Revenue Tax Audits
What to do if you are selected for a Revenue tax audit?
Don't try to handle it yourself. You need an expert to help you prepare for the audit and to negotiate on your behalf with Revenue when the time comes. Getting this right can save you a whole lot of stress - and money..
Get your tax returns reviewed
At Taxtalk.ie, the first thing we will do is carry out a detailed review of your tax returns. We are looking to see if there are any errors in the returns that would give rise to a tax underpayment for the year under review. We may then suggest you make a prompted qualifying disclosure in relation to these matters to the Revenue rather than waiting for the inspector to find them during the revenue tax audit.
Prompted Qualifying Disclosure
A prompted qualifying disclosure is one that is made to Revenue after an audit notification letter issues but before the date that they start their investigation into your tax affairs.
There are significant benefits in making a prompted qualifying disclosure. Firstly the penalties that you face are greatly reduced. Secondly, your name will not be published on Revenue’s list of tax defaulters if your qualifying disclosure is accepted. Finally, Revenue will not initiate an investigation with a view to criminal prosecution where a taxpayer makes a qualifying disclosure.
When our clients receive an audit letter, the first thing we do is determine if a disclosure is required, if this is the case we must make a request in writing to delay the commencement date by 60 days, this gives us 2 months extra to prepare for the audit. During 2013, we represented 9 clients during audits, without the need for the directors or business owners to be involved in the front end negotiations, this reduces the stress and fear of dealing with an audit significantly and can lead to a better result for the client.
Two types of tax default
The first is where the tax default occurred as a result of deliberate behaviour i.e. there was intent on your part to underpay. In this case, your qualifying disclosure must include details of all tax defaults as a result of deliberate behaviour for all taxes (income tax, VAT, PAYE, etc) and for all years.
The second type is where a tax default occurred merely as a result of careless behaviour. In this case, the disclosure must include details only of the matter giving rise to the tax underpayment for the period under review. The disclosure must include a declaration that all matters contained in the disclosure are correct and complete. It must be accompanied by payment of the tax and the interest (not the penalties) on the late payment of the tax
What are the penalties?
In making the qualifying disclosure to Revenue it is not necessary to quantify and pay the penalties immediately. These can be agreed and paid afterwards. The level of penalties imposed depends on whether the tax default arises as a result of deliberate or careless behaviour.
If the tax default arises by reason of careless behaviour, the penalties can be negotiated down to as low as 10% of the underpaid tax liability where there is both cooperation and a prompted qualifying disclosure. Even in the case of deliberate behaviour, penalties can be reduced significantly if the taxpayer co-operates fully with Revenue and makes a prompted qualifying disclosure. Penalties can be reduced to as low as 3% of the underpaid tax where an unprompted disclosure is made before an audit notification is received.
What you need is an experienced Irish tax advisor in your corner, someone who has been through the Revenue audit process many times and knows fully how they work.
If you have been selected for a Revenue Tax audit, call us today.
What can Taxtalk do for you?
The following are some of the services we provide to our clients if they are selected for a Revenue Tax audit:
Prepare all the books and records required for the audit inspection
Identify what areas are likely to give rise to additional taxes
Prepare qualifying disclosures so that penalties and interest are reduced to a minimum
Meet with the tax authorities on behalf of you or your company
Assist your accountant or solicitor with the technical tax aspects of the issues that arise
Appeal tax assessments raised by Revenue
Agree tax settlements efficiently
Bring audits to a close without your involvement