Revenue Audits

Every year a certain number of Revenue audits are conducted as a cross check of the information provided by you in your tax returns against those in your business records. This system was developed by Revenue to monitor the compliance of each entity in the self assessment system of tax.

What is examined?
Revenue audit covers the following types of tax returns:
Income Tax, Corporation Tax or Capital Gains Tax returns and/or
The returns submitted in respect of VAT, PAYE/PRSI or Relevant Contracts Tax (RCT)
How are the cases selected?
Revenue selects cases based on perceived risk. Three methods of selection are used:
Screening tax returns:
The vast majority of audit cases are selected in this way. Screening involves examining the returns made by a variety of taxpayers and reviewing their tax compliance history. The figures are then analysed in the light of trends and patterns in the particular business or profession and evaluated against other available information.
Projects on business sectors:
From time to time, projects are conducted to examine tax compliance levels in particular trades or professions. The returns for a large number of taxpayers in a particular sector are screened in detail and a proportion of these are selected for audit.
Random selection:
This is in addition to the first two methods. It means that all taxpayers have a possibility of being audited. Each year, a small proportion of audit cases is selected using this method.

*Technology has enabled Revenue to enhance their screening process and they now utilise a computer-based risk analysis program REAP. This enables revenue to interrogate information across a range of taxes and duties from Revenue’s own systems as well as information received from third party sources. This system now ensures that 100% of all self assessed tax returns are analysed and monitored for compliance.*

Revenue audits can be costly and time consuming. Accountancy fees can range from hundreds to thousands of euros depending upon the commitment and size of the audit. If significant discrepancies arise the auditor may extend the examination for prior or subsequent years.

*In 2007 14,308 Revenue audits were completed yielding €668 million. A further €30 million of tax arrears was also collected by Revenue auditors in the course of audits. The 2007 National Construction Sector Project yielded €130 million through Revenue audit. A further €15.5 million was collected in tax arrears.*

Due to random selection anyone who is self assessed may be subject to a revenue audit. To minimise the impact of this on you and your business you should ensure that your returns are filed on time and are accurate, that your accounts reflect your returns, and that you keep a copy of your records for at least 6 years

*Source revenue annual report 2007