Monthly Tax Journal for Chartered
and Chartered Tax Consultants
Accountants
•
tax. OInt
......••.....•.••••.........••••.•........•...
GERRY HIGGINS
New Code of Practicefor
Revenue Audit
·
·
··
··
···
·
··
·
IRELAND
CCAB-I
Pre Budget
Submission 2011
UK
GRACE BRENNAN
Mandatory Disclosure Regime What does it mean for Advisers?
Tax Items in the
Comprehensive
Spending Review
EU
Tax Policy Group
NOTE FROM THE
TAX DEPARTMENT
FEATURES
NEW CODE OF
The European Ideal
PRACTICE FOR
REVENUE AUDIT
By Gerry Higgins.....
oters in the Republic of Ireland had
difficulties with the Lisbon Treaty, and
over the course of that debate we got
wedded to some notions. Notions like needing a
Commissioner from Ireland, as if having someone wearing a green jersey
at the C9mmission table was going to make any bit of difference
domestically. The Commission is first and foremost an executive. If you
want representation, look to the MEPs or the Council of Ministers.
Nevertheless we persisted, and now each countly has its "own"
Commissioner.
. ... 3
MANDATORY
DISCLOSURE REGIME WHAT DOES IT MEAN
FOR ADVISERS?
By Grace Brennan.
. ....
NEW
DEVELOPMENTS
Ireland..
.
UK..
5
9-22
9
12
Imernarional
SOURCE
MATERIAL
... 19
23
CHARTERED
ACCOUNTANTS
IRELAND TAX CASE
DIGEST
29
CPD TAX COURSES
Editor
Publisher
Production
Design &
Layout
Printing
31
Kimberley Rowan,
Tax Manager
Michael Diviney,
Director of Publishing
Typeform
E-print, Dublin
The Editor has taken all due care and consideration,
taking into account the content and readership of
tax.point, to ensure that all statements presented as
facts are true and accurate at the time of publication. No liability for errors or omissions is accepted,
nor for the consequences of any person acting or
failing to act on the basis of the content as published. The content of tax.point should not be regarded as a substitute for expert professional advice.
Any opinions or views offered do not necessarily
concur with the views of Chartered Accountants
Ireland.
Revenue material has been reproduced "as is" with
the kind permission of the Office of the Revenue
Commissioners. HMRC Material has been reproduced from the HMRC website at www.hmrc
.gov.uk and copyright is acknowledged.
tax.point
V
But that creates its own problems. Each Corrunissioner must be given
something to do. With 27 Member States, there must be 27 portfolios. There
must surely have been a lot of head scratching to come up with 27 areas of
responsibility, and make sure that none of them sound like non-jobs.
ot
only d1at, but each ConU11issioner has to be given a secretariat, full of ED
officials doubtless lacking neither enthusiasm nor ability. That's 27
Corrunissioners, 27 portfolios, 27 teams and 27 Member States jealously
guarding their sovereignty while wondering if less executive policy capacity
within the EU would have sutTiced.
It must get particularly fraught for the Commissioners when they realise,
as they surely do, that their tenure is relatively short and that the pace of
European progress is slow. While the ED institutions may look nimble in
comparison, say, with the Vatican, most ED legislation takes many years
to move from proposal to enforceable Directive. The polar icecaps are
melting faster. Towhere is this truer than for tax.
The institutions of the European Union are geared for grand projects.
They are not rapid response units. So we should neither look to, nor be
fearful of, micromanagement from the EU as to 110w to resolve a fiscal
crisis.
I'm not suggesting for a moment that the ED doesn't do good work in the
tax arena. Many of the best arrangements and principles derive their
genesis and enforcement in Brussels - from obvious things like the VAT
system and the principles of freedom of movement and mutual
cooperation to less glamorous items such as the combat of cross border
fraud.
But these are big ideas, which have taken time to come to fruition within
the EO's institutions. We can't afford that kind of time to deal with a big
crisis. Quick solutions must be framed within the existing EU rules. That,
first and foremost, is why concerns over ED challenges to tax sovereignty
are at best misguided, at worst scaremongering.
Brian Keegan
Director of Taxation
Chartered Accountants Ireland
New Code of Practice for
Revenue Audit
here is no doubt rhar every
disclose before I commence
accountant
audit". Getting the disclosure right
T
and tax advisor
the
(if one is necessary) saves a lot of
will have some experience
time, trouble, penalties and costs.
from time to time with Revenue
audits (be it for a valued client or
God forbid, one's self). The large
number of Revenue audits
conducted
2010 CODE OF PRACTICE
and the significant levels
FOR REVENUE AUDIT
of penalties and interest associated
The 2010 Code came into effect on
with even minor tax defaults mean
1 October 2010 for audits notified
that a detailed knowledge of
Revenue audits and the associated
issues is necessary for accountants.
The Revenue audit area is largely
driven by administrative
practice
rather than legislation. This
administrative
enshrined
from that day. When an audit is
A new Code of Practice for Revenue
Audit came into effect last month;
Gerry looks at Revenue Audits in
general and the main changes brought
about by the new Code
open at 1 October 2010, the
taxpayer may choose whether the
settlement is made under the terms
of the 2010 Code or the 2002 Code.
