Michael Creed (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

235. To ask the Minister for Finance if he will pursue with the Revenue Commissioners the requirement for a tracking mechanism for former employees who switched to C2 operators without any intervening period of unemployment; and if he will make a statement on the matter. [34492/13]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I am advised by the Revenue Commissioners that the former Relevant Contracts Tax (RCT) regime, which incorporated the “C2” ceased in December 2011. However, I am assuming that they Deputy's question relates to the risk that an employee who becomes self employed will not register, pay appropriate taxes etc.

The position is that the new electronic system for RCT, eRCT, which was introduced by Revenue provides a significant safeguard in such situations in relation to contractors in the construction, forestry and meat processing sectors. With the elimination of the C2 certificate, eRCT requires principal contractors to automatically deduct 20% tax on payments made to all new sub-contractors that they engage. This operates as a significant disincentive to those principals and sub-contractors who may seek to collude to manipulate what is effectively an employer/employee relationship into one of self-employment for the purposes of reducing the tax and PRSI liability of the sub-contractor and the PRSI charge for the employer.

I am also informed that Revenue's hand in detecting possible arrangements between principal contractors and former employees is significantly strengthened under the eRCT regime by the access the Commissioners now have to quality information on contracts, the ability to monitor transactions in realtime and the facility to adjust the tax rate of a sub-contractor to 35% if required in cases of non compliance. As well as reducing the administrative burden on principal contractors, this new system has also minimised the likelihood of errors and opportunities for abuse, including employment misclassification.

Further details on the eRCT system are available on Revenue's website at www.revenue.ie. If the Deputy has specific information about suspected abuse, he should bring the matter to the attention of the Revenue Commissioners.