Peadar Tóibín (Meath West, Sinn Fein)
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11. To ask the Minister for Finance if he will provide in tabular form the annual number of registrations for relevant contract tax refused by the Revenue Commissioners between 2008 and 2014. [45935/14]

Michael Noonan (Limerick City, Fine Gael)
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I am informed by the Revenue Commissioners that every principal contractor who enters into a contract with a sub-contractor in relation to construction, forestry or meat processing operations is obliged to register as a principal contractor for RCT.  Sub-contractors, who are not already registered for RCT, will be automatically registered for RCT on foot of a contract notification from a principal contractor.

I am also advised that refusing to register a principal or sub-contractor for RCT purposes will generally not arise as this is a necessary prerequisite to enable a principal or a sub-contractor comply with their RCT obligations. 

I have previously dealt with Questions from the Deputy in relation to the numbers of sub-contractors in the State and the numbers registered for Relevant Contracts Tax (RCT) in Question No. 202 of 25 November 2014 (Ref. 45172/14) and Question No. 215 of 2 December 2014 (Ref. 46181/14). My reply to Question No. 312 of 4 November 2014 (Re. 41524/14) is also relevant. 

The Deputy may be referring to refusals in the case of sub-contractors where there is possible misclassification of employment (i.e. a "bogus" self-employment).  I am advised that as details of contract offers are not normally available at RCT registration stage, it is not possible for the Revenue Commissioners to make any determination at that point as to the nature or status of any contract, and in these circumstances Revenue is not in a position to refuse any applications for registration on these grounds.

There are safeguards, which have been designed into the electronic RCT system, for those individuals who may have concerns that they are caught up in "bogus self-employment".  Firstly, a principal contractor has a statutory obligation to notify Revenue through the electronic RCT system of details of all contracts entered into with a sub-contractor and secondly, on receipt of these contract details, Revenue issues a "Contract Confirmation" letter directly to the individual who is described by the principal as being the sub-contractor.  On receipt of the "Contract Confirmation" letter, a sub-contractor is obliged to notify Revenue if they believe that they are not a sub-contractor but are more correctly an employee and Revenue will take the necessary steps to investigate the matter.

Revenue is very active in visiting construction sites through its Joint Investigation Units, whose work includes conducting joint operations with officers from NERA and the DSP.  One project that Revenue has a strong focus on is the Department of Education and Skills Capital Programme.  Revenue staff have been involved in over 70 visits to such sites since January 2012 and this work is on-going.

A second additional recent, and on-going, Dublin Region project reviewed 18 publicly funded construction sites ranging in contract size from €1m to €400m, on which in excess of 300 contractors were identified (including approximately 40 non-resident contractors).  Following risk assessment, 51 audits and 20 risk management interventions were opened and to date, 34 audits and all 20 risk management interventions have been completed, with a yield of €749,476. Some non-resident contractors were also appraised and, as a result, a number of audit interventions were opened.

Issues encountered during audit interventions ranged from non-operation (or non-reporting) of the electronic RCT system, inaccurate posting of contracts and payments and workers being paid in cash without any supporting documentation, i.e. payslips, P45s on cessation, etc. 

The Joint Revenue/Department of Social Protection Investigation Unit teams also conducted 30 unannounced visits, concentrating on construction projects with contract values in excess of €5m. A total of 817 workers were interviewed of which 128 (15%) had compliance issues which are being addressed.  Issues encountered were, in the main, employees that had not been registered with Revenue.  The team is currently engaged with 5 sub-contractors who have misclassification (i.e. bogus self-employment) issues with their workers.

The conclusion reached at the interim report stage of this project is that the electronic RCT system has helped to significantly mitigate an area of historically high risk, although some practices including 'cash payments' to employees have persisted.

In conclusion, RCT is designed to ensure tax compliance in the construction and certain other sectors. The question of bogus self-employment in the sector is multi-faceted and is a subject of review by the Department of Social Protection in respect of PRSI, both contributions and benefits, and by NERA in relation to employment rights as well as Revenue in relation to tax issues.  It is important to recognise that a legitimate feature of the construction and certain other sectors is the use of sub-contactors.