The new Code of Practice for Revenue Audits came into effect from 1 October 2010. This new Code applies to all audits notified on or after that date. Taxpayers may also choose to avail of the new Code in relation to audits which were open before that date. The new Code includes a number of changes and clarifications which will have a positive impact on the manner in which Revenue audits are conducted. The Code also goes some way towards recognising the impact of current economic conditions on the ability of the taxpayer to meet Revenue obligations. Some of the most important changes are set out below.
- The Code recognises and provides guidance for taxpayers who either need more time to pay a settlement or are unable to pay the full settlement. It sets out the circumstances in which Revenue are willing to offer flexibility to taxpayers who want to meet their obligations but are experiencing difficulties doing so. Importantly, it provides for phased payment arrangements and clarifies that those who pay through an agreed phased payment arrangement will not lose the benefits of a “qualifying disclosure”. Making a qualifying disclosure has the benefit of reducing penalties and avoiding publication in relation to the subject matter of the disclosure.
- The “no loss of revenue” provisions in the Code have been substantially enhanced. Where the taxpayer can prove to the satisfaction of Revenue that no loss of revenue has occurred, the tax will not be collected. In addition, statutory interest will only be charged for the period of actual loss to the Exchequer and the penalty will take account of factors such as the general compliance record of the taxpayer and the level of cooperation. ‘No loss of revenue’ is where an error has been made by the taxpayer but this error has not cost the Exchequer any money. In the past a documentary mistake in relation to VAT, for example, could lead to significant interest and penalties and a final tax bill far in excess of the original tax mistake.
- The Code sets out a mechanism and timeframe for concluding an audit once all queries have been dealt with by the taxpayer.
- Clarity has been provided on the different types of Revenue interventions which are not an official audit and the benefits of the taxpayer making disclosures in the course of such an intervention.
This article has been authored by Niamh Keogh.