Change in Revenue Treatment of a Board of Management for School Building Projects

02 February 2012
Category: Legal Articles

If you are commencing a school building project (including emergency works, summer works, additional accommodation or major buildings and extensions), the board of management need to be aware of and ensure compliance with this recent legislative change which came into effect on 1 January 2012.  Section 20 of the Finance Act 2011 inserted new provisions into the Taxes Consolidation Act, under which new regulations have been issued.  This legislation will affect the tax treatment of the board of management for school building projects and payments made to contractors.  There are penalties and surcharges for non-compliance so it is vital that the legislation is properly complied with.

What is it?

The changes relate to the operation of Relevant Contracts Tax (RCT) which is a tax regime applicable to construction contracts in which tax is deducted from payments for construction operations due to the contractor by the principal contractor.  RCT usually applies to main contractors in their dealings with sub-contractors.  However, the Revenue has recently indicated that a school board of management, being a body established by statute and funded wholly or mainly out of moneys provided by the Oireachtas, is a “Principal Contractor”.     This means that the board of management will be responsible for complying with RCT requirements and VAT returns when making payments to the contractor.  The Revenue introduced a mandatory electronic RCT system on 1 January 2012 for all principal contractors in the RCT system, so all filings and notifications must be done online through the Revenue ROS system.

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