Michael McGrath (Cork South Central, Fianna Fail)
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60. To ask the Minister for Finance if he has examined the operation of the relevant contracts tax system in the construction industry; the number of persons in the industry working under this system; if he satisfied that taxation law is being fully complied with in respect of the system; and if he will make a statement on the matter. [40987/15]

Michael Noonan (Limerick City, Fine Gael)
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The operation of Relevant Contracts Tax, and the electronic Relevant Contracts Tax (eRCT) system that underpins it, is a matter in the first instance, for the Revenue Commissioners.

The Deputy will be aware that -

(a) the eRCT system of tax deduction at source applies to payments made by principal contractors to sub-contractors; and

(b) the PAYE system of tax deduction at source applies to payments made by employers to their employees.

As I outlined in a PQ (Question No. 39514 on 10 November 2015) response last week and based on information provided to me by Revenue:-

(i) there are 99,741 sub-contractors currently registered under the eRCT system of which 23,202 are sole traders with the balance being companies or partnerships; and

(ii) based on employer end of year PAYE returns for the 2014, there were 75,386 individuals employed in construction related businesses.

More up-to-date information is not currently available. However, the CSO's recently published Quarterly National Household Survey data for Quarter 3 2015 shows employment in the sector increasing by over 13% on Quarter 3 2014.

I am advised byRevenue that monitoring of the construction sector for abuses of the tax and duty systems forms part of its on-going compliance programmes to which they commit significant resources. In the course of this year, Revenue has strengthened its focus on the sector and its national programme of compliance interventions in relation to tax and the construction sector in general. Revenue's focus includes:-

Proper operation of the eRCT system including ensuring that principal contractors are fully reporting payments through the eRCT system and ensuring that principal contractors are reporting "Unknown" sub-contractors to Revenue;

Reconciling reported activity under the Home Renovation Incentive (HRI) with VAT returns filed;

Reconciling reported activity under the eRCT system, PAYE/PRSI returns, VAT returns and examining profit margins;

Proper operation of the VAT reverse charge;

Proper operation of PAYE/PRSI obligations;

Ensuring that employees are not misclassified as sub-contractors;

Ensuring that obligations of non-principals/sub-contractors are being fully met.

Revenue has also increased the number of unannounced visits to construction sites.

If the Deputy has specific information relating to individuals or business groups in any sector who are involved in tax evasion, he should provide that information to Revenue. Revenue has provided a tailored template on their website which facilitates reporting of tax evasion and the relevant links are being provided for the Deputy's information.

The Deputy will also be aware that during the Committee Stage debate on Finance Bill 2015 earlier this week, I announced that a public consultation would shortly be held on a range of issues relating to employment practices and trends. Such a process will allow all interested parties to feed into a broad ranging consideration of the issues involved.