?
If the contract provides for a single consideration for the repair and maintenance then reverse charge should apply to the full consideration. If the contract provides that a separate charge should apply where repairs are necessary then only the consideration applicable to the repairs is subject to reverse charge. Each case should be examined on its own merit.
Repair would generally be considered to be an operation carried out to fix, mend or restore the building/structure to its previous condition. Examples of repair include replacement of glass in broken window, replace/fix broken tiles, mending faulty boiler. Maintenance includes operations such as cleaning (internal & external) and painting (other than painting of a newly constructed building). (updated 10 December 2008).