RCT - Where do I stand?

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Silvergirl

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We are a small company, and we did work for a new large company a few months ago.
Works were quoted, and agreed upon and were completed with the site engineer. (We supplied products and there was also installation/commissioning involved, overall invoice value was 21+K).

After we submitted our invoice their accountant came back to say they are RCT. https://www.revenue.ie/en/self-asse...tion-industry/relevant-contracts-tax-rct.aspx - and that we needed to resubmit without VAT.

Then finally after chasing them for payment they short pay the invoice. Their accountant came back with the explanation that they deducted 5% for retention which when queried was quote: 'Regarding the retention, this is what is being held on us by the client, once we receive payment of our retention, we will pass this on to you' and the other deduction was the 20% RCT that they will pay to Revenue. Can this be correct??

Is this something our accountant will get back on our behalf or is their deduction incorrect? At this rate we are waiting months for payment, and sure who knows when they'll be paid their 5% or if they'll tell us when they do. We will be fighting the 5% but I need to know my position re the 20%. I've been online googling but it's rather confusing. I've also contacted my accountant but he hasn't returned my call and I'm anxious to get on this asap. Any help on a clear explanation would be greatly appreciated. Surely no one in their right mind would do business with an RCT company if there were made aware of this situation upfront.
 
I know nothing about the situation, but my reading of the link you provided is that either you charge the amount plus VAT, or in the RCT situation you charge the amount ex-VAT and the other company pays your bill and the additional 20% to Revenue. Not that you charge the bill ex-VAT and they charge you the 20%. That sounds completely wrong. Hopefully someone else can clarify.
 
Thanks RedOnion, so it seems that the RCT is correct! :( So we've outlaid for materials, paid staff, incurred expenses and been half paid for our pleasure. Yes it seems you can right it off against tax at year end but we did the work in Feb, and this is all now only coming to light as they were so slow to pay. Now we have to wait till end of the year to get the benefit of our 20%. Think we might be better off losing this customer.
 
If you're doing sub contractor work, you can register with Revenue and so long as your tax affairs are in order there is 0% deducted. Another benefit of registration is that you can see everything submitted by the customer.

I've only ever seen it from the other side in a specific scenario, but your accountant should be able to advise you properly.
 
Silvergirl, you can apply to the Revenue to have your deduction rate at 0%. If your taxes are up to date it should be no problem. It can be done under RCT on your ROS account.
In relation to the 5%, happens us regularly. Can sometimes be a fight but you will just need to set a reminder to send an invoice for it 1 year from finish date and go from there.
 
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