The 2010 Code runs to 86 pages and
practice is mainly
is available on the Revenue website.
in the 2010 Code of
Practice for Revenue Auditors which
conscience is a review of the records
came into effect on 1 October
in relation to the specific period and
2010
tax head which is the subject of the
and replaced the 2002 Code.
The Revenue set the tone in the
introductory
paragraph of the 2010
Code:
audit while being mindful of other
REVENUE AUDITS -
issues relating to other periods and
"It is a fundamental
other tax heads which may need to
self assessment tax systems that
be considered
returns filed by compliant
in crafting a
principle of
tax
GENERAL OVERVIEW
prompted
The main point that every
deciding how to address any issues,
computing
accountant,
it is necessary to be familiar with the
promotes compliance with the tax
Code of Practice. In general, this
system by vigorous pursuit of
tax advisor or taxpayer
faces when a letter from the
Revenue is received informing
the
qualifYing disclosure. In
payers are accepted as the basis for
tax liabilities. Revenue
provides that to get the maximum
those who do not file returns, by
person that a Revenue audit is about
reduction
auditing selected returns and by
in penalties, a qualifYing
to take place, is what issues do they
written disclosure with tax
taking appropriate
have which may give rise to a
computations
tax evaders. Revenue challenges
problem with the Revenue. The first
made, which is handed to the
aggressive tax avoidance
thing that will happen after a
Revenue Auditor when he asks the
schemes and unintended
question "Have you anything
legislation
general examination
of one's
and payment must be
to
action against
that threaten
use of
tax
tax. point
3::11
yields and the perceived fairness
of the tax system"
The final sentence (in bold) was not
part of the 2002 Code and reinforces
the Mandatory
Disclosure legislation
instalment arrangement
based on the
taxpayers and professional advisors to
the Revenue of transactions which
bestow a tax advantage.
accepted by the Revenue, it will not
Finance (No.2) Act 2008.
affect the taxpayers ability to make a
qualifYing disclosure and receive the
benefits of same (lower penalties).
2008 on the passing of
Parts 2.6 to 2.16 of the 2010 Code
need to be carefully studied by all
professional advisors to enable them
to properly advise clients on the
Penalties
preparation
Since the 2002 Code new legislation
has been enacted in relation to tax
unprompted
of either a prompted
incorporates
the new penalty regime.
some extent on whether the default
Below, I set out some of the main
occurred on or after 24 December
changes in the 2010 Code.
2008 as well as on the number of
previous qualifYing disclosures, the
No Loss of Revenue
category of behaviour, and whether
A fresh approach
the disclosure was prompted
to "no loss of
revenue cases" is to be found in Part
or
unprompted.
Publication
has been made by the taxpayer but
The publication
this error has not cost the Exchequer
changed.
regime has not
Qualifying Disclosure
the satisfaction of the Revenue that
The 2010 Code introduces
a five
"no loss of revenue" arises then the
disclosures which effectively
be limited to any period during
disregards any previous qualifYing
which there is a temporary
disclosures made more than five
revenue and a reduced penalty will
years before. In the 2002 Code there
apply. The main point here is that it
was no cut-off period and a previous
is up to the taxpayer or his advisors
qualifYing disclosure was always
to produce all evidence, including
counted against the taxpayer.
Inability to Pay
Revenue will consider claims that the
taxpayer is unable to pay any tax due
the last eight years. The provisions
with regard to "no loss of revenue"
Before tackling a Revenue audit,
for all accountants.
No Code of Practice can be
expected to cover all matters. Where
there are grey issues not covered by
the legislation or the Code, it is
advisable to engage with the
Revenue auditor prior to the
Revenue audit commencing
agreement
such matters should be addressed in
disclosure in relation to one tax
a formal written disclosure.
head (e.g. PAYE) will not result in a
Gerry Higgins is a Tax Partner with
second qualifYing disclosure in
Cooney Carey
respect of another tax head (e.g.
Email: [email protected]
Income Tax) from being regarded
as a first qualifYing disclosure.
Cooney Carey
Chartered
Accountants
All qualifYing disclosures must be
The Courtyard
or his advisor to support the claim
made in writing and this is reflected
Carmanhall
with documentary
in the New Code. The facility for
Sandyford
making verbal voluntary disclosures
Dublin
evidence. Once a
proposal is put forward for an
to see if
can be reached on how
Under the New Code a qualifYing
arising out of a Revenue audit up
front. Again it is up to the taxpayer
and practice that have taken place in
"qualifYing disclosures" are a must
tax will not be sought, interest will
gathering to help with a claim.
date to reflect changes in legislation
careful study of the 2010 Code,
year rule in relation to qualifYing
third party evidence, the Revenue
in that it brings the 2002 Code up to
especially the parts in relation to
taxpayer or his advisors can show to
will not do any of the information
2010 Code represents a step forward
restrictive, are most welcome.
any money. Generally, if the
loss of
In conclusion, it is fair to say that the
and "inability to pay", while very
2.5 of the Code. "No loss of revenue"
cases generally arise where an error
tax.point
or
qualifYing disclosure.
penalties. The 2010 Code
The level of penalty depends to
K:4
as and from 24
December
in section 149 Finance Act 2010
which generally requires disclosure by
was withdrawn
client's ability to pay, which is
18
Road