John M Shanahan & Co.

linking practice to business

Chartered Accountants
Registered Auditors

Phone: 057 93 22100

email: info@shanahan.ie

Preparing for a Revenue Audit

While Revenue may continually scrutinize taxpayers for compliance purposes, you do not want your business to be pulled out of the hat and face the anxiety of a Revenue Audit in 2020.

January 15, 2020

 

Revenue Audits have become a regular feature of our tax system. Whilst the actual number of Revenue Audits has decreased in recent years, according to their recently published figures, Revenue’s efforts are now targeting their audits where there is the greatest chance of errors and therefore more money into the system.

 

 

 

 

 

 

We at, John M Shanahan & Co, Chartered Accountants, Tullamore, Co Offaly have taken a moment to outline how best to prepare for the possible visit to your premises.


The Revenue Audit itself.

A Revenue audit is where your tax returns are compared to your tax records. There are generally three reasons for which Revenue pull your file for review:

  • Screening tax returns - this is where they look at your returns and compliance history for any patterns or trends. This is the most common method of selecting a business or tax payer for audit;
  • Projects on business sectors - Revenue might focus on a particular business sector, trade or profession when choosing businesses or tax payers for audit;
  • Random selection - a small number of audit cases are selected using this method.


If you or your business is select you for an audit, you will be given written notice 21 days in advance by way of letter, which will include:
•    the date and time of the audit
•    the accounting period that will be audited
•    whether the audit will focus on one issue or several issues.

What Happens during the Revenue Audit

A Revenue audit usually involves the following steps:
•    The auditor explains the purpose of the audit and indicates how long it will take;
•    You are given the opportunity to make a disclosure if you have underpaid some tax or made an error;
•    Your books and records are made available for examination during the course of their work.

Reducing the Risk of a Revenue Audit

As Revenue’s efforts are now focused on conducting audits where there is the greatest chance of errors. With the use of its computer-based profiling system REAP (Risk, Evaluation, Analysis & Profiling) and additional information it can access from returns filed on other systems such as the Motor Registration Database, Revenue now have the tools it needs to take a more targeted approach. This therefore places greater importance on business owners and company directors to calculate and file its taxes correctly and on-time.

Steps to Reduce the Risk of Audit.

1. Pay & File Tax returns.

Basic housekeeping, but it is essential that you file and pay your tax returns on-time, every time. The Revenue publishes a Key Dates Calendar with a full list of all return and payment dates for all tax types to ensure that you stay compliant.

2. Intra EU Acquisitions Transactions.

Ireland has come under increased pressure from other EU member states to provide accurate Intra-EU Acquisition records. Revenue is now checking records supplied by other EU countries against Irish VAT3 returns. Therefore, ensure that you accurately complete the E1, E2, E3 and E4 boxes on VAT 3 returns. Also obtain and verify EU customer VAT numbers.

3. Invoicing.

Increasingly, inaccurate sales and purchase invoices are acting as a warning sign for Revenue to carry out checks. Check the accuracy of your invoices e.g. date, pricing and description of goods/services, full customer name and address and also that the correct VAT rate is being used.

4. Company Vehicles.

If you have a company vehicle(s), all records of Benefits in Kind (BIK) must be accurately recorded as Revenue is now checking the Motor Registration Database against Payroll and CT1 returns to uncover discrepancies in BIK.

5. Compliance Review.

We recommend conducting a compliance review nof your business. A compliance review is a special review carried out by an accountant to check whether a company has calculated and filed its taxes correctly in accordance with Revenue’s regulations.

In our compliance reviews for example we take a detailed look at your company’srecords, such as :-

  1. Sales and purchase invoices to ensure you are returning VAT at the correct rate;
  2. Net wages records to ensure that you have filling accurate (P35 returns) and today, Payroll PSR (Payroll submission Request) returns with Revenue;
  3. Bank lodgements to check VAT on sales etc;
  4. RCT Compliance (if applicable).

This review provides business owners and company directors with peace of mind and the opportunity to deal with any non-compliance issues with Revenue sooner rather than later. Facing an audit can be a complicated and expensive distraction for your business but with good bookkeeping and timely returns, a Revenue Audit can be avoided in many cases.

If you are a business owner or company director who would like to take preventative steps to avoid a Revenue Audit, talk to us today about our comprehensive Compliance Review for your business.

 

We at JOHN M. SHANAHAN & CO. are here to help you with all your business, financial, accounting, statutory and taxation requirements, by providing expert, specialist and professional service tailored to meet your needs.

Phone 057 93 22100 or email info@shanahan.ie or use our contact form here- Contact Form.

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