S.I. No. 1/1971 - Income Tax (Construction Contracts) Regulations, 1971

S.I. No. 1 of 1971.

INCOME TAX (CONSTRUCTION CONTRACTS) REGULATIONS, 1971

ARRANGEMENT OF REGULATIONS.

PART I.

General.

Regulation

1. Citation and commencement.

2. Interpretation.

3. Transfer of functions, etc.

4. Application for sub-contractor's certificate.

5. Liability for payment of tax deductible.

6. Service by post, etc.

PART II.

Registers and Certificates.

7. Register of sub-contracts.

8. Certificate of deduction.

9. Payment in respect of construction operations performed by a gang or group of sub-contractors.

PART III.

Payment and Recovery of Tax.

10. Payment of tax by principal.

11. Recovery of tax.

12. Estimation of tax due by principal.

PART IV.

Repayment and Credit to Uncertified Sub-contractors.

13. Repayment.

14. Credit against liability to tax of sub-contractor.

PART V.

Miscellaneous.

15. Inspection of principal's records, etc.

16. Death of principal or payee.

17. Difference between principal and sub-contractor.

18. Notification of liability.

S.I. No. 1 of 1971.

INCOME TAX (CONSTRUCTION CONTRACTS) REGULATIONS, 1971.

The Revenue Commissioners, in exercise of the powers conferred on them by section 17 of the Finance Act, 1970 (No. 14 of 1970), hereby make the following Regulations:

PART I. General.

1 Citation and commencement.

1. (1) These Regulations may be cited as the Income Tax (Construction Contracts) Regulations, 1971.

(2) These Regulations shall come into operation on the 6th day of April, 1971.

2 Interpretation.

2. In these Regulations, except where the context otherwise requires—

"accounting period" has the meaning assigned to it in Regulation 7 of these Regulations;

"certificate of deduction" has the meaning assigned to it in Regulation 8 of these Regulations;

"certified sub-contractor" means in any year a sub-contractor who at or before the time of payment in that year of an amount due to him from a principal under a construction contract has produced to the principal a sub-contractor's certificate in respect of that year;

"construction contract" has the meaning assigned to it in subsection (1) of the principal section;

"income tax month" means a month beginning on the 6th day of any of the months of April to March in any year:

"inspector" means an inspector of taxes; "officer of the Revenue Commissioners" includes an inspector;

"payee" has the meaning assigned to it in Regulation 9 of these Regulations;

"payment", in relation to a payment made by a principal to a sub-contractor under a construction contract, includes a payment on account of an amount due under the construction contract;

"prescribed" means prescribed by the Revenue Commissioners under these Regulations;

"principal" means a principal within the meaning of the principal section of the kind referred to in subsection (2) of that section (and includes such a payee as is referred to in Regulation 9 (b) of these Regulations);

"the principal section" means section 17 of the Finance Act, 1970 (No. 14 of 1970);

"repayment period" has the meaning assigned to it in subsection (4) of the principal section;

"sub-contractor" means a person of the same kind as the person referred to as the sub-contractor in subsection (2) of the principal section;

"sub-contractor's certificate" means a certificate issued to a sub-contractor under subsection (7) of the principal section;

"uncertified sub-contractor" means in any year a sub-contractor who at or before the time of payment in that year of an amount due to him from a principal under a construction contract has not produced to the principal a sub-contractor's certificate in respect of that year;

"year " means year of assessment;

other words and expressions have the same meaning as in the Income Tax Acts.

3 Transfer of functions, etc.

3. (1) The Revenue Commissioners may nominate any officer of the Revenue Commissioners to perform any acts and discharge any functions authorised by these Regulations to be performed or discharged by the Revenue Commissioners.

(2) Anything which is authorised or required by these Regulations to be done by an inspector may be done by any inspector.

4 Application for subcontractor's certificate.

4. A person who desires to obtain a sub-contractor's certificate shall make application on the prescribed form for such certificate to the Revenue Commissioners.

5 Liability for payment of tax deductible.

5. A person who is required to make any deduction of tax referred to in these Regulations shall, whether the deduction is made or not, be accountable for the amount of the deduction and shall be liable to pay that amount to the Collector.

6 Service by post etc.

6. (1) Any notice, notification, certificate, requirement or register which is authorised or required to be given, served, made, sent or issued under these Regulations may be sent by post.

(2) If a person delivers to an officer of the Revenue Commissioners any declaration, certificate, statement or register in a prescribed form, he shall be deemed to have been required by a notice under these Regulations to prepare and deliver that declaration, certificate, statement or register.

