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Tax avoidance

  1. Overview
  2. What is tax avoidance?
  3. What to do if you think you are engaged in tax avoidance
  4. Legislative tools to challenge tax avoidance
  5. The consequences of engaging in tax avoidance
  6. Mandatory Disclosure regime
  7. Informing Revenue of tax avoidance
  8. Schemes at risk of Revenue investigation

Informing Revenue of tax avoidance

You may have entered into a tax avoidance scheme without being fully aware of what it was. If so you may decide to come forward and settle your tax affairs with Revenue. You can inform Revenue of this by making a qualifying avoidance disclosure.

By making a disclosure you may receive a reduction in the 30% tax avoidance surcharge. You will also not have your details published on the list of tax defaulters.

When you make a qualifying avoidance disclosure it must:

  • give the full details of the tax avoidance
  • be made in writing
  • be signed by you, or on your behalf
  • include a declaration that all details in the disclosure are correct
  • include a payment of tax or duty due and interest.

A taxpayer can submit a qualifying avoidance disclosure at any time after filing their tax return. This is provided it is before the hearing of a taxpayer's case by the Appeal Commissioners. The rate of tax avoidance surcharge will increase as any Revenue compliance intervention progresses. In addition, the earlier a taxpayer submits a qualifying avoidance disclosure and pays the additional tax due, the less interest that will arise.

You can make a disclosure by completing the following forms:

  • Form QAD1 - to make a qualifying avoidance disclosure
  • Form QAD1 - continuation
  • Form QAD2 - to accompany the QAD1 if you want to specify the amount of the tax avoidance surcharge you believe should apply.

The example below shows the benefit of making a qualifying avoidance disclosure.

  • Example

    Scheme challenged under specific anti-avoidance provision

    Mary is an employee subject to PAYE. In 2015 she entered into a tax avoidance transaction, which was not disclosable under the Mandatory Disclosure regime. This saved her €25,000 in tax that year. She paid fees of €10,000 to take part in that scheme.

    On 1 December 2017 Revenue challenges the scheme under one of the specific anti-avoidance provisions. An assessment is then issued. Mary appeals the assessment. In December 2018 the Appeal Commissioners find in Revenue's favour. Mary wishes to settle her tax bill on 11 January 2019. Revenue inform Mary that she owes the following:

    Scheme challenged under specific anti-avoidance provision- without a qualifying disclosure.
    DetailsAmount
    Original tax €25,000
    Interest (€25,000 x 0.0219% x 1,198 days approximately) €6,559
    Total tax plus interest €31,559
    Tax Avoidance Surcharge (€25,000 x 30%) €7,500
    Total due to Revenue €39,059
    Fees to promoter €10,000
    Legal fees (estimate for Appeal Commissioners) €5,000
    Total cost of taking part in scheme €54,059

    If Mary had submitted a qualifying avoidance disclosure before 1 December 2017 then the rate of tax avoidance surcharge could have been reduced to 3%. A portion of the interest charged would not have arisen. Mary would not need to go to the Appeal Commissioners and may not have incurred any legal costs. This could have reduced the settlement payment which she eventually made to Revenue by up to approximately €8,978, as follows:

    Scheme challenged under specific anti-avoidance provision- with a qualifying disclosure.
    DetailsAmount
    Original tax €25,000
    Interest (€25,000 x 0.0219% x 791 days approximately) €4,331
    Total tax plus interest €29,331
    Tax Avoidance Surcharge (€25,000 x 3%) €750
    Total due to Revenue €30,081
    Fees to promoter €10,000
    Legal fees (estimate for Appeal Commissioners) €0
    Total cost of taking part in scheme €40,081

Next: Schemes at risk of Revenue investigation

Published: 25 May 2020 Print this page

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