The Revenue Commissioners have enacted new regulations to strengthen the RCT (Relevant Contracts Tax) system with the aim of clearly classifying workers as either directly employed of self-employed contractors.

The regulations come into effect on April 1, along with a substantially revised declaration form (Form RCT1).

The new regulations stem from a commitment by the Social Partners in Towards 2016 to strengthen the RCT system by revising the RCT1 declaration form and by putting in place new procedures to help ensure that workers are correctly classified as either employees or self-employed subcontractors.

Before entering into a relevant contract, a principal contractor and subcontractor must jointly complete and make a declaration on Form RCT 1 to the effect that they have satisfied themselves that, in their opinion, the contract is not a contract of employment. The new regulations require principal contractors to deliver the RCT1 declarations to Revenue in certain circumstances.

The Revenue commissioners said that, following on from its successful National Construction Sector Project, which netted an additional €167m in under-declared taxes, interest and penalties in 2007, Revenue has also recently doubled the number of Joint Investigation Unit officers who will be working with officers from the Department of Social and Family Affairs and the new National Employment Rights Authority in tackling employment related issues across all sectors.