RCT: Penalties and Why Reporting Matter

Pay a subcontractor before you get the deduction authorisation, and Revenue treats it as an unreported payment.

The penalty is a percentage of the gross payment:

Subcontractor on 0% - 3%
Subcontractor on 20% - 10%
Subcontractor on 35% - 20%
Subcontractor unknown to Revenue - 35%

That's per payment.
Not per contract.
Not per month.

A €40,000 payment to a subcontractor on the 20% rate, paid without notifying Revenue first, is a €4,000 penalty. On top of the €8,000 you should have withheld and remitted.

Make the same mistake on four payments and you're looking at €16,000 in penalties on work you'd already priced tight.

It's calculated on the gross payment, so the penalty has no relationship to your margin on the job.