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Information needed on tax for sub contracting

  • 08-07-2015 5:22pm
    #1
    mcneil
    Banned (with Prison Access) Posts: 332 ✭✭


    Theres me and another fella who have been working together this past while doing private work and going half wack on the labour costs and paying our own taxes from what we earn. We took on a sub contracting job 4 weeks ago and one of the workers for this company wanted to only pay one of us for the work and then we split the money and look after our own taxes from this.

    We recieved(or should i say the other guy im working with) our first payment today with the 20% tax deducted out of the earnings! What im wanting to know, if this guy gives me my earnings with cash or a cheque, am i liable to pay another 20% tax on these earnings.

    I usualy do my own accounts seeing as ive only started up and my earnings will only be between 15-20k this year seeing as everything was straight forward with the private work untill now!

    Were going to ask the company can they split the cheques from now on but if not, were do i stand.


Comments

  • #2
    chickenlicken2
    Registered Users, Registered Users 2 Posts: 171 ✭✭chickenlicken2


    mcneil wrote: »

    We recieved(or should i say the other guy im working with) our first payment today with the 20% tax deducted out of the earnings! What im wanting to know, if this guy gives me my earnings with cash or a cheque, am i liable to pay another 20% tax on these earnings.

    I usualy do my own accounts seeing as ive only started up and my earnings will only be between 15-20k this year seeing as everything was straight forward with the private work untill now!

    Were going to ask the company can they split the cheques from now on but if not, were do i stand.


    Not ideal.

    I presume you are both self employed sub contractors not a partnership?

    I also take it that only Contracror B invoiced the client? You didn't both invoice and he just paid Contractor B?

    When the payment was processed the Revenue are notified. It would have been paid all to Contractor B and this would be duly noted on B's RCT account.

    You have become a sub contractor of Contractor B. You need to invoice him for your work. He registers the contract with Revenue and notifies them of payment to you, using the deduction rate they have set for you.

    Very very messy method.


  • #3
    mcneil
    Banned (with Prison Access) Posts: 332 ✭✭mcneil


    chickenlicken2 wrote: »
    Not ideal.

    I presume you are both self employed sub contractors not a partnership?

    I also take it that only Contracror B invoiced the client? You didn't both invoice and he just paid Contractor B?

    When the payment was processed the Revenue are notified. It would have been paid all to Contractor B and this would be duly noted on B's RCT account.

    You have become a sub contractor of Contractor B. You need to invoice him for your work. He registers the contract with Revenue and notifies them of payment to you, using the deduction rate they have set for you.

    Very very messy method.



    Correct above. I knew this was very messy when first notified that there's only one of getting paid!

    If I invoice the other subby, will I be liable for another 20% tax and is there any other fees needing paid out by both us.

    Another question, what would be the reasons for the main contractor wanting to pay just one of us. Is it just to save more paper work or is it to save money?


  • #4
    chickenlicken2
    Registered Users, Registered Users 2 Posts: 171 ✭✭chickenlicken2


    mcneil wrote: »
    Correct above. I knew this was very messy when first notified that there's only one of getting paid!

    If I invoice the other subby, will I be liable for another 20% tax and is there any other fees needing paid out by both us.

    Another question, what would be the reasons for the main contractor wanting to pay just one of us. Is it just to save more paper work or is it to save money?

    Right, say you agreed with Contractor B that the contract would be 10000 or 5k each. He has just been notified of a payment of 10k. He only received half 8000 as 20% tax was deducted.

    He needs to set you up as a subbie on ROS. You invoice him for 5k. He notifies Revenue of a payment to you for 5k.He has to apply whichever rate is set for you by Revenue 0% 20% or 35%.

    You are paid the appropriate amount. The RCT is paid to Revenue.

    You don't lose the tax. It sits with Revenue and you can offset against tax liability.

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

    Only the company would know the reason why. Possibly price if they negotiated a cheaper fee by a quoye gor Job X from B rather than Job X between A and B. From an administratiom perspective they only need to set up one supplier for payment, raise one PO, one contract on ROS , one payment. However it has created a lot of unexpected work for you and Contractor B.


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