Income Tax

Today, the Revenue Commissioners announced that the extended ROS Pay & File deadline date for self assessed taxpayers is 15th November 2023.

This extended deadline applies to:

• Certain self assessed Income Tax payers who both pay and file through ROS.

• Taxpayers liable to file Capital Acquisitions Tax Returns and payments, as beneficiaries in relation to gifts and/or inheritances with valuation dates in the year ended 31st August 2023.   The extension is only available to Taxpayers who both pay and file through ROS.

Please be aware that this extension is only available to taxpayers who both pay and file through ROS. In situations where only one of these actions is completed through ROS, then the deadline for submission and payment is 31st October 2023.

For further information, please click: Revenue eBrief No. 088/23

In 2016 the ‘New State Pension’ was introduced.  As part of transitional arrangements to the new State Pension, taxpayers have been able to make voluntary contributions in relation to any incomplete years in their National Insurance record between April 2006 and April 2016.

Anyone who is retiring on or after 6^th April 2016, under the ‘new State Pension’ rules, requires approximately thirty five qualifying years to claim the full state pension.

The U.K. government has extended the voluntary National Insurance contribution deadline from 5^th April 2023 to 31^st July 2023. This will allow taxpayers more time to fill gaps in their NI records to maximise the amount they will receive in State Pension.

Therefore, if you’re a man born after 5th April 1951 or a woman born after 5^th April 1953 you have until 31^st July 2023 to pay voluntary contributions to make up for gaps between tax years April 2006 and April 2016, providing you’re eligible.

Where there are gaps in an individual’s National Insurance record, voluntary NICs can be paid to be eligible for a higher State Pension or entitlement to other state benefits.  Therefore, anyone with gaps in their National Insurance record from April 2006 onwards still has time to fill the gaps and increase their State Pension.

After 31^st July 2023 you’ll only be able to pay for voluntary contributions for the past six years which may not be sufficient to qualify for a new State Pension if you have less than four qualifying years on your National Insurance record. Normally, you would require at least ten qualifying years in total.

Please be aware that any payments made will be at the lower 2022 to 2023 tax year rates.  In other words, where the rates of voluntary National Insurance contributions were due to go to up from 6th April 2023, payments made by 31st July 2023 will be paid at the lower rate.

Actions for taxpayers to take before 31st July 2023: 

1. Check your NI record. Taxpayers can check their National Insurance record, via the HMRC app or their Personal Tax Account.

2. Identify any discrepancies between NI contributions paid and those showing on HMRC’s system.

3. Identify any NI credits that are missing from periods in which they should have been received.

4. Identify any shortfalls in contributions.

5. Confirm that you are eligible to pay voluntary contributions in respect of any gaps.

6. Contact HMRC if you think there are any errors.

7. Decide whether to make voluntary NI contributions. Establish how much making the voluntary contributions will cost and consider making up any shortfall by 31st July 2023, particularly for the period April 2006 to April 2017 before this opportunity is lost.

To look at your personal tax account to view your National Insurance record and obtain a state pension forecast, without charge, please click link: https://www.gov.uk/check-state-pension

The Future Pension Centre can tell you if paying for extra national insurance years will increase your state pension entitlement.  For full details, please click: https://www.gov.uk/future-pension-centre

Based on the information you receive from HMRC, if you have returned to Ireland and you decide to top up your pension contributions before the deadline date, please find link to Application Form: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1102905/CF83.pdf

Please click for full HMRC guidance material which may be relevant to you if you have returned from working in the UK: https://www.gov.uk/government/publications/social-security-abroad-ni38/guidance-on-social-security-abroad-ni38#deciding-whether-to-pay-voluntary-national-insurance-contributions

Why is it so important to act before 31^st July 2023?

The ability to buy back years by looking back to 2006 is scheduled to end on 31^st July 2023. After the cut-off date, it will only be possible to pay for gaps in your National Insurance record by looking at the past six years. This means that you could lose out on the opportunity to maximise your UK State Pension for gap years before 2017.

The Special Assignee Relief Programme (“SARP”) was introduced on 1^st January 2012 to provide Income Tax Relief for eligible employees assigned to work in Ireland from abroad.  It was due to expire for new entrants on 31^st December 2022, however, Finance Act 2022 extended the relief for a further three years, up until 31^st December 2025.

