Relevant Contracts Tax (RCT)

Penalties for principal contractors

You may make a payment for a relevant contract to a subcontractor, other than as shown on a deduction authorisation. This is an unreported payment. If you make an unreported payment, you are liable for a penalty.

The following penalties apply to each unreported payment:

Subcontractor statusPenalty
0% deduction rate 3% of the relevant payment
20% deduction rate 10% of the relevant payment
35% deduction rate 20% of the relevant payment
Unknown 35% of the relevant payment

If you submit details of a payment that has not been reported correctly, you will receive a letter in your Revenue Online Service (ROS) inbox. This letter will inform you of the penalty you are liable to pay. You can pay by using the RCT Penalty Payment option on ROS.

If you do not pay the penalty, Revenue will issue a penalty notice to you. This is called a Notice of Opinion.

You may not agree to the penalty shown in that notice. If you do not, it will be referred to a relevant court to decide if you have to pay.

Next: RCT for non-resident subcontractors