Construction accounting software in Ireland: RCT and reverse charge

Revenue describes RCT as a withholding tax that applies to certain payments by principal contractors to subcontractors in the construction, forestry and meat-processing industries. The rates are 0%, 20% and 35%. All RCT compliance, filing and payment runs through ROS, so principal contractors need ROS access and subcontractors should register to see their RCT transactions.

For construction services supplied by a subcontractor to a principal contractor within RCT, the principal contractor accounts for the VAT. The subcontractor invoices without VAT and notes the reverse charge; the principal records both the VAT due and the VAT reclaimable on its own return. Getting this wrong is one of the most common VAT errors in the sector.

Building and construction services on private dwellings and other immovable goods are at the 13.5% reduced rate, subject to the two-thirds rule: where the cost of the goods used in the work exceeds two-thirds of the total price, the rate for the goods applies to the whole job. Work for homeowners, who are not principal contractors, is invoiced with VAT in the normal way.

Each invoice and bill carries its VAT treatment: 13.5%, 23%, or reverse charge. A reverse-charge purchase from a subcontractor posts both sides to the VAT3, and a reverse-charge sale is kept out of your output VAT. RCT deductions are recorded against the subcontractor’s account so the ledger matches what ROS shows. HelloBooks does not file RCT returns or send RCT notifications.

Margins in construction are thin and jobs run for months.

Code materials, plant hire and subcontract costs consistently, and use a separate income and cost account or a clear naming convention per major job if you need to track profit by project. Receipts photographed on site and attached to the bank line save hours at the VAT deadline.

Plant and vehicles are often the largest costs after labour and materials.

VAT recovery on vehicles and fuel has its own rules in Ireland. Capture every fuel docket and van invoice, code them to separate accounts, and let your accountant decide what is reclaimable. Clean records make that decision quick.