New Code of Practice for Revenue Compliance Interventions

A new code of practice for Revenue compliance interventions applies to all interventions notified on or after 1 May 2022 and is applicable to all taxes and duties except for customs duties. The code outlines how Revenue conduct compliance interventions and is focused on motivating taxpayers to self-review and correct any issues on a voluntary basis. 

To encourage this approach, Revenue have narrowed the opportunities afforded to taxpayers to mitigate penalties and proactively encourage taxpayers to engage with Revenue in advance of any intervention commencing.

What has changed?

The most fundamental change relates to the revised classification of compliance interventions and taxpayers’ ability to make a qualifying disclosure upon notification of same. The new code introduces three intervention levels to provide a graduated response to risk and taxpayer behaviour, as follows:

Intervention	Objective	Type of Intervention	Disclosure Opportunity
Level 1	To support compliance	Occurs where Revenue have not already engaged in any detailed examination of a taxpayer/issue. Interventions include: a reminder notification of outstanding tax returns a request to self-review a profile interview, i.e. a meeting with a taxpayer to understand their business and their tax affairs engagement with businesses under the Cooperative Compliance Framework (CCF), which involves Revenue and the taxpayer agreeing actions to ensure compliance	When notified, a taxpayer can: make an unprompted qualifying disclosure self-correct tax returns (if within the relevant time limits)
Level 2	To challenge non-compliance based on a risk-based approach	Occurs once a risk is identified by Revenue. Interventions include: a Revenue audit a risk review – a new approach that is defined as “a focused intervention to examine risk or a small number of risks on a return”. Whilst narrower in scale than a Revenue audit, a risk review should be treated with the same level of attention	When notified, a taxpayer can: make a prompted qualifying disclosure
Level 3	To tackle high-risk cases or practises	Intervention is in the form of a Revenue investigation.	When notified, a taxpayer has no opportunity to make a prompted or unprompted qualifying disclosure.

All notifications issued from 1 May 2022 will include a reference to their categorisation as Level 1, Level 2 or Level 3. It is important to note that the levels are not considered as a sequence of actions – Revenue may initiate an intervention at any level without any prior intervention at a lower level, although an intervention at a lower level may lead to a higher-level intervention.

Other significant changes:

• Self-correction – Taxpayers are now required to notify Revenue in writing if self-correcting a tax return. Amending a return without notifying Revenue will not qualify for self-correction without a penalty.
• Audit timelines – The time allowed to:
  • prepare for an audit has increased from 21 days to 28 days
  • notify Revenue of an intention to prepare a prompted qualifying disclosure has increased from 14 days to 21 days
• Publication – Publication will not apply where the tax underpayment or refund incorrectly claimed does not exceed €50,000. The previous threshold was €35,000 and applied to the combined settlement (i.e. tax, interest and penalties). The increase is welcome, but it may still represent a very low threshold for some.
• Offshore matters – Taxpayers can make a qualifying disclosure in regard to offshore matters, which was previously unavailable.

Any compliance intervention that commenced on or before 1 May 2022 will continue to apply the code of practice that was applicable at that time.

What does this mean?

While the number of compliance interventions fell in 2020/2021, mainly due to the impact of COVID-19, Revenue have signalled that their intent to shift their focus back to undertaking compliance interventions at all levels. This renewed focus, coupled with the new code, highlights how important it is for taxpayers to review their tax affairs on an ongoing basis to identify any risks that may require attention. 

If an issue is identified, there are options available to regularise their tax affairs before the commencement of a compliance intervention (e.g. a self-correction, a technical adjustment, a ‘no loss of revenue’ claim or a voluntary disclosure) and help mitigate against potential penalties and/or publication as a tax defaulter. As always, it is important to obtain professional advice as soon as Revenue initiate any form of intervention to ensure that the appropriate steps are taken. 

Crowe has extensive experience in assisting taxpayers in carrying out reviews of their tax affairs, regularising their tax affairs and advising on the options available in dealing with compliance interventions at all levels.