RCTDC Tax Deduction Cert

I have taken on some extra work (3 days/week) with a builder - as an aside from my PAYE job.
He suggested he would pay me, deduct tax but not have me on the books as a PAYE employee. Instead, he will give me a RCTDC Relevant Contracts Tax Deduction Certificate - which I can submit to the tax office to claim a repayment of taxes paid.

My question is can I expect to get much back considering I have gone above the tax cutoff for the year in my PAYE job due to working a lot of overtime earlier in the year - and im now on 40% tax on most of my earnings?

He was suggesting that I would get the most of it back but I have my doubts about this.

Have any of you been paid on this basis?

No, you will get nothing back. You will have to do a self-assessment tax return to pay the additional tax you will owe on this income. The 35% tax deducted on the RCTDC can be credited against this liability.

The 35% is stopped on the gross amount of the invoice

If you are VATregistered there will be a portion of this stopped (as included in Gross)
This may bedue back to you

Also since the 35% is stopped on income received,
Since tax isabsed on profits after expesnes if you have any relevant business expenses this would reduce your taxable profits down mand therefore you tax amount payable

Therefore there is a chance that you would be due a refund of some of the tax stopped but there is a lot more involved than just appying for a refund

stuart@buyingtolet.ie

ubiquitous/stuart: thanks for the info guys.

This was pitched to me as something that I now realise its not - and at the time I took his cheque and signed the bloody form.

I am going to sort this out with him but in the event that the Tax Deduction Cert(TDC) was sent in to the revenue (it was for a small amount - €760), am I going to be in any sort of bother if i dont file tax returns even if i dont sign any more of these TDC forms?

Furthermore, I realise now that by signing that form, I declared myself as a subcontractor - so i'm wondering if i'm supposed to have a C2 cert and could get in bother over that?

I never gave my pps # - would the form be invalid without it?

am I going to be in any sort of bother if i dont file tax returns even if i dont sign any more of these TDC forms?

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Yes - because by failing to file tax returns in respect of non-PAYE income, you will effectively be evading tax on this income.

This applies regardless of how you are evading tax. However in your own case, the Revenue now have documentary evidence of your income via the RCT cert. Your name will also appear on the contractor's annual RCT returns to Revenue, so you will now be doubly exposed to anti-evasion penalties if you fail to declare.

i'm wondering if i'm supposed to have a C2 cert and could get in bother over that?

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No

I never gave my pps # - would the form be invalid without it?

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Not for the purposes of tracking your income, but the Revenue will probably require that your PPS number is entered on the form before they sanction a tax credit or repayment arising from it.

I have to wonder when I see all this tax evasion, self employed cr*.

If all the OP earned with the builder was 760 euro, he just contacts revenue in the new year with his P60 from his main employment and they will add it in as other income on his P21. He will get credit for the tax paid, hopefully the guy he worked for paid the tax on top of the 760 ie the RCTDC says gross income 1026 with tax paid of 266. In this case the OP will technically owe about 165 euro which will be written off.

If I was him I would forget about it and if contacted by revenue (wishful thinking) he says that he thought that the 35% was the tax he pays and it was only a once off, I don't think there would by any jail time involved.

You have to remember that there are 2 million workers in this country. Thats 2 million records that revenue have. Their systems aren't that good (YET) to find serotoninsid's income and match it up with his PAYE record or match it with anythign for that matter.

davidoco said:

I have to wonder when I see all this tax evasion, self employed cr*.

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Yeah, thats fair comment. However on the flip side, when an individual is willing to do a days work and is likely to end up with €50 for it - then thats a problem as I see it. I'm no millionaire - just trying to pay my mortgage like countless thousands of others.

davidoco said:

If all the OP earned with the builder was 760 euro, he just contacts revenue in the new year with his P60 from his main employment and they will add it in as other income on his P21. He will get credit for the tax paid, hopefully the guy he worked for paid the tax on top of the 760 ie the RCTDC says gross income 1026 with tax paid of 266. In this case the OP will technically owe about 165 euro which will be written off.

If I was him I would forget about it and if contacted by revenue (wishful thinking) he says that he thought that the 35% was the tax he pays and it was only a once off, I don't think there would by any jail time involved.

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The idea was that I would do this on an ongoing basis - three days a week - so it wasnt intended to be a once off. Having said that, I would owe Revenue another 7 per cent tax as I exceed the cutoff for basic rate tax in my primary job each week.

davidoco said:

If I was him I would forget about it and if contacted by revenue (wishful thinking) he says that he thought that the 35% was the tax he pays and it was only a once off, I don't think there would by any jail time involved.

You have to remember that there are 2 million workers in this country. Thats 2 million records that revenue have. Their systems aren't that good (YET) to find serotoninsid's income and match it up with his PAYE record or match it with anythign for that matter.

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This had occured to me before querying this whole matter initially but your the first person to suggest that theres no chance of revenue persuing it.
Either way, Its not worth my while.
Other countries cater for this sort of situation eg. Germany - whereby people who want to work another job partime are allowed to do so with a tax exemption up to a certain reasonable amount per month. They should do the same thing here. It encourages people to work that little bit harder when they need to, rewards them for it as should be the case and pushes down the volume of people working in the black economy.

serotoninsid said:

The idea was that I would do this on an ongoing basis - three days a week - so it wasnt intended to be a once off.

This had occured to me before querying this whole matter initially but your the first person to suggest that theres no chance of revenue persuing it.

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I didn't realise it wouldn't be a one off. What has to happen to get the ball rolling is you send in the RCTDCs looking for a refund. You see the contractor only sends in money each month and at the end of the year sends in a P35 (?) detailing all the people he paid. Revenue (if they have the time) will go through this list looking for people not registered and contact you. If they spot you someone will try and contact you to explain the ins and outs of self employment.

If you read the part that you signed (and hopefully still have) I think it will show that you are claiming back tax not signing to say that your did work as a subbie or anything like that. In your case you won't be claiming back tax and you realise that you will owe tax but most lads on RCT will be owed tax back as the net tax rate in this country is between 20 and 30%.

What Revenue (if they are bothered) are likely to do is insisit that you are taken on by the guy as an employee and none of this RCT messing. Stready three day week where he calls the shots on your hours etc is employee/employer relationship.

What Revenue (if they are bothered) are likely to do is insisit that you are taken on by the guy as an employee and none of this RCT messing. Stready three day week where he calls the shots on your hours etc is employee/employer relationship.

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Not necessarily, and especially where

I have taken on some extra work ... as an aside from my PAYE job.

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What Revenue (if they are bothered) are likely to do is insisit that you are taken on by the guy as an employee and none of this RCT messing. Stready three day week where he calls the shots on your hours etc is employee/employer relationship.

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Dead right on that one Dave - although the guy in question is up to speed on this and intends dropping payments off the RCTDC basis from time to time - to avoid them making him put me on PAYE.

However, its all fairly pointless as I see it anyways, as I am looking at 42% tax on this work - and whilst I generally dont mind the work, labouring on a building site is hard graft and I have to know that i'm coming out with something decent at the end of it. I've been working 70+ hours/week over the last 4 weeks and whilst I am doing it with the purpose of getting my house up and running, its pointless devoting these hours if I'm going to come away with peanuts.