R.C.T

ganger

I took up employment with a contractor in september,after 2 years receiving a reduced rate of jobseekers allowance.Since september i am getting 20% deducted every week i.e 600 -120 = 480.Will i be deducted this amount weekly all year ?.

K.Flyer

A short answer is most likely Yes.
If you are a sub-contractor and you do not have up to date returns made to Revenue then usually RCT is stopped (20% or 35%) at source until such time as Revenue say different.
The contractor you are doing the work for should have asked Revenue for your RCT percentage rate (0%, 20% or 35%), they should be sending the amounts deducted back to Revenue on your behalf and you should be receiving a confirmation from revenue showing these payments going through.
When you get up to date with Revenue you can ask for the RCT to be changed.
Your accountant should be able to advise you on all of these matters.

ganger

Thanks for replying.The first 2 weeks i got confirmation letters from revenue and since then nothing.I was paying revenue via direct debit for 1 year monies that were outstanding,i received receipt numbers monthly .That debt was paid in full.That was 2 years ago,and i have been on jobseekers allowance since then until i got this job.So as far as i am aware i dont owe anything .Some other guys at work were getting deducted the same and are now receiving the full 600 .

K.Flyer

Best to give your local Revenue office a call and ask them if they are still receiving payments and / or what your status is with them.

Alan Shore

ganger wrote: »

I took up employment with a contractor in september,

No you did not. You are not employed. If the contractor is engaging you through the RCT system then you are a self employed subcontractor. It appears that your affairs are not up to date with the Tax Office so they are deducting 20% RCT.

If you get your affairs up to date this may be reduced. You can recover the RCT deducted when you file your tax return with the Tax Office in due course.

thesimpsons

you need to check if you are a subcontractor or an employee. possibly your interpretation of your status and your "employer"'s is different. If you are a subcontractor you are on the RCT system as a self employed person, liable for your own taxes, no holiday rights/entitlements, PRSI, credited weeks, etc. If you are an employee then you should be getting payslips, normal tax allowances and credited PRSI weeks, covered by welfare at work acts, etc.

http://www.revenue.ie/en/tax/rct/determining-the-correct-employment-status-of-a-worker.html

ganger

Thank you all for replying,,incidentally if in the eyes of the tax office im not tax compliant why dont they inform me as to what is wrong.

Alan Shore

The principle has informed them that you are a self employed sub contractor. They will accept that until the Principle is audited when they will conduct a more indepth review of the nature of the contract.

thesimpsons

revenue will happily take the 20% for now and when/if you (or the employer/contractor) have an audit, then they'll come looking for anything outstanding - with interest.

ganger

Alan Shore wrote: »

The principle has informed them that you are a self employed sub contractor. They will accept that until the Principle is audited when they will conduct a more indepth review of the nature of the contract.

What exactly in lay mans terms does that mean?

Alan Shore

If you have been working for the same person each week earning the same amount each week since September - looks like an employee to me! Do you provide your own materials, do you have your own insurance?

In the RCT system the Principal (Employer) tells the Revenue that he has engaged the subcontractor (you) as a subcontractor and not an employee.

The liability is with the Principal so no need for you to worry.

ganger

Thanks again for taking the time to explain.There are 20-25 men in the same boat as I am.Having been on j.a for a while getting very little we all jumped at the chance of this work.But the more we have been talking among ourselves the more it appears iffy.Each Wednesday we all have to submit an "invoice" stating x amount of slating or x amount of rafter etc but the sum is always 600 before tax.we don't supply materials only hand tools.All we are trying to do is earn a living but it seems more like exploitation ,both of us and the tax system.What can we do?

Mr. Incognito

Unfortunately this is a difficult situation and even more so when we dont have all the facts.

The principal contractor in any job where he is sub-contracting has a number of formal steps that he has to go through to ensure that the sub contractors are Irish tax compliant hense the RCT scheme. This combated avoidance of tax. If tax was being avoided then the government got its tax through the withheld payments.