Prior to 1^st January 2023, an individual was required to earn a minimum basic salary of €75,000 per annum (excluding all bonuses, benefits or share based remuneration) in order to be eligible for SARP.

From 1^st January 2023 onwards the employee must have a minimum base salary of €100,000 per annum.  This amount excludes all bonuses, commissions or other similar payments, benefits or share-based remuneration.

A number of conditions need to be satisfied for this relief to apply, as follows:

1. The individual must be an employee of either (i) a company incorporated and tax resident in a country with which Ireland has a Double Taxation Agreement/Exchange of Information Agreement or (ii) an associated company of a relevant employer. The individual must arrive in Ireland in any of the tax years, from 2012 to 2025, at the request of his/her/their employer, to perform employment duties in Ireland for that employer or with an associated company of that employer.

2. The individual must have been employed by a relevant employer for six months immediately prior to arriving in Ireland.

3. The individual must perform employment duties in the State for at least twelve consecutive months from the date of arrival in Ireland.

4. The employee must not have been tax resident in Ireland for the five tax years preceding the year of arrival.

5. The individual must be Irish tax resident, although he/she/they may also be tax resident in another country.

6. The individual must be tax resident in Ireland for all years for which he/she/they claim the relief.

7. When applying, SARP applicants must have a PPS number issued to them.

8. Within ninety days of the individual’s arrival in Ireland, the employer must submit the SARP application (SARP 1A) to Revenue’s SARP Unit, certifying that all the above conditions have been met for the relief to apply. In addition, the employer company must have complied with the normal PAYE employee commencement regulations.

9. If the individual is not Irish tax resident in the year of arrival, Relief may start from the following year.

Example

Mark arrived in Ireland from USA on 17^th October 2019 on a 5-year contract.

He was not Irish tax resident in 2019.

As Mark was tax resident in Ireland in 2020, he was entitled to claim relief under SARP.

His first year of claim was, therefore, 2020.

He can continue to claim SARP up to and including 2025 if he continues to satisfy the relevant conditions for the Relief.

SARP Relief

The relief operates by:

• exempting, from Income Tax,
• 30% of a qualifying employee’s annual employment income above a qualifying income threshold (€75,000 prior to 1^st January 2023 and €100,000 from 1^st January 2023 onwards),
• Subject to an earnings cap (since January 2019, an earnings cap of €1m has been in effect),
• for a period of 5 years.

Relief is not extended to Universal Social Charge (USC) so the individual must pay USC on the full amount of his/her/their salary.

The specified amount is not exempt from PRSI, unless the employee is relieved from paying Irish PRSI under either an EU Regulation or under a bilateral agreement with another jurisdiction.

The relief operates by providing a deduction for income tax purposes from remuneration based on the following formula:

(A-B) X 30%

A = Qualifying Remuneration i.e. total remuneration.  This includes:

• Income, profits or gains from his/her/their employment in the State with a relevant employer or associated Company.
• Allowances, benefits-in-kind, bonuses, share awards, commissions, etc.
• The following is deductible from the total remuneration figure when calculating the Relief: employee contributions to an Irish approved pension plan or a foreign pension plan eligible for Irish tax relief as well as remuneration eligible for Double Taxation Relief in Ireland.

B = €100,000 (prior to 1st January 2023 it was €75,000)

Example:

Thomas arrived in Ireland on 1st January 2023 and meets all the above conditions to qualify for SARP relief.

His salary is €120,000, his bonus is €15,000 and he receives a benefits in kind (e.g. medical insurance) valued at €3,000.

A = €138,000 i.e. €120,000 + €15,000 + €3,000

B = €100,000 i.e. qualifying Income Threshold

SARP Deduction = (€138,000 – €100,000) = €38,000 @ 30% = €11,400

Thomas’s marginal Income Tax rate in Ireland is 40%, therefore his Income Tax saving is €4,560 i.e. €11,400 x 40%

It’s important to keep in mind that 8% USC and 4% PRSI, if applicable, will apply to this employment income.

Important Points to keep in mind:

1. Revenue recently clarified that employees must have at least one Irish workday each month in the first twelve months. Therefore, all employees eligible for SARP should take account of this when making travel arrangements in their first year in Ireland so as to ensure their SARP Relief isn’t withdrawn.

2