Taxes Consolidation Act 1997 section 530O

Computation of subcontractor's profit

Section 530O provides that a subcontractor must use the gross (pre-deduction) amount of a relevant contract tax (RCT) payment when computing profits or gains for Schedule D purposes.

• Where a principal deducts RCT from a payment to a subcontractor under section 530F, the subcontractor must include the full gross amount of that payment in computing Schedule D profits or gains.
• The gross amount is the total of the net payment actually received by the subcontractor plus the amount of RCT deducted by the principal.
• This ensures that the subcontractor's taxable profits reflect the full economic value of the contract payment, not just the cash received after deduction.
• The RCT deducted is treated as a payment of tax on account and is available for offset or repayment through the normal tax return process.