Enhanced Reporting Requirements (ERR): Increased Revenue compliance activity and Level 1 interventions

Revenue has moved from a ”service for compliance” approach, supporting employers to meet their ERR obligations, to formal compliance interventions. Over the past few months we are seeing a marked increase in Revenue Level 1 intervention letters specifically targeting ERR submissions. Revenue is applying enhanced analytics across all reportable categories to identify anomalies, patterns and inconsistencies at both employer and employee level. This increased activity appears to be broad-based across sectors.

By way of reminder, ERR has applied since 1 January 2024 and requires real-time reporting, on or before the payment date, of three categories of non-taxable payments and benefits: travel and subsistence, the small benefit exemption, and the remote working daily allowance (€3.20 per day).

Based on recent activity, the following areas are emerging as key risk triggers.

Key risk areas identified

• Non-filing, incomplete or late submissions: The most direct trigger for Level 1 interventions. Where reportable payments are being made but no, or incomplete, ERR submissions are filed, Revenue’s analytics readily identify the gap.
• Round-sum or fixed monthly travel and subsistence allowances: These are taxable in full and should be operated through payroll as pay. They do not qualify as tax-free reimbursements and should not be reported as non-taxable under ERR.
• Small benefit exemption breaches, including:
  • Exceeding the €1,500 annual limit
  • Exceeding the five-benefit threshold
  • Lack of centralised tracking across departments

  Where the conditions are not met, the benefit can become taxable in full, not just the excess.

• Incorrect categorisation: Misallocating payments across the travel and subsistence sub-categories. Inconsistent or incorrect categorisation is a common data-quality flag that Revenue’s analytics readily identify.

The risk of escalation

A Level 1 intervention is a formal compliance step that requires prompt action. If it is not resolved within Revenue's timelines, it can escalate to a Level 2 intervention, bringing higher penalties and interest and a broader examination of the employer's PAYE position that extends well beyond ERR.

Incorrect or absent ERR filings can attract avoidable Revenue scrutiny. Early action is therefore crucial. Where an issue is identified before Revenue intervenes, an unprompted qualifying disclosure or a self-correction can significantly reduce penalty exposure and avoid publication on the list of tax defaulters. Employers should consider this option where historical non-compliance is identified.

How we can help

Our Employment Tax Advisory Services team supports clients across the full ERR cycle:

• ERR compliance health checks: Review of submissions, categorisation accuracy, and supporting documentation
• Travel and subsistence policy review: Alignment with Revenue civil service rates and correct application of the ERR travel and subsistence sub-categories
• Expense claim process assessment: Evaluation of approval workflows, receipt retention practices, and application of the “lesser of” rule
• Small benefit exemption framework: Implementation of a centralised tracking register across departments
• NPOW determination review: Assessment of employee working arrangements and correction of any misclassification, including quantification of potential historical exposure
• Qualifying voluntary disclosure preparation: Where historical errors are identified, we can assist with preparing and submitting a qualifying disclosure to Revenue to mitigate penalties
• Response to Level 1 Interventions: Drafting responses, correcting historical submissions, and managing Revenue engagement
• Proactive PAYE risk assessments: Identification of potential areas of non-compliance before Revenue intervention
• Training for payroll and finance teams: Ensuring correct understanding and application of ERR categorisation requirements, NPOW rules and the small benefit exemption

Recommended next steps

Given the increased scrutiny, we strongly recommend organisations take a proactive, preventative approach to ERR compliance rather than reacting to a Revenue intervention.

If you would like to arrange a focused ERR review or discuss any of the above areas in more detail, we would be happy to talk it through, including how your current ERR submissions would stand up if Revenue were to make contact.