Helen Downes, CEO, Shannon Chamber (2nd left) pictured at the breakfast briefing in Treacys Oakwood Hotel in Shannon with the PwC tax team(from left): Emer Hodges, Joseph Ahern and Florita Dolly. Photo: Eamon Ward.
A recent breakfast briefing hosted by Shannon Chamber in conjunction with PwC gave chamber members a thorough understanding of the impact the Revenue Commissioners’ new Compliance Intervention Framework will have on taxpayers, large and small, individuals and companies.
Speakers from the PwC Midwest tax team briefed attendees on the new framework which was rolled out on 1 May 2022. The team explained the key changes, what it will mean in terms of interaction with the Revenue Commissioners from now on and how taxpayers should prepare.
The feedback from the attendees was very positive, particularly because the briefing focused on key areas of tax risk, with advice on how to prepare for a Revenue intervention under these new rules and most importantly, plenty of practical information on how to manage these key risk areas.
The topics covered included the new Compliance Intervention Framework, which replaces the previous Revenue Audit Code of Practice. The one fundamental change which may have significant implications for taxpayers is the introduction of a new intervention, termed a “Risk Review” where a taxpayer will only have 28 days from the date of notification of a Risk Review to make a qualifying disclosure in respect of all tax underpayments relating to the tax head that is the subject of the Risk Review. Failure to disclose any such underpayments at that point will give rise to higher penalties and may result in publication in Revenue’s Tax Defaulters List.
VAT, corporation tax and PAYE was also on the agenda and attendees was advised to be aware of any particular tax risk areas in their business and to put appropriate controls put in place to mitigate these risks.
Attendees heard that in order to assess the level of risk of non-compliance by a taxpayer, Revenue analyse the data available to them from various sources. For example, data included in the statistical reports such as the VAT return of trading details, VIES returns, Intrastat returns and Form 46Gs to identify any discrepancies in the information is analysed.
In the context of formal Revenue interventions, Revenue has adopted electronic auditing techniques to manipulate large volumes of data to identify any discrepancies in the information.
For example, in the course of recent corporation tax interventions the following areas have frequently arisen: determining trading v non-trading income; non-deductible expenditure; asset additions and conditions for claiming capital allowances; and R&D tax credit claims including documentation and financial workings
In terms of risks under the banner of PREM (Employers’ PAYE & PRSI) one area which businesses need to pay particular attention to are individuals/contractors and their employment status. In order to determine the employment status of contractors a number of factors must be considered. Employment status defines the rights and obligations of both the employer and the individual, principally in the areas of income tax, social insurance and employment law, with often significant implications where not correctly determined.
Chamber CEO Helen Downes said the key takeaways from this event were that many businesses are taking a proactive approach to reviewing their tax affairs and recognise that they may have tax risks in areas such as VAT, corporation tax or PAYE, PRSI and USC which may give rise to issues in the event of a Revenue intervention.
“With the new Revenue framework placing a greater onus on taxpayers to ensure that tax filings are correct, it is more important than ever to ensure that you companies are aware of their tax risk profile and put effective controls and procedures in place to mitigate their exposures.”
According to PwC Tax Director, Florita Dolly: “Revenue interventions and disputes present many challenges for businesses. Our Tax Risk and Controversy team, which includes ex-Revenue officials, is highly skilled with deep expertise in all aspects of Revenue interventions, tax disputes and the proactive management of tax risk. More information in relation to all of the issues mentioned above is available from PwC.”