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Discover key insights from the Revenue Annual Report 2024, focusing on compliance, interventions, and future strategies.
In brief
- The Revenue Annual Report 2024 highlights a strong culture of voluntary tax compliance and increased data utilization for effective interventions.
- Advanced technologies like AI and machine learning are enhancing Revenue's ability to target non-compliance and streamline internal processes.
- Focus areas for 2025 include the rental sector and employment taxes, with a commitment to leveraging data for proactive risk management.
The Revenue Commissioners published their 2024 Annual Report which provides significant detail and statistics on their activity during 2024 and an indication of their focus areas for 2025 and beyond. This article delves into the report's insights regarding interventions, specifically focusing on Revenue inquiries and audit activities, and explores the implications these findings may hold for the future landscape of Revenue intervention management.
Intervention Activity in 2024
On a positive note, Revenue acknowledge that voluntary tax compliance remained high during 2024 which reflects a culture of voluntary tax compliance in Irish society. Revenue also emphasises the sheer scale of the data available to support their Intervention programs that utilise real-time data analytics and examination of both taxpayer and third-party information. Revenue reference the extent of such third-party information available to them including information from merchant acquirers, Government bodies, financial institutions and other intermediaries. Additionally, there has been a notable increase in public reports concerning suspected non-compliance and evasion.
Revenue through international agreements automatically receive information from other jurisdictions. This includes bank information under the Common Reporting Standard (‘CRS’) and Foreign Account Tax Compliance Act (‘FATCA’), tax rulings, Country-by-Country reports, mandatory disclosure reports and reports by digital platform operators.
This wealth of data, combined with advanced technologies such as machine learning and artificial intelligence, is anticipated to enhance Revenue's ability to target risk areas more effectively. Regarding their application of these technologies, Revenue state:
We will continue to maximise our use of extensive data holdings, third party information, and advanced analytical capability to identify non-compliance and quantify risk, thus minimising the administrative burden on compliant taxpayers. We will also continue to explore and trial ways in which we can utilise technological advances, including AI, to automate certain internal processes as part of our ‘Digital Transformation Strategy’. We have strong policies and governance in place covering the use of all IT, including AI, and expanded AI training will be introduced to all our people during 2025.
The Revenue’s overall statistics for their Audit and Compliance Intervention have been published and details of intervention activity managed through their Compliance Intervention Framework (‘CIF’1), This includes information on interventions initiated prior to the establishment of the CIF, as well as Audit and Compliance activities not encompassed by the CIF. The table below summarises these findings.
The data in respect of the Intervention activity under the new CIF is further broken down between the type of Interventions carried out by Revenue under the CIF which are as follows:
For illustration I have included the previously published data by Revenue in their Annual Reports for 2022 and 2023 alongside the 2024 data below.
As will be evident from the above the activity under the CIF is in general increasing and it is notable that the average yield per Level 2 Audit in 2024 was €106k compared to €46k in 2023. This could indicate distortion by a number of large settlements in 2024 or possibly the more targeted selection process by Revenue. Irrespective, it is clear that Revenue interventions have resulted in significant yield to the Exchequer.
In addition, Revenue have highlighted the activities of their two dedicated Anti-Avoidance branches during 2024 in which they completed 256 cases yield more than €46m (including tax, interest and penalties). This is an increase from its completion rate in the two prior years as set out in the table below.
Revenue continue to target offshore evasion and avoidance, and reference information received by them through Mutual Assistance agreements, Tax Information Exchange Agreements and FATCA in this process. This is expected to continue through 2025 and beyond.
Outlook for 2025
It’s anticipated that many of the areas focussed on by Revenue in 2024 will continue to be targeted in 2025. The Revenue specifically refer to their focus on the rental sector and state:
We have continued to leverage data available to us to identify cases of serious tax evasion in the rental sector. A number of investigations are currently progressing, and our focus on this sector will increase in 2025. As part of this work, we will engage with other Government agencies to implement a co-ordinated approach to identify and address a range of risks in the private rental sector.
Employments taxes, particularly the classification of workers, will also feature in Revenue’s radar for 2025. Indeed, there have been several high-profile cases such as those in the gig economy and involving the national broadcaster. Here Revenue state:
As part of our business compliance programme, which includes payroll related reviews and interventions, we examine the payment of staff expenses, and the provision of benefits and salary payments to employees, as a matter of course. We also examine all other areas of potential tax risks related to staff remuneration, including the classification of workers for tax purposes. These matters will remain a focus for our compliance activity in 2025.
It is also evident that the information sources available to Revenue increase with each passing year.
Conclusion
While the above provides a snapshot of Revenue’s Intervention activity in 2024 and focus areas in 2025, the increased usage of technology and data analytics means that Revenue Interventions (and particularly Level 2 Interventions) in 2025 and beyond are likely to be based on a particular risk feature relating to a taxpayer’s returns. While businesses will not have access to all the information that could indicate a potential tax risk to Revenue, it is crucial for them to establish robust tax control frameworks to proactively identify and address possible risks.
Businesses should conduct regular reviews of their tax control framework and activities for tax risks and consult with their professional advisers as appropriate. By Identifying and dealing with tax risks, businesses can potentially mitigate the likelihood of facing costly and time-consuming interventions from Revenue.
Summary
The Revenue Annual Report 2024 highlights the significance of data-driven strategies in monitoring tax compliance. With a focus on voluntary compliance and advanced technologies, Revenue aim to tackle non-compliance effectively. As attention shifts to the rental sector and employment taxes in 2025, businesses must strengthen their tax control frameworks to proactively manage risks and align with Revenue's evolving priorities.