In this instance the employer (and it appears to be an employment situation) the employer is attempting to argue that you are sub contractors to avoid having to account for employers PRSI, pension, insurance etc. He has you send him invoices as an attempt to evidence this.

From your own perspective, if you are to accept the position that you are now self employed then you may not be entitled to social welfare when this "work" dries up. The lad employing you will find that the Revenue and Ireland are a very different place from the boom times and these shoddy practices get caught up on very quickly.

You have a number of choices and this is not structured advice nor should it be relied upon.

1. Tip off Revenue. This will result in an audit of your employer and I would guess that he will have to pay significant penalties if he is breaking the law. He will most likely be held to be an employer, although anyone that is "employed" for less than a year will not have the benefit of most employment rights.

2. Take the gross amount, declare as self employed and register for RCT as a sub contractor to reclaim the tax deducted. Then file a self employed tax return. In your case it appears that no tax at all is being deducted. This may result in social welfare entitlements being withdrawn.

3. File a Form 12 as an employee. Declare the monies received as employment income regardless of how your employer treats it.

4. Take your chances. This is entirely at your own risk. Ireland has a self assessed tax regime. You can't turn around to Revenue and say I never knew. If you are breaking the law you will get the penalties applied regardless.


If I was you I would go with 3. This makes sure you are tax compliant and holding yourself out to be an employee and let Revenue make the determination.

ganger

Thanks for that Mr.incognito,,there is a 20% deducted from my pay,,600-120=480.All the lads working with me are trying to make a wage legally. I am in the Kilkenny tax office area so I presume it's that office I ring,,I just hope I can speak with someone who might be able to advise as the best way sort this out.Once we confront the builder about this I know we will all be shown the gate and that's a fact.So we will be out of work again,,with no "entitlements".

Alan Shore

You have two ways to deal with.

1. Go to the builder and say that he is not paying you enought, that he should contribute to an employee pension scheme, pay holidays and 10.75% PRSI on top of your wages.

2. Go to the tax office and NERA and make a complaint.

If I were you I would go with option 1. Remember that it's your reputation that will get you a job in the future.

If you had an agreement with the builder then he is the first port of call surely.

I don't agree with Mr inc regarding a form 12. If you think that your an employee then it's the employer you should talk to.

If he has 25 labour only employees each earning €600 per week long term then it won't be long before someone reports him.

Mr. Incognito

Alan Shore wrote: »

You have two ways to deal with.

1. Go to the builder and say that he is not paying you enought, that he should contribute to an employee pension scheme, pay holidays and 10.75% PRSI on top of your wages.

2. Go to the tax office and NERA and make a complaint.

If I were you I would go with option 1. Remember that it's your reputation that will get you a job in the future.

If you had an agreement with the builder then he is the first port of call surely.

I don't agree with Mr inc regarding a form 12. If you think that your an employee then it's the employer you should talk to.

If he has 25 labour only employees each earning €600 per week long term then it won't be long before someone reports him.

I don't think 1 is a real world solution. Someone who is being exploited does not have the bargaining power to demand that their employer apply the law. There are 400,000 people unemployed and plenty more that would happily go along with this treatment to have a wage to feed their family.

As you say it is your reputation in industries like building and no one wants to hire someone with a reputation as a trouble maker so it is either an anoynomous tip off or quietly filing your own tax compliance for me.

sheggy

Can anyone tell me how long it takes for the RCT Tax payments made on behalf of me the sub-contractor by my contractor will be returned, i have filed all my VAT returns and Form 11 for Income Tax for the relevant year, thanks.

Mr. Incognito

sheggy wrote: »

Can anyone tell me how long it takes for the RCT Tax payments made on behalf of me the sub-contractor by my contractor will be returned, i have filed all my VAT returns and Form 11 for Income Tax for the relevant year, thanks.

That's not how it works

Read this http://www.revenue.ie/en/tax/rct/subcontractor.html