It is a fundamental principle of Self Assessment tax systems that returns filed by compliant taxpayers are accepted as the basis for computing tax liabilities. Revenue promotes compliance with the tax system by vigorous pursuit of those who do not file returns, by auditing selected returns and by taking appropriate action against tax evaders. Revenue challenges aggressive tax avoidance schemes and unintended use of legislation that threaten tax yields and the perceived fairness of the tax system.
Revenue audits can be a burden to people and may cause some disruption to their business. It is, therefore, essential that audits be conducted in an efficient courteous and professional manner. Auditors will adopt an even-handed and professional approach in speech and behaviour during the audit process.
Customer Service Charter
The Customer Service Charter sets out the fundamental elements of the service that taxpayers are entitled to and what Revenue expects of taxpayers.
What taxes and duties are covered?
This Code of Practice covers Income Tax, Corporation Tax, Capital Gains Tax, Exit Taxes, VAT, Capital Acquisitions Tax, Excise Duties, Vehicle Registration Tax, Stamp Duties, Customs Duties, Income Levy, PRSI (both employers and employees), Health Contributions, Environmental Levy, Training Levy and includes all forms of withholding that apply to any of these taxes.
References to tax in this Code include references to duties and levies and a reference to a tax return is to be construed accordingly.
Revenue carries out a programme of compliance interventions that minimise the burden on the compliant taxpayer and tackle, in a thorough and effective way, the non-compliant taxpayer. This approach involves taking account of all the risks that apply to a taxpayer across all taxes and duties. Revenue priority is to recover any unpaid tax, along with interest and penalties as efficiently as possible.
Cases are selected for intervention based on the presence of various risk indicators. The type of intervention to be undertaken will be the one considered to be the most appropriate to change the behaviour of the taxpayer. Revenue's risk-based approach involves assigning auditors to tackling those cases featuring highly in our risk ranking system. This risk analysis approach may also result in Revenue focusing on one tax or duty in the case of a particular person or sector.
Revenue has a multi-faceted approach to tackling non-compliance and amongst the activities carried out are:
- Audits (including risk selected audits, random audits and re-audits)
- Non-audit interventions.
Each Revenue intervention is intended to be in the form which is most efficient in terms of time and resources, and which imposes the least cost on the taxpayer, whilst addressing the perceived risk. Consequently, not all Revenue interventions take the form of formal audits. Revenue carries out the following non-audit interventions:
- Profile interviews
- Assurance checks (including aspect queries)
- Pursuit of returns from non-filers
- Sectoral reviews
- Joint Investigation Unit (JIU) visits involving other agencies, including National Employment Rights Authority (NERA) and Department of Social Protection (DSP)
- Site Visits.
Non-audit interventions are described in more detail at Appendix IV.
Risk Evaluation Analysis and Profiling – REAP
REAP is Revenue's risk analysis system. It risk-rates Revenue’s customer base providing coverage across all the main taxes and duties. 'Risk' in this context means the risk posed to Revenue's core business of 'collecting the right tax and duty at the right time'. REAP has been designed to analyse a vast amount of data (including third party data) that Revenue has on tax and duty cases and to attribute scores based on the level of risk they pose. It prioritises cases based on risk, enabling Revenue to target its attention on those who need it most and minimizing contact with compliant customers. It focuses on a customer's track record rather than single returns; it ensures fairness by applying the same rules to all cases.
These rules have been derived from the collective knowledge and experience of Revenue auditors.
Reviews of Specific Trades, Professions or Economic Sectors
Revenue’s annual compliance programme also includes the examination of cases from specific economic sectors. Risk features are identified. Lessons learned from selected cases are then applied to the sector as a whole, focusing on those taxpayers displaying the risk features. The REAP risk model is adjusted to take account of sector-specific risks. The normal audit rules, as set out in this code, apply to audits conducted as part of sectoral projects.
Projects can range from unannounced compliance visits to full comprehensive audits. In many instances, Revenue will have gathered intelligence on a sector in advance from a number of sources, including the Risk Evaluation Analysis and Profiling (REAP) system, results from other enquiries and audits in the sector, local knowledge, or information from third parties, including suppliers. A project may simply focus on all businesses in one geographic location. In some instances, taxpayers in a sector will be asked to "self-review" prior to receiving an audit notification. They are asked to review their returns, paying particular attention to certain areas of risk that Revenue has identified. Revenue treats any qualifying disclosures submitted as a result of self-review as unprompted qualifying disclosures with significant reduction of tax penalties. (See paragraph Definition of an 'Unprompted Qualifying Disclosure' in the section "Regularising Tax and Duty Affairs")
Operation of the revised Code
This Code of Practice will come into effect from 1 October 2010 as regards audits that are notified on or after that day. As regards audits, notice of which had been given, but which had not been settled before 1 October 2010, the taxpayer may choose whether the settlement is made under the terms of this Code or the Code of Practice for Revenue Auditors 2002. The penalties if applicable will be determined by whether the default occurred before, on, or after the 24th December 2008.