“Revenue Audits” – Donegal Democrat 14 January 2010

Let’s face it. Revenue Audits are an extremely traumatic experience, and few people will admit to being prepared for a thorough investigation of their business or tax affairs. And let’s be honest, when things go wrong – we all need help. No one can do it alone.

In the current challenging economic climate, cost containment – and indeed cost reduction – is a key element of many businesses’ strategy for development – and even survival.

Unnecessary costs are being identified and, where possible, eliminated. It is surprising, therefore, that many businesses pay more than they need to the Revenue Commissioners. Why, you will ask?

Our tax legislation is complex and with the introduction of an annual Finance Act, it changes every year. Businesses have tax filing and reporting obligations under a number of headings, including Income Tax, Corporation Tax, VAT, PAYE/PRSI, Relevant Contracts Tax, Professional Services Withholding Tax, and Excise/Customs Duties.

To keep up to date with the frequent changes to legislation and to ensure full compliance with all tax obligations is not always easy. Our experience is that many businesses are not fully tax compliant. This, of course, is rarely, if ever, intentional, and is often because the individuals responsible for completing PAYE/ PRSI, VAT returns, etc., are not tax specialists and often lack the support and training they need.

It is not surprising, given the current state of the public finances, that Revenue is intensifying its efforts to collect outstanding taxes. The number of Revenue audits has increased significantly, and the quality of audits has also increased due, in part, to the use of sophisticated new computer software, which aids Revenue in both selecting cases for audit and in carrying out the audit.

If an organisation is not fully tax compliant, the chances of being detected by Revenue are increasing all the time. There are two principal ways whereby an organisation may become aware of non-compliance with its tax obligations. One is having Revenue discover it during the course of a Revenue audit, and the second is by having a “health check” of tax compliance procedures. Where Revenue uncover failings in tax compliance procedures, the consequences can be both expensive and embarrassing. They include:

• Payment of interest and tax-geared penalties of possibly up to 100% of the tax underpaid;
• Publication by Revenue of the details of any settlement made;
• In very serious cases, the possibility of a criminal prosecution; and
• Diminished career prospects for those individuals responsible for the tax compliance function.

All of the above can be avoided by having a review or “health check” of tax compliance procedures. The health check identifies weaknesses in procedures and affords an opportunity to rectify them before Revenue come knocking on the door.

The benefits of a tax “health check” include:

• Cost savings
• Non-publication of tax settlements
• No risk of prosecution
• Peace of mind

Niall Doherty Tax Consultants has assisted numerous businesses in significantly reducing unanticipated tax liabilities by performing tax health checks. Let us help you.

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The views expressed in this article are the views of the author and do not necessarily reflect the views or policies of Niall Doherty & Co. Tax Consultants Limited, or its Board of Directors. Niall Doherty & Co. Tax Consultants Limited makes no representation concerning and does not guarantee the source, originality, accuracy, completeness or reliability of any statement, information, data, finding, interpretation, advice, opinion, or view presented herein. This article does not represent advice and no action should be taken on foot of any commentary made herein. Always consult a Registered Tax Consultant before implementing tax planning or tax structuring of any nature.

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