What is the 2019 Revenue code for Revenue Compliance Interventions?
As of May 1, 2022, Revenue has implemented a revised Code of Practice for Revenue Compliance Interventions. This code explains how Revenue is to conduct tax interventions and outlines what taxpayers can expect during these interventions. It also underscores the advantages of promptly disclosing any tax discrepancies.
It is very important to be familiar with the new code and the previous Revenue Compliance Code of 2014. Please see our related article on Revenue powers.
The new Code is applicable to interventions initiated after May 1, 2022. The existing Code is relevant to ongoing and previous to 1 May 1 2022 interventions.
Confusion often arises as the two codes are quite similar and many existing concepts remain unchanged. However, it’s essential to recognize that the differences between them are of significant importance.
This article aims to shed light on all notable changes in Revenue compliance under the code, so that taxpayers are well-informed and can navigate the complexities and jargon of the code effectively.
This article serves as a brief overview, and it is strongly recommended that all taxpayers seek professional advice when assessing their tax compliance status . This is particularly crucial for those contemplating voluntary disclosures, facing potential tax interventions, or believe such situations may arise in the future.
The 2019 Revenue Compliance Interventions Code and Graduated Response to Risk
The 2019 Code introduces a new Compliance Intervention Framework to establish a consistent graduated response to tax risk. This is an important framework to understand as interventions can range from reminders and encouragements for tax compliance to criminal investigations for serious cases of fraud or evasion.
There are now three risk-based intervention levels. All compliance intervention notifications issued from May 1, 2022, will be categorised as Level 1, Level 2, or Level 3 compliance interventions. Importantly, the Code clarifies that these levels are not sequential. This allows Revenue to initiate interventions at any level without prior lower-level intervention.
Level One: Supporting Compliance
Level 1 interventions aim to support tax compliance and include Reminder Notifications of Outstanding Tax Returns, self-review requests for tax returns and profile interviews with taxpayers.
Taxpayers under Level 1 interventions retain the ability to make an ‘unprompted’ qualifying disclosure in case of a tax default.
Level Two: Challenging Non-Compliance
Level 2 interventions focus on challenging non-compliance and include risk reviews and tax audits.
- Upon receipt of a Level 2 Compliance Intervention notice, taxpayers are given 28 days to prepare themselves for a risk review or audit, marking an extension from the previous 21 days’ notice for audits.
- Following this notification, taxpayers can only initiate a prompted voluntary disclosure before the commencement of the risk review or audit.
- Taxpayers have the option to request a 60-day period to prepare a qualifying disclosure by submitting a notice of intention within 21 days of receiving the Level 2 intervention notification.
It is important to note that unprompted qualifying disclosures are no longer allowed under Level 2.
Level Three: Tackling High-Risk Cases
Level 3 interventions are specifically targeted at high-risk cases, involving investigations into serious tax evasion or fraud.
In the event of a taxpayer being subject to investigation, they are prohibited from initiating either ‘unprompted’ or ‘prompted’ qualifying disclosures. The taxpayer may instead choose to pursue a disclosure or settlement with Revenue.
This type of disclosure does not come with the benefits associated with a qualifying disclosure, such as penalty reduction, exclusion from Revenue’s quarterly List of Tax Defaulters, or immunity from potential criminal prosecution.
Qualifying disclosures explained
Qualifying disclosures are essentially a ‘Self-Correction in Writing’ which entail the submission of written information to Revenue concerning tax or duty liabilities. Qualifying disclosures play a crucial role in penalty mitigation and preventing public disclosure.
The Code emphasises the importance of a timely and accurate disclosure accompanied by payment. The new Code distinguishes between ‘unprompted’ and ‘prompted’ disclosures, impacting penalty levels and publication on Revenue’s List of Tax Defaulters. Notably, the Code reinstates the ability to make qualifying disclosures for ‘offshore matters.’
