Taxes Consolidation Act 1997 section 530F

Obligation on principals to deduct tax

Section 530F sets out the obligations on principals to deduct relevant contracts tax in accordance with a deduction authorisation, the penalties for failing to do so, and the position where a persistent technology systems failure prevents compliance.

• A principal must deduct RCT strictly in accordance with the deduction authorisation; failure to do so triggers penalties ranging from 3% to 35% of the relevant payment depending on the subcontractor's RCT rate status.
• Where a payment is made outside the deduction authorisation process, the principal must submit an unreported payment notification to Revenue in the manner and with the details prescribed by regulations.
• A principal who deducts RCT must provide the subcontractor with a copy of the deduction authorisation or its key details, including the names and tax reference numbers of both parties, the gross payment, the tax deducted, the rate applied, the payment date, and the unique reference number.
• Where a persistent technology systems failure prevents compliance, the principal avoids penalties provided they deduct at the last notified rate (or 35% if none), notify Revenue immediately once the failure is resolved, and pay the tax by the relevant return due date.