How are revenue interventions evolving in Ireland

Explore Revenue interventions in post COVID-19 Ireland, focusing on audit powers, compliance trends, and the importance of proactive tax management.

In brief

• Revenue interventions in post COVID-19 Ireland are targeted by Revenue leveraging data analytics for tax risk identification.
• Taxpayers should proactively review their tax compliance to identify and resolve potential issues before Revenue interventions occur.

Revenue interventions are a fact of business life and are an integral part of Ireland’s self-assessment tax regime.  Under the self-assessment system, tax returns filed by individuals and companies are generally accepted by the Revenue Commissioners (Revenue) at face value and processed accordingly.  However, to ensure the veracity of the information supplied in these Returns the Revenue have quite extensive powers to carry out audit interventions.  The Revenue have a four-year window from the end of the tax year or period of account in which a return is filed to initiate a Revenue audit.  For example, if a company with a 31 December accounting date files its 2023 corporation tax return during 2024, the Revenue have until 31 December 2028 to initiate an audit intervention. This audit window may be extended where the Revenue believe the return has been completed in a fraudulent or negligent manner.  

In January, the Revenue published their 2024 Headline Results, and the data makes for interesting reading.

2024 was the second full year under which tax interventions commenced by Revenue were carried out under their revised Code of Practice for Compliance Interventions (‘Code of Practice’) which was effective from 1 May 2022. This Code of Practice introduced the tiered concept of Revenue Interventions as follows:

In addition, 2024 was the second year following COVID-19 in which Revenue were in a position to conduct on-site tax interventions for the fully year. The Revenue’s 2023 Annual Report stated that 86% of tax audits which commenced in 2023 were conducted on-site whereas 50% of Risk Reviews were conducted on-site.

The data published by Revenue in its Headline Results each January provides a broad overview of its Intervention activity for the prior year. The details published in the three years to 2024 was as follows:  

While the overall number of interventions has increased in 2024 from the prior period, we will need to obtain the more detailed analysis of the data that is published in the Revenue’s Annual Report for 2024 (published in April) to understand the drop in audit yield.

In that regard the more detailed data published in Revenue’s Annual Reports for 2022 and 2023 provides a better insight into the level of audit/intervention activity by Revenue under the new Code of Practice. This is illustrated in the below table:

Thirdly, Revenue also seek criminal sanctions for more serious cases of tax evasion and fraud. The numbers of convictions in 2023 and 2024 were similar at circa 20. However, there has been a drop in the number of summary convictions in 2024 from the prior year.

Given that the level of Revenue interventions is unlikely to abate, (and probably more likely to increase) and will generally be targeted based on identified risk factors, it is appropriate that taxpayers strive to manage their tax risk without Revenue intervention. In this regard, taxpayers should review their tax compliance in previous periods in order to ascertain whether there are any potential tax under declarations, or tax positions adopted which may no longer be sustainable. These could arise across any of the tax heads. If any such matters are identified, it will be important to bring such matters to Revenue’s attention before the Revenue come knocking on your door.

If there is an actual tax liability arising, a qualifying disclosure to the Revenue should mitigate the penalties, avoid publication of the settlement and avoid the possibility of the matter being referred for prosecution. It should also be noted that certain categories of taxpayers are excluded from making a qualifying disclosure (e.g. where a Revenue Investigation has already commenced or the matter at issue is within the scope of a public enquiry, etc.). Therefore, it is imperative that taxpayers intending to make disclosures should seek appropriate professional assistance.