How to manage a Revenue Intervention
Understanding Revenue Interventions: What You Need to Know
If you’ve received a letter notifying you of a Revenue Intervention, it’s important to take immediate action. Revenue interventions are a part of the tax compliance process, and how you respond can impact the outcome. Since May 1, 2022, there are now three levels of Revenue Intervention, each with specific guidelines and expectations. Let’s explore what this means and what steps you need to take.
What is a Revenue Intervention?
A Revenue Intervention is when Revenue checks your tax returns and financial records to ensure compliance. The intervention might involve looking at your business accounts, tax filings, and other relevant documents to confirm that taxes have been paid correctly.
If you receive a notification letter regarding an intervention, it’s critical to communicate with the Revenue caseworker right away. The letter you receive is an official record of the scope of the intervention, so make sure to keep it safe. The caseworker can only act within the limits specified in this notification unless you receive further communication extending or escalating the intervention.
Step 1: Review the Notification Letter
The initial notification letter will specify which of the three intervention levels applies to your case. It’s crucial to understand the type of intervention being undertaken. The letter will also outline which taxhead(s) and period(s)/year(s) the caseworker is examining. These details will guide what records you’ll need to provide.
The Three Levels of Revenue Intervention
Since May 1, 2022, Revenue interventions are classified into three distinct levels:
Level 1 – Compliance Intervention
This is the least intrusive level and involves basic checks to verify whether you have been following the correct procedures for tax filings.
Level 2 – Audit
An audit is a more in-depth examination of your financial records and tax returns. If discrepancies are found, a tax liability might be identified, which can result in additional penalties or interest.
Level 3 – Investigations
The highest level of intervention, often involving a thorough investigation. If evidence of deliberate tax evasion is found, this could lead to legal action.
The initial letter will clearly state which intervention level applies, so ensure you understand the specifics. If you are unsure, it’s wise to ask the Revenue caseworker for clarification.
Step 2: Organize Your Records
Once you understand what’s required, it’s time to get your records in order. Depending on the intervention level and the caseworker’s instructions, you may need to provide hard copies of your records if the caseworker is visiting your business. Alternatively, soft copies can be submitted electronically through MyEnquiries.
If your records are extensive, it’s a good idea to contact the Revenue caseworker early to arrange access to a Revenue File Transfer facility. This allows you to securely send large volumes of data, and both you and the caseworker can track what has been transferred.
Step 3: Know Your Rights and Responsibilities
Revenue’s updated Code of Practice for Revenue Compliance Interventions (effective May 1, 2022) provides clear guidelines on how interventions are conducted. It’s essential to familiarize yourself with this Code, as it outlines both your obligations and rights during an intervention.
If an issue is identified during the intervention—such as an unpaid tax liability not reflected in your original return—you may be able to make a prompted disclosure. This is where you voluntarily disclose the error to Revenue before they formally request payment. There are strict time limits for making a disclosure which you should be aware of.
Benefits of a Qualifying Disclosure
Making a qualifying disclosure (prompted or unprompted) has several advantages:
Lower penalties: If you disclose voluntarily, the penalties for underpayment may be reduced.
No prosecution: If the disclosure is made in good faith, you won’t face legal prosecution for the underpayment.
No public listing: Your name won’t appear in the list of tax defaulters published by Revenue.
There are two types of qualifying disclosures:
Unprompted: Made voluntarily before Revenue has identified an issue.
Prompted: Made after Revenue has issued a notification about a tax liability.
If you need more time to prepare a prompted disclosure, you can request an extension of up to 60 days. This request must be made within 28 days of receiving the notification letter.
Step 4: Review the Legislative References
Several key sections of the Tax Consolidation Act 1997 (TCA 1997) guide the process of Revenue interventions and the penalties involved:
Section 1077F: States that no penalty is due if the tax default is under €6,000 and not due to deliberate behavior.
Section 1084: Imposes a surcharge for late filing of tax returns.
Section 1086A: Requires Revenue to publish a list of tax defaulters in Iris Oifigiúil (Ireland’s Official Gazette) within three months of each quarter.
Conclusion
A Revenue intervention can be a stressful experience, but understanding the process can help you navigate it smoothly. By communicating promptly with your Revenue caseworker, organizing your records, and understanding your rights, you can minimize potential issues. If you’re facing a liability, remember the benefits of making a qualifying disclosure to reduce penalties and avoid legal action.
For more detailed guidance on how Revenue compliance interventions work, refer to the Code of Practice for Revenue Compliance Interventions.
Staying proactive and informed will ensure that you handle any Revenue intervention. If you have received an intervention letter, we recommend you seek professional advice.
For more detailed information and personalised advice, feel free to contact us at MKConsultancy.ie or TaxTalk.ie. We are here to help you make the most of your income while minimising your tax liabilities.
January 2025
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