Interacting with Revenue

“The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin” – Mark Twain

The thought of dealing with a tax collector can be off-putting for anyone, but unfortunately taxes are unavoidable. As with all battles in life it pays to know your enemy. While Revenue don’t think of themselves as such, it is a rare taxpayer who would call them a friend. However, Revenue do provide a wealth of information and they do play by the rules, though it might not always seem that way. (Of course they also write the rules and on the rare occasion when they do lose the rules are changed to ensure it won’t happen again, but that’s another issue.)

Online Services

Interacting with Revenue is ultimately beneficial for all taxpayers and it is to be encouraged. As a starting point we would recommend that all businesses register for the Revenue Online System “ROS” where they have not already done so. ROS is a very useful tool and amongst other things it allows you to pay and file returns instantly, check outstanding balances, check your tax clearance status and review your return history. You can also download employees tax credits and cut-offs straight from the system. Furthermore, online filing has the advantage of providing you with extended deadlines for your VAT, PAYE, Corporation Tax and Income Tax returns. Okay, the extensions are only a few days, but every little helps.
other benefits of the system are:

• Reduction in paper handling, photocopying and compliance costs
• More effective and efficient use of time
• More accurate processing of returns
• 24 hour, 365 day access to Revenue
• Calculation facilities to assist customers
• Instant acknowledgement of returns
• Faster processing of returns and payments

Registering for ROS is a three step process, which starts with logging on to the Revenue website www.revenue.ie . From there you can apply for registration. Step 1 is to apply for a ROS access number. Once you receive this Step 2 is to use the access number to apply for your digital certificate. Finally you retrieve your digital certificate and you’re ready to go. The whole process takes less than a week.

Customer Charter

Revenue consider all taxpayers to be customers and have a Customer Charter on their website. The charter sets out the mutual expectations Revenue has with its customers. These expectations are set out under the following headings:

• Consistency, Equity and Confidentiality
• Courtesy and Consideration
• Information and Assistance
• Presumption of Honesty
• Compliance Costs
• Complaints, Review and Appeal.

The customer service section on their website also sets out the standards that Revenue have set themselves, such as processing 80% of claims for repayment within 10 working days and 100% within 20 working days.

Finally the section also outlines the complaints procedure. If you’re not satisfied with the customer service or Revenue decision you have a right to appeal in certain circumstances. For anything other than a customer service complaint it is advisable to seek professional assistance first.

Revenue Audit Code of Practice

Revenue Audits are a necessary part of a self-assessment tax system. Revenue have an audit code of practice, issued on 1st October 2010, which sets out a framework to which they must comply when conducting their audits. This new code of practice replaces the 2002 version. In the event that you are chosen for a Revenue Audit, and most business can expect at least one audit at some time in their life cycle, it is advisable to review the code.

The audit code provides information on the selection process for an audit. It outlines Revenue’s “Risk Evaluation Analysis and Profiling – REAP” system. This system gathers and analyses information from all the various tax and third party returns to identify cases where they believe there is risk that the correct tax has not been paid.

Importantly the code also sets out the penalties that can be imposed by Revenue in an audit and how those penalties can be mitigated by making qualifying disclosures, cooperating with the Revenue during the audit etc.

There have two improvements on the previous code that deserve mentioning. Firstly there is greater leniency in cases where there is “no loss of revenue” to the exchequer. Previously these claims were only allowed within VAT groups, but now are opened to a wider review.

The second improvement is with the concept of “unjust enrichment”. This might happen if you pay too much VAT to Revenue because you accounted for it at the standard rate when you should have used lower rate. If you went back to Revenue and said you’d like the difference between the standard rate and the lower rate on those sales back they would argue that the customers paid the VAT, you just collected it off of them. As such to give it back to you would be “unjust enrichment” as you would not be giving it back to your customers. The counter argument is that the higher rate resulted in an increased cost of the product, which reduced demand, but this was hard to prove. In the past it was up to the taxpayer to prove that the refund would no result in their “unjust enrichment”. The rule has now changed so the onus is now on Revenue to prove that unjust enrichment would occur in order for them not to issue the refund. This might seem like a minor change, but essentially it is similar to the idea that the taxpayer is now innocent until proven guilty and not guilty until proved innocent as used to be the case.

Difficulty in Paying Taxes

Almost all businesses run into cashflow problems from time to time and it might be the case that there isn’t the money in the bank to meet a tax liability. Unfortunately ignoring the problem won’t make it go away and Revenue have become increasingly tough in chasing outstanding debts. The best advice is to tackle the problem head on. You are in a much stronger position if you go to Revenue explaining that there has been a temporary problem that you need their help to resolve rather than waiting for them to come knocking at the door.

Final Though

“Know your enemy and know yourself and you can fight a hundred battles without disaster” – Sun Tzu: The Art of War

Well, maybe not a hundred with Revenue, but you should still do better than most.