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The receipt of a Revenue Audit notification can be a stress inducing event for taxpayers in Ireland. While Revenue Audits are often met with negative connotations it is important to remember that with careful preparation and expert advice you can minimise worry. We have put together some key tips that can help you to sail through the Revenue Audit process. For more information see below.
- Revenue Audit Letter.
Let’s start at the beginning. The first step in preparing for a Revenue Audit is to review in detail the notification of an audit issued by the commissioners. This will provide further detail on the periods / years and tax types that will be audited. It will also outline the time and place of the audit and the name of the Revenue official attending the audit.
If you are confused or unsure of any matter, then you should seek clarification with Revenue immediately. Similarly, if the time of the Revenue is not suitable, it is important to contact the Revenue in a prompt timeframe, to reschedule.
It is important to note that sometimes, the Revenue will use e-audit techniques in order to determine if a business has filed their tax returns correctly. They hence, may require information to be supplied to them in electronic format. If this applies to your audit it will be outlined as such in the letter.
- Review the Revenue Audit Code of Practice.
Ahead of a Revenue Audit, you should familiarise yourself with the Revenue Audit Code of Practice. This document is available at www.Revenue.ie and it sets out the guidelines and criteria regarding the audit process. It will allow you to be aware of your rights and to have peace of mind.
- Meet with an accountant / agent in advance
In order to streamline your Revenue audit and minimise worry, you should meet with a professional accountant.
In this meeting a taxpayer should identify:
- the completeness of information to be provided to Revenue
- potential issues that might arise in the course of the Revenue Audit
- tax reliefs used during the period which might be reviewed by Revenue
- if it is an e-audit, understand Revenue’s requirements on information to be supplied and the format
- decide who should attend the meeting at the opening of the Revenue Audit
- Organise your supporting documentation.
Revenue will require supporting documentation in order to confirm the accuracy of tax returns. Hence it is vital to have sales and purchases invoices available and it should be possible for the Revenue to trace these documents to specific financial accounts.
- Review tax returns submitted.
All tax returns which have been submitted should be reviewed to identify whether any errors or discrepancies can be identified. Ensure that wages and salaries as disclosed in the financial accounts of the business agree to the payroll records, with an explanation for any differences. Similarly, for VAT, the Return of Trading Details sets out the sales of the business and these figures should be reconciled to the financial accounts.
- Prepare a disclosure.
Finally, if, during preparations for the audit, an underpayment of tax is discovered, making a prompted qualifying disclosure will reduce penalties that Revenue charge on tax underpayments and will avoid publication in the Revenue’s list of tax defaulters. This disclosure must be in writing and contain a calculation of the tax and interest together with any payment. If additional time is required to prepare the disclosure an extension of 60 days can be requested.
If an underpayment on a tax head that is not the subject of the Revenue Audit is discovered an unprompted qualifying disclosure can be made to avail of even lower penalties.