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Reclaiming RCT

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  • 14-10-2020 3:35pm
    #1
    rudders
    Registered Users Posts: 96 ✭✭


    Quick question for any of you Tax experts. If John is a sole trader and is charged RCT on a job of 20% (this job starts on 1/7/x1 and ends on 1/4/X2) John has been deducted E1000 on RCT over the period. He also has expenses of 200. What would be the most appropriate way to reclaim RCT. (Possible to do two returns over two years) would he need to register for ROS and deduct his expenses from his RCT or can this be done on myAccount? I am assuming John can reclaim E100 in year 1 and E100 in year two from his RCT through expenses?

    Much appreciated!


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    #2
    Stratvs
    Registered Users Posts: 958 ✭✭✭Stratvs


    Expenses don't come off RCT on a € for € basis. If you have €1,000 in RCT paid at 20% deduction rate then income is presumably €5,000.
    The €200 expenses come off the income not the tax. So net self-employed income is €4,800.
    That is then taxed/prsi/usc as appropriate along with whatever other income is in play for the year.
    The RCT of €1,000 is then available as a credit against the total tax/prsi/usc liability.
    If the contract cuts across two or more tax years then whatever RCT is recorded by the principal to Revenue in each year will be available against the relevant net income of that year.

    https://www.revenue.ie/en/self-assessment-and-self-employment/rct/rct-for-subcontractors.aspx

    They need a ROS registration. AFAIK you can't deal with RCT via MyAccount.


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    #3
    rudders
    Registered Users Posts: 96 ✭✭rudders


    Stratvs wrote: »
    Expenses don't come off RCT on a € for € basis. If you have €1,000 in RCT paid at 20% deduction rate then income is presumably €5,000.
    The €200 expenses come off the income not the tax. So net self-employed income is €4,800.
    That is then taxed/prsi/usc as appropriate along with whatever other income is in play for the year.
    The RCT of €1,000 is then available as a credit against the total tax/prsi/usc liability.
    If the contract cuts across two or more tax years then whatever RCT is recorded by the principal to Revenue in each year will be available against the relevant net income of that year.

    https://www.revenue.ie/en/self-assessment-and-self-employment/rct/rct-for-subcontractors.aspx

    They need a ROS registration. AFAIK you can't deal with RCT via MyAccount.


    Ok, really appreciate that response! So if John is also an employee of another company (PAYE) should this also be filed on ros along with the sub contractor work? Or will his paye income be done by his employer?


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    #4
    Stratvs
    Registered Users Posts: 958 ✭✭✭Stratvs


    rudders wrote: »
    Ok, really appreciate that response! So if John is also an employee of another company (PAYE) should this also be filed on ros along with the sub contractor work? Or will his paye income be done by his employer?

    If John is an employee then his PAYE will continue to be done by his employer.
    However all income PAYE and self-employed must be returned on the ROS Form 11 for the year. Ultimately, provided his PAYE income is taxed correctly the net tax position +/- in the tax return will reflect the results from the self-employment.


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