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Revenue begins to flex its muscles

Tuesday, March 9, 2010

by Nick Ryan

With the tax take continuing to plummet it is no surprise to hear that the Revenue have begun to flex their muscles in seeking additional tax revenues. A speaker at a recent seminar in Cork suggested it would be likely, following the 2009 tax deficit, that Revenue audits will be on the increase in 2010. I, for one, am surprised at the lack of activity from Revenue in policing the taxes as, from experience in the UK, in times of economic slump UK Revenue were quick to sound the rallying call to arms for Revenue officers to seek out and find additional tax revenue through audit and investigation. Here in Ireland the opposite appears to have occurred with Revenue becoming a sleeping giant, doors locked, telephones switched to voice mail and a paucity of response to general queries. Perhaps, as some suspected, the government put pressure to bear on Revenue not to chase struggling businesses in these difficult times though with the government feel good messages that Ireland is moving out of recession then perhaps the restraining orders have been rescinded.
I have heard from a number of businesses in West Cork of notable sightings of Revenue officers walking the high streets of Bandon, Skibbereen and Clonakilty focusing on cash traders and service providers taking a particular interest in till receipts and associated records, employment records and details of service providers, even from shop window and notice board adverts!. From this I can only surmise that it is the easy to get low hanging fruit that is Revenues first choice target. Although this is the easy option I would think that the potential tax revenues to be gained from targeting this area would reap a limited and insignificant reward in comparison to the plummeting tax take we read about in the press.
From a VAT perspective, VAT is a tax that can for the Revenue generate “quick wins” in revenue as it is a tax that can bring with it both complexities on its application and difficulties in accounting, especially for the smaller business where the proprietor might be required to wear many hats of salesman, marketer, book-keeper, and administrator.
Therefore we should heed the warning signs and prepare for an audit by assessing your business for risk in all tax heads. When you have an opportunity, a moment for self reflection on how you manage your tax accounting and compliance obligations should be considered. Any doubts or concerns should be investigated and where these doubts are shown to exist then seek counsel. Also, where business can be quiet then now is the opportunity to consider what procedures can be put in place to strengthen and improve your tax reporting obligations and provide for greater confidence in dealing with the Revenue audit. From experience those businesses that have taken the time to improve their management of the tax reporting functions have reaped the benefit of this in the future by reduced costs in dealing with a Revenue audit.
In these times I doubt Revenue will consider ignoring the minor errors.
If you are concerned over your businesses readiness to manage a Revenue audit, have concerns over your VAT reporting and accounting systems or have news on Revenue activity then please submit your comments below or contact us by email or telephone to discuss.