RCT Audit - bad news

Trg, given that Revenue are being reasonable about interest and penalties, then they should also be reasonable about the RCT - there's no way your guy should accept the grossing up; he should offer to settle on the basis of the RCT being calculated on the 55k as a gross amount (i.e.e 55k x 35% = 19,250).

He should point to the fact that if they gross it up then he would be entitled to issue the RCTDC to his subbie, and they would have a valid claim to repayment of the 29k - by doing it the other way, the 19,250, plus interest & penalties on that amount, will be genuine yield to the exchequer... if it were me I would take that settlement rather than spend months going to appeal.

I reckon the guy has regard for the system, it is true that there were many instances where the rules were not being applied correctly but there were many instances (for many years) where the rules WERE correctly applied.

The eye was taken off the ball but there was no intention to evade or profit. The man has no chance of official appeal, reckon he's going to propose that he pays to Revenue the amount that SHOULD have been deducted but he'll appeal to the goodness of their heart for interest and peno's, he's hoping for time to pay as well.

I've come across this situation before.

Case 1
My client had an RCT audit. Inspector informed them because they did hold a payments card but had paid the money on a date prior to receiving it (a matter of weeks) technically the Revenue should treat the payment as being 65%. However, promises were made not to let it happen again and all was well. No charges or penalties

Case 2
I had a client who was a subbie who received payments from a main contractor prior to receipt of a payments card. The main contractor was audited and Revenue insisted that any payments made without cards be treated as being 65% due. They had to pay a lot of money to Revenue and issue RCTDC to the subbies, including my client. At that time, Revenue still paid out on RCTDCs and issued a refund to my client who repaid it to the main contractor.

Case 3
On a recent audit of a colleagues client, payments were made without a payments card on hand. Although Revenue admit there is no loss to them, they are insisting that any payments be treated as being 65%. They are also insisting on interest on penalties on late returns. ie. if a cheque issued in May but was only paid on June RCT 30 - interest and penalties are due. Having to treat payments as being 65% of the gross will probably put this man out of business. Resolution has not been reached.

In all of the above cases, subbies were all C2 registered and payments cards were applied for and on-hand but not until after the payments had been made. In some cases, only by days.

I don't think it is fair to say that this man had no regard for the RCT system. Sometimes people are just doing their best, or doing the nice subbie a favour by getting payment out to him. That is why you should listen to your accountant or book-keeper when we say NO to these requests.