(3) In proceedings for recovery of a penalty by virtue of subsection (8) of the principal section—

(a) a certificate signed by an officer of the Revenue Commissioners which certifies that he has examined the relevant records and that it appears from them that a stated notice was duly given to the defendant on a stated day shall be evidence until the contrary is proved that that person received that notice in the ordinary course,

(b) a certificate by an officer of the Revenue Commissioners which certifies that he has examined the relevant records and that it appears from them that, during a stated period, a stated declaration, certificate, statement or register was not received from the defendant shall be evidence until the contrary is proved that the defendant did not, during that period, deliver that declaration, certificate, statement or register,

(c) a certificate certifying as provided for in subparagraph (a) or subparagraph (b) of this paragraph and purporting to be signed by an officer of the Revenue Commissioners may be tendered in evidence without proof and shall be deemed until the contrary is proved to have been signed by such officer.

PART II. Registers and Certificates.

7 Register of subcontracts.

7. (1) Every contractor who is a principal shall keep and maintain throughout his accounting period, being the period for which the accounts of his business are made up, or throughout the year if accounts of his business are not made up, a register in the prescribed form.

(2) Where a register is kept and maintained under this Regulation—

(a) the principal shall enter in the register, on the occasion of any payment made by him to a sub-contractor, the particulars indicated by the form of the register as being required to be entered therein in respect of that payment, and

(b) the principal, on being required so to do by the Revenue Commissioners by notice, shall deliver the register to the Revenue Commissioners within the period specified in the notice.

(3) Where the principal is a body corporate, any declaration or certificate which is indicated by the form of the register as being required to be made by 'the principal shall be signed either by the secretary or a director of the body corporate.

8 Certificate of deduction.

8. (1) When a principal makes a payment to an uncertified subcontractor from which tax is deductible under subsection (2) of the principal section, he shall, on making such payment, give to the uncertified sub-contractor a certificate in the prescribed form (in these Regulations referred to as a certificate of deduction) containing such particulars as are indicated by the form of the certificate as being required to be entered thereon.

(2) The principal shall on the same day as he makes the payment to the uncertified sub-contractor issue a copy of the certificate of deduction to the inspector.

9 Payment in respect of construction operations performed by a gang or group of sub-contractors.

9. Where construction operations are performed by a gang or group of sub-contractors and payment in respect of such construction operations is made by the principal to one member (in these Regulations referred to as the payee) of the gang or group—

(a) if the payee is an uncertified sub-contractor, he shall on the day on which he makes any payment in respect of the construction operations to any other sub-contractor in the gang or group—

(i) give to him a certificate in the prescribed form containing such particulars as are indicated by the form of the certificate as being required to be entered therein in relation to the amount which he has paid to such other sub-contractor out of the payment which he received from the principal, and

(ii) send to the inspector on the prescribed form a statement showing how the amount which he received from the principal was divided between the members of the gang or group of sub-contractors;

(b) if the payee is a certified sub-contractor, the construction operations performed by the other members of the gang or group shall be deemed to have been performed under a construction contract made between the payee and such other members and—

(i) the payee shall for all the purposes of subsection (2) of the principal section and of these Regulations be deemed to be a principal in relation to such contract;

(ii) the other members of the gang or group shall for those purposes be deemed to be sub-contractors to him under that contract.

PART III. Payment and Recovery of Tax.

10 Payment of tax by principal.

10. (1) Within ten days from the end of an income tax month, a principal shall remit to the Collector all amounts of tax which he was liable under the principal section to deduct from payments made by him to uncertified sub-contractors during that income tax month.

(2) The remittance shall be accompanied by a declaration in the prescribed form together with a copy of every certificate of deduction referred to in Regulation 8 of these Regulations issued by him during that income tax month.

(3) The Collector shall give the principal a receipt in the prescribed form for the total amount so remitted.

11 Recovery of tax.

11. (1) (a) The provisions of any enactment relating to the recovery of income tax charged under Schedule D shall apply to the recovery of any amount of tax which a principal is liable under the principal section and these Regulations to pay to the Collector as if the said amount had been charged on the principal under Schedule D.

(b) In particular and without prejudice to the generality of subparagraph (a) of this paragraph, this Regulation applies the provisions of sections 480 , 485 , 486 , 488 and 491 of the Income Tax Act, 1967 .

(2) Proceedings may be brought for the recovery of the total amount which a principal is liable to pay as aforesaid without distinguishing the amounts which he is liable to pay by reference to each sub-contractor and without specifying the sub-contractors in question, and for the purposes of the proceedings the said total amount shall be one single cause of action or one matter of complaint; but nothing in this paragraph shall prevent the bringing of separate proceedings for the recovery of each of the several amounts which the principal is liable to pay as aforesaid by reference to his several sub-contractors.

