Ireland: Revenue Audits – One Year On

Last Updated: 4 April 2018
Article by Shane O'Donovan

A year has passed since the last article in relation to Revenue audits. The trend discussed in the previous article has continued throughout 2015 and into 2016. In 2015, Revenue carried out non-audit compliance interventions, which yielded a total of €314.6 million. This compares to 429,545 non-audit interventions in 2014, which yielded a total of €272 million.

In this article, the following will be considered:

  • The reasons behind the continued upward trend in non-audit compliance interventions; and
  • E-audits and, in particular, the development of the e-audit and its impact on the Revenue audit landscape.

Revenue non-audit compliance interventions

As outlined in the previous Revenue audits article, Revenue interventions can broadly be broken down into three categories, namely:

  1. Revenue Non- Audit Compliance Interventions (Mainly Assurance Checks, Aspect Queries and Profile Interviews).
  2. Revenue Audits.
  3. Revenue Investigations.

A non-audit compliance intervention is the lowest level of review which the Revenue seek to carry out. It will generally take the form of written aspect queries.

Typically, an aspect query will generally arise in reply to a return which has been submitted to the Revenue.

While the questions raised by Revenue aspect queries may seem innocuous, it is important that taxpayers engage with the process and answer the queries in a timely manner. Failure to deal with aspect queries can lead to a full Revenue audit.

What triggers Revenue non-audit compliance interventions?

The continued upward trend in non-audit compliance interventions is a clear indication of the Revenue's move towards a reliance on data mining information submitted on tax returns.

Revenue non-audit compliance interventions generally arise as a result of tax return screening and statistical analysis. The following errors generally attract Revenue attention:

  1. Filing an incorrect or incomplete tax return.
  2. Late filing of a tax return.

Generally, at the outset of a Revenue intervention, the taxpayer will have an opportunity to make a voluntary disclosure. Making a voluntary disclosure at the outset of a Revenue intervention can significantly reduce the penalties associated with any tax settlement. Another key benefit of a voluntary disclosure relates to publication – if a taxpayer makes a qualifying voluntary disclosure at the outset of a Revenue intervention, no publication will arise. Without a voluntary disclosure, publication will arise if the total Revenue settlement exceeds €33,000 or if the penalty associated with the Revenue settlement exceeds 15%.

In general, a taxpayer will receive a Revenue Aspect Query or Revenue may invite the taxpayer to make a voluntary disclosure or seek to call out to the taxpayer to discuss an aspect of his/her tax return. If serious errors are detected, this may result in a Revenue Audit.

How can you minimise the possibility of being selected for a Revenue non-audit compliance intervention?

The key to avoiding Revenue scrutiny is to ensure that you are fully compliant with tax legislation, i.e. you must ensure that:

  • All tax returns filed with Revenue are correct and contain the correct elections and sufficient disclosure.
  • Every aspect of your tax return is filled out properly and that your tax return is completed in its entirety.

For example, the following errors will attract Revenue attention:

  • Failure to fully and properly complete a VAT Return of Trading Details. This creates a problem for Revenue as it will not have all the statistical information required to meet its statistical reporting obligations to the EU.
  • Application of incorrect VAT rates in respect of the main activity of your business. For example, applying a 13.5% rate where the correct VAT rate is 23%.

We would recommend that you consider instructing your tax adviser to carry out a compliance health check of your business approximately every three years. This will ensure that any errors not identified in simple year-end returns are isolated at an early stage.

It is important to note that this health check is not part of your annual audit and preparation of accounts, and is not designed to look at minute details. However, it may be key to ensuring that you avoid selection for Revenue audit. It involves a two-day review, similar to the review carried out on a pre-Revenue audit check. Common errors identified in a compliance health check of VAT/PAYE returns submitted to Revenue include:

  • Accounting for VAT at a rate that is too high/low.
  • Incorrectly calculating motor expenses.
  • Placing employees or directors on the wrong PRSI rate.

In addition to ensuring that potential tax liabilities do not accrue, a health check may also identify potential savings, e.g. identifying that VAT should be accounted for at a lower rate or delaying the issuing of invoices to defer the time at which VAT is due thereby improving cash flow.

What is an e-audit?

An e-audit is similar to the paper audit that many of you are familiar with. It is an audit that consists wholly of, or includes, an examination of electronically-held records. It reflects the introduction of software management packages into small and medium sized enterprises, in addition to the larger companies.

Revenue currently use IDEA software (a data interrogation programme) in order to examine a taxpayer's electronic records. IDEA can quickly identify gaps in invoice numbers, incorrect VAT rates, weekend postings and large transactions in addition to industry-specific inconsistencies. It raises the level of interrogation of the material, allowing Revenue to direct attention to particular areas where there may be problems and to easily identify inconsistencies. Where a two to three-year period is under review, records may be analysed from year to year. It also allows Revenue to quickly identify relevant questions and reach conclusions in a shorter period of time than in a paper audit.

If you are selected for e-audit, a pre-audit meeting takes place before the actual audit commences. The purpose of this meeting is to save time at the audit by providing the auditor with the opportunity to identify the computer hardware and software in use in your business and the electronic records available. You can still make a voluntary disclosure on the day of the audit if necessary. Data may be interrogated off site and you may be required to deliver the electronic records to Revenue by secure email or other encrypted Revenue system.

Impact of the e-audit on the Revenue Audit landscape

From experience, it has been noted that Revenue tend to revert to clients with a list of pertinent questions following interrogation of electronic records.

In the retail sector, for example, Revenue is particularly interested in cash register and EPOS systems. Revenue will gather information prior to the audit and look for anything out of the ordinary. The auditor may also examine hard copy paper records linked to the system, e.g. invoices and credit notes. All records will be interrogated for their accuracy and completeness. The following aspects of the EPOS system will be of particular interest to Revenue:

  • The training button
  • The void button
  • Re-entered transactions
  • Codes imputed manually

As we all know, a computerised system not utilised correctly has the potential to succumb to human error. Interrogation of the data held in relation to the above will often bring to light incorrect VAT returns through errors in VAT rates on products, suppressed sales or pilferage in the system.

The e-audit will not be closed until the taxpayer provides sufficient answers to Revenue's questions. Depending on the type of electronic system in use in your business, it may well be the case that the data entry is either right or wrong. If it is wrong and a tax liability accrues as a result, it is unlikely that Revenue will allow you to fix the mistake and move on from it. It is more likely that Revenue will ask you to calculate the tax due as a result of the mistake and remit it to Revenue.

The future is electronic

Just as technology is now an integral part of our everyday lives, it also plays an integral role in assisting Revenue in the selection of taxpayers for Revenue audit and in the interrogation of the data under audit.

Through the use of the REAP (Risk Evaluation Analysis and Profiling) system, and through Joint Investigation Units, where Revenue works closely with other Government Departments and exchange data, Revenue can quickly identify non-compliant taxpayers.

Where non-compliant taxpayers are selected for e-audit, the IDEA platform allows Revenue to interrogate a much larger sample of records and to identify inconsistencies far more quickly than it could in a traditional paper audit.

There can be no doubt that Revenue will continue to develop and advance its technological capabilities and that e-audit will therefore play an ever-increasing role in the Revenue Audit landscape. The future is undoubtedly electronic. Prepare for the future by making regular compliance health checks an integral part of your business plan. If you don't identify the problem, it is almost certain that Revenue will.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
PKF O’Connor, Leddy & Holmes Limited
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
PKF O’Connor, Leddy & Holmes Limited
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions