Relevant Contracts Tax (RTC) for recruitment

crystalmac

The wife set up a recruitment company (she worked in this area a number of years ago for a big company) a few months ago, she applied and got the licence and will mainly supply labour into the construction, engineering and healthcare sectors, she has sent back the 6 month ARD for a new company and it had no actives, now she has spoken to a few construction companies and will supply labour (6 guys for up to 8 weeks for start and see where it goes) to a company next month when this development sites starts……

She is only going to register now for:
VAT
PAYE
Corporate tax

She was going to fill in the forms herself to get the above for the company which she did for another company she has that sell a food product before…but the VAT form has a question about Relevant Contracts Tax (RTC)..She don’t know if the company will have to be RCT registered or not as the company will supply labour ONLY to construction companies be that principle contractor or sub-contractors,

As a recruitment company in the supply of labour ONLY to the construction sector, how does this work or is RCT not a worry???

Thanks in advance

Lockedout2

Is the company employing the staff directly or sub contracting them?

If the company is employing them as employees then there is no need to register for RCT.

When the company supplies "tradesmen" to the construction companies the payment will be subject to Relevant Contracts Tax so she needs to ask her accountant what this will mean for her as new companies don't automatically get a zero rate deduction rate.

She needs to consider separating the "professional" staff invoices as these will not be subject to RCT.

crystalmac

Yes, her company will be employing the staff directly and the construction company paying her recruitment company.

so the bottom line is her company is employing them as employees "tradesmen" and they are on the site of the contractor who is paying her recruitment company per day for each tradesman and she pays the tradesmen as her employees, so then there is no need to register for RCT you are saying??

Yes, she will ask the accountant, but he is away till the 24 june on annual leave and only got the call yesterday evening from the contractor after sending him some CV's of guys she had on the books, so panic set in, we have being dealing with VAT for years, but with this new company we came across the RCT for the first time, so as a new company will not automatically get a zero rate deduction rate.

Marcusm

crystalmac wrote: »

Yes, her company will be employing the staff directly and the construction company paying her recruitment company.

so the bottom line is her company is employing them as employees "tradesmen" and they are on the site of the contractor who is paying her recruitment company per day for each tradesman and she pays the tradesmen as her employees, so then there is no need to register for RCT you are saying??

Yes, she will ask the accountant, but he is away till the 24 june on annual leave and only got the call yesterday evening from the contractor after sending him some CV's of guys she had on the books, so panic set in, we have being dealing with VAT for years, but with this new company we came across the RCT for the first time, so as a new company will not automatically get a zero rate deduction rate.

The issue is that your wife's company's clients will deduct RCT on payments to her. She will need to be careful to ensure that she does not have a significant cashflow cost which will depend on her company's operation of PAYE.

crystalmac

Marcusm wrote: »

The issue is that your wife's company's clients will deduct RCT on payments to her. She will need to be careful to ensure that she does not have a significant cashflow cost which will depend on her company's operation of PAYE.

So for example: she invoice the contractor €5,000 + VAT and the contractor paid €5,000 invoice (the contractor pay the VAT) to her company or is it the contractor pay €5,000 less RCT of 20% (RCT rates 0%, 20% & 35% i see online) ...trying the get the head around this RCT.

As regards PAYE, in her present company she pay this every quarter I think, maybe the same with this new recruitment company.