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Irish Revenue provides taxpayers with more clarity


The Irish Revenue Authority has published a revised Code of Practice for Revenue Audits and Other Compliance Interventions (the Revised Code). Taxand Ireland outlines some of the key positive changes from a taxpayer’s perspective.

The Revised Code will govern all compliance notifications made on or after 14 August 2014. Parties who are subject to unsettled compliance interventions which were notified before 14 August 2014 now have a choice as to whether the settlement is made under the Revised Code or the older Code of Practice for Revenue Audit 2010 (the 2010 Code).

The Revised Code will extend to cover 3 new taxes:

  • The local property tax
  • Universal social charge
  • Domicile levy

The following are the key positive changes made by the Revised Code.

Extension of the ability to make a ‘no loss of revenue’ claim
In Ireland, where a taxpayer has failed to operate the tax system correctly, the tax due or payable will not be sought where the taxpayer has proven to the satisfaction of Irish Revenue that 'no loss of revenue' has occurred. Irish Revenue believes that this is partcularly relevant to value added tax (VAT) and relevant contracts tax (RCT). Under the Revised Code, Irish Revenue has accepted that a 'no loss of revenue' claim may be made in respect of tax heads other than VAT or RCT, albeit only in very specific and exceptional circumstances.

Timeframe for concluding audits
More certainty has been provided around the timeframe for the conclusion of an audit, and in particular, delays in finalising an audit where all the necessary information has been provided by the taxpayer. The 2010 Code specified that in circumstances where a taxpayer has satisfied all outstanding queries within a reasonable time, and the audit remains open for a further 3 months, Irish Revenue are required to indicate when the audit is likely to conclude, at the request of the taxpayer. The Revised Code inserts protection for the taxpayer in cases of undue delay in finalising an audit. It provides that where there is no clear reason for the delay in concluding the audit, the taxpayer’s entitlement to credits or refunds of tax will not be delayed or withheld.

Additional clarity & guidance
The Revised Code clarifies the meanings of both a revenue audit and revenue investigation and includes more detailed guidance on Irish Revenue’s approach to the increasingly popular e-audits. Guidance in this area will provide more clarity to taxpayers on what to expect if subject to an e-audit. In addition, the Revised Code confirms that a late surcharge will not be sought from taxpayers who have filed an incorrect tax return within the time limit where a tax geared penalty applies.

More focused interventions
From the perspective of the administrative burden on the taxpayer, a particularly helpful development in the Revised Code is the approach to the time frame or period which can be reviewed in the audit or intervention. The Revised Code has limited the examination to a year or a particular period where a specific risk has been identified. The scope will only be expanded beyond this initial period in circumstances where there is a sound basis for Irish Revenue to believe that significant tax defaults have taken place. In considering whether to expand the audit, the financial burden on both Revenue and the taxpayer must now be considered. 

Your Taxand contacts for further queries are:
Martin Phelan
T. +353 1 639 5139

Conor Bradbury
T: +353 1 639 5000

Taxand's Take

The Revised Code offers corporate and individual taxpayers in Ireland greater certainty and guidance on issues arising as part of an intervention by Irish Revenue, and provides increased protection for taxpayers who are subject to a Revenue audit or other intervention from Irish Revenue.

It has been welcomed by tax practitioners and their representative body, the Irish Tax Institute, which liaised with Irish Revenue regarding suggested amendments and have stated that they are satisfied that most of the issues raised by them have been addressed in the Revised Code. The Revised Code will take effect from 14 August 2014. It will be a 'live' document, reviewed on an on-going basis and updated to reflect changes in legislation and new practices. 

Taxand's Take Author

Martin Phelan
Taxand Board member

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