New Code of Practice for Revenue Compliance Interventions

The new code of practice has been effective since 1st May 2022. The new code of practice for revenue compliance sets out a new framework for compliance interventions and will replace the old framework. Revenue aimed to create a better approach for allowing different levels of intervention to get better engagement with taxpayers. According to Revenue.ie: “This framework provides for a graduated response to taxpayer compliance behaviour ranging from easily accessible opportunities to voluntarily correct errors up to criminal investigation for serious cases of fraud or evasion.” Revenue also uploaded a very useful video guide for taxpayers and their agents, highlighting the major changes brought in by the new code:

The big update that comes with the new code is the introduction of the 3 intervention levels which will be based on the individual’s risk and tax-payers behaviour when tax compliance is not met.

The intervention levels are as follows

Level 1 – Request to Self-Review – Profile Interviews – Filing reminders (Reminder Notification of Outstanding Tax Returns) – Engagement with businesses under the Co-operative Compliance Framework

This level relates to cases where you were not prompted by Revenue and disclosed information to them in respect of the underpayment of taxes. This usually results in minimal penalties compared to any other level. A Level 1 compliance intervention may identify issues that warrant the initiation of either a Level 2 or Level 3 compliance intervention. Also, where a taxpayer does not respond to a Level 1 intervention, Revenue may proceed to examine the matter as a part of either a Level 2 or Level 3 intervention where a sufficient level of risk exists.

Level 2 – Risk Review (Notification of a Revenue Level 2 Compliance Intervention) – Tax Audit (Notification of a Revenue Level 2 Compliance Intervention) This level relates to when Revenue prompts you to disclose information in respect of an underpayment of taxes, and results in no prosecution and reduced penalties. Any intervention at this level may be desk or field based. A desk intervention is conducted without a visit to the taxpayer’s business. A field intervention generally involves a visit to the taxpayer’s place of business but may also be conducted via videoconferencing.

Level 3 – Revenue Investigation (Notification of a Level 3 Compliance Intervention – Revenue Investigation)

This level usually results in increased penalties and potential publication. Level 3 interventions under the Compliance Intervention Framework are focused on tackling high risk practices and cases displaying risks of suspected fraud and tax evasion.

For a better overview, here is a table with the new Compliance Framework Levels:

Being tax compliant is very important and in order to avoid penalties, it’s necessary to keep up to date with this new code of practice.

If you are interested in reading more, you can access the full 82 page new Code of Practice for Revenue Compliance Interventions here.