(3) In proceedings instituted by virtue of this Regulation for the recovery of any amount of tax–

(a) a certificate signed by an officer of the Revenue Commissioners which certifies that a stated amount of tax is due and payable by the defendant shall be evidence until the contrary is proved that that amount is so due and payable, and

(b) a certificate certifying as aforesaid and purporting to be signed by an officer of the Revenue Commissioners may be tendered in evidence without proof and shall be deemed until the contrary is proved to have been signed by an officer of the Revenue Commissioners.

12 Estimation of tax due by principal.

12. (1) Where the Revenue Commissioners have reason to believe that the total amount of tax which a principal was liable under the principal section and these Regulations to remit in respect of the respective income tax months comprised in any accounting period or in any year was greater than the amount of tax (if any) paid by the principal in respect of the said months then, without prejudice to any other action which may be taken, they may make an estimate in one sum of the total amount of tax which in their opinion should have been paid in respect of the income tax months comprised in that accounting period or year and may serve notice on the principal specifying—

(a) the total amount of tax so estimated,

(b) the total amount of tax (if any) remitted by the principal in relation to the income tax months comprised in the said accounting period or year, and

(c) the balance of tax remaining unpaid.

(2) Where notice is served on a principal under paragraph (1) of this Regulation—

(a) the principal may, if he claims that the total amount of tax or the balance of tax remaining unpaid is excessive, on giving notice in writing to the Revenue Commissioners within the period of fourteen days from the service of the notice, appeal to the Appeal Commissioners,

(b) on the expiration of the said period, if no notice of appeal is received or, if notice of appeal is received, on determination of the appeal by agreement or otherwise, the balance of tax remaining unpaid as specified in the notice or the amended tax as determined in relation to the appeal shall become due in the same manner as, and be recoverable by the like proceedings as are provided for, in Regulation 11 of these Regulations.

(3) A notice given by the Revenue Commissioners under paragraph (1) of this Regulation may extend to two or more accounting periods or years.

(4) The provisions of the Income Tax Acts relating to appeals shall with any necessary modifications apply to claims and appeals under this Regulation as if those claims or appeals were appeals against assessments to income tax.

PART IV. Repayment and Credit to Uncertified Sub–Contractors.

13 Repayment.

13. (1) Any claim for any repayment period by an uncertified sub-contractor for repayment of tax deducted from a payment pursuant to subsection (2) of the principal section shall be made in the prescribed form, and, for the purposes of any such claim made by a member of a gang or group of sub-contractors who has received a payment from such a payee as is referred to in Regulation 9 (a) of these Regulations, the said member shall be treated as having received income of such a gross amount as would, after deduction of tax at the rate prescribed by the said subsection (2), yield the net amount actually received from the payee and the said member shall be treated for purposes of repayment as having borne such tax.

(2) Where the amount of income tax payable by the claimant for the year within which the repayment period falls has not been finally determined on foot of an assessment, or assessments, made on him, the Revenue Commissioners shall estimate according to the best of their knowledge and belief and in accordance with the information available to them the amount of income tax payable by him for that year.

(3) The Revenue Commissioners shall—

(a) compute the aggregate of—

(i) the amount of the tax which was deducted from payments received by the claimant in the repayment period or was deemed, pursuant to paragraph (1) of this Regulation to have been borne by the claimant in relation to payments received by him in that period, and

(ii) the amount of the tax otherwise paid or borne in the repayment period by the claimant for the year within which that period falls,

(b) compute the proportion applicable to the repayment period of the amount of income tax which has been finally determined to be payable by the claimant for the year on foot of an assessment or assessments made on him or, as the case may be, of the amount of income tax which is estimated under paragraph (2) of this Regulation to be payable by him for the year,

(c) repay to the claimant the excess of the aggregate amount computed in accordance with subparagraph (a) of this paragraph (as reduced by any part of that amount which has been repaid or set off) over the amount computed in accordance with subparagraph (b) of this paragraph.

(4) If the amount of a repayment calculated by the Revenue Commissioners to be due in respect of any repayment period is not agreed by the claimant, they shall, despite the objection, make the repayment in accordance with their calculation of the amount due to him and shall, on determination of any appeal against the amount of the repayment, make such further repayment as may be necessary.

14 Credit against liability to tax of sub–contractor.

14. Any amount of tax retained on the occasion of any repayment made to an uncertified sub–contractor shall be credited against any tax for which he is, or is estimated to be, liable for the year within which the repayment period falls:

Provided that where his liability cannot be finally determined until after the end of the year, credit shall not be made during the year against any tax which is deductible in the year from emoluments which fall within Chapter IV of Part V of the Income Tax Act, 1967 .

PART V. Miscellaneous.

15 Inspection of principal's records, etc.

15. (1) Upon request made to him at any premises of a principal by an authorised officer, any person, being the principal or a person employed by the principal at the premises, shall produce to the authorised officer for inspection all such documents and records relating to construction contracts and the register of sub-contracts as may be in such person's power, possession or procurement.

(2) Where, in pursuance of this Regulation, an authorised officer requests production of any documents or records, he shall, on request, show his authorisation for the purposes of this Regulation to the person concerned.

(3) In this Regulation "authorised officer" means an officer of the Revenue Commissioners authorised by them in writing for the purposes of this Regulation.

16 Death of principal or payee.

16. On the death of a principal or of a payee anything which the principal or the payee would have been liable to do under these Regulations shall be done by the personal representative of the principal or the payee.

17 Difference between principal and subcontractor.

17. (1) If a difference arises between a principal and a sub–contractor as to whether the principal has deducted tax from payments made to the sub–contractor, or as to the amount of tax that has been so deducted, the matter shall be determined by the Appeal Commissioners.

(2) A determination under paragraph (1) of this Regulation may be made by one Appeal Commissioner.

18 Notification of liability.

18. The inspector shall send to an uncertified sub–contractor from whom tax was deducted directly or as a member of a gang or group during the year, as soon as possible after the end of the year, a statement showing his liabililty for the year and how it is proposed to deal with any overpayment or underpayment of tax.

GIVEN this 6th day of January, 1971.

J. F. RICHARDSON,

Revenue Commissioner.

EXPLANATORY NOTE.

These Regulations prescribe the manner in which the scheme of deduction of tax from payments to certain sub–contractors, which was introduced by Section 17 of the Finance Act, 1970 , is to operate. The Regulations will come into operation on 6th April, 1971, this being the date on which Section 17 is brought into effect by Order of the Minister for Finance dated 22nd December, 1970 ( S.I. No. 314 of 1970 ).

Part I of the Regulations contains definitions and provides for the transfer to their officers of any of the functions of the Revenue Commissioners under the Regulations. It also covers the manner in which application is to be made for a certificate authorising the receipt of payments by sub-contractors without deduction of tax and secures that a person liable to deduct tax will be accountable for that tax whether or not he deducts it.

Provision is also included for the service of documents by post and for the manner in which certain evidence in penalty proceedings may be provided.

Part II provides that persons in the construction industry who make payments to sub-contractors must keep a register of such payments. Where accounts of the business are made up the register is to be maintained for the accounting year. In other cases the register is to be maintained on a year of assessment basis.

An obligation is also imposed on persons making payments under deduction of tax to provide the payee with a certificate of deduction when making the payment and to send, on the same day, a copy of the certificate to the Inspector of Taxes.

Provision is made for the circumstances that a payment to a sub-contractor may be received by him on behalf of a gang or group of sub-contractors of which he is a member. The recipient of the payment—if tax has been deducted therefrom—must supply each other member of the gang or group with a certificate of the member's share of the net payment and also provide the Inspector of Taxes with a break-down of the total payment. Where tax has not been deducted from the payment which is being distributed, the member making the distribution must deduct and account for tax in respect of any payment made to any other member who is not authorised to receive payment in full.

Part III deals with payment and recovery of tax deductible from amounts paid to sub-contractors. Persons liable to make such deductions are required within 10 days from the end of every "income tax month" (i.e., a month beginning on the 6th day of any calendar month) to pay over to the Collector all tax deductible during that month and to forward to the Collector a copy of every certificate of deduction issued during the month.

The provisions of the Income Tax Acts relating to the recovery of income tax under Schedule D are applied to the recovery of tax deductible from payments to sub-contractors and provision is included for the making of estimates on persons who do not remit, or do not fully remit, tax so deductible.

Part IV provides the machinery whereby a person who has received a payment under deduction of tax may claim repayment on a monthly basis by reference to the total income tax paid or borne by him in the repayment period and the proportion applicable to the repayment period of his liability, or estimated liability, for the year of assessment. Provision is also made for the giving of credit for tax not repaid against the person's income tax liability for the year of assessment.

Part V includes a provision under which an authorised officer of the Revenue Commissioners may require the production, at a contractor's premises, of the register of payments to sub-contractors and any other documents or records relating to construction contracts. Provision is also made whereby the obligations imposed by the Regulations on a person making payments under construction contracts are, on his death, imposed on his personal representative. A right of appeal to the Appeal Commissioners is provided where a dispute arises between a contractor and a sub-contractor as to the amount of tax deducted from a payment. Provision is also made for the issue by the Inspector of Taxes of an end-of-year statement to a person who has received payments in respect of sub-contracts under deduction of tax showing his liability and how any overpayment or underpayment of tax is to be dealt with.