Gerry Adams (Louth, Sinn Fein)
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197. To ask the Minister for Finance if he is satisfied that the Office of the Revenue Commissioners is adequately administering and enforcing the use of RCT1s and that these certificates are not being widely used by companies and individuals to avoid tax and drive down workers’ wages and conditions. [38206/14]

Gerry Adams (Louth, Sinn Fein)
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198. To ask the Minister for Finance his plans to review the legislation underpinning RCT1s with a view to preventing these tax certificates from being used to avoid tax by employers. [38207/14]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 197 and 198 together.

I am advised by the Revenue Commissioners that the legislation underpinning the Form RCT1 has recently been fundamentally reformed.  Form RCT1 and Form C2 were part of the paper based relevant contracts tax (RCT) system that was abolished with effect from 31 December 2011.  If the Deputy is aware of the continued use of such Forms, it would be appreciated if he would inform the Revenue Commissioners.  I am further advised that the electronic Relevant Contracts Tax (eRCT) system which was introduced with effect from 1 January 2012 is working efficiently and that it has removed substantially the vulnerabilities for fraud, mainly extraction fraud based on bogus contractors and bogus documentation, that attached to the previous paper based relevant contracts tax system.

On a wider note, I am informed by the Revenue Commissioners that it appears that the Deputy's Questions may, more appropriately, have been meant to refer that which is known as 'bogus self-employment".  That is the phrase used to describe a scenario wherein an individual who is an employee is erroneously described as being 'self-employed' so as to purport to relieve the person who engaged that individual from certain statutory obligations relating to matters such as tax, PRSI, employment rights, etc.  In that regard, whilst both the

- Pay As You earn (PAYE) system that applies to wages; and

- the electronic relevant contracts tax (eRCT) system that applies to payments made under contracts in the construction, meat processing and forestry sectors,

outline the making of statutory deductions at source from payments made, neither such system determines whether an individual, as regards an engagement, is either employed or self-employed. The 'Code of Practice for Employment or Self-Employment Status of Individuals' was created to assist both parties to an engagement including an engagement in the construction sector - in determining if a contract of engagement is, by its nature, either a 'contract of service' (that is, an employer and employee arrangement) or a 'contract for service' (that is, not an employer and employee arrangement).  The Code of Practice for Employment or Self-Employment Status of Individuals' is not a Revenue Code but rather was compiled with the assistance of the Irish Congress of Trade Unions / Department of Jobs, Enterprise and Innovation / National Employment Rights Authority / Department of Social Protection / Department of Finance / Small Firms Association / Irish Business and Employers Confederation / Construction Industry Federation / Revenue Commissioners.I am further informed by the Revenue Commissioners that they are committed to tackling all forms of shadow economy activity including that which is described as 'bogus self-employment status'.  Their staff carry-out visits to a wide range of businesses, including temporary places of business such as building sites, as part of their on-going compliance operations.    In some instances, such visits are undertaken jointly with other State agencies such as the Department of Social Protection and the National Employment Rights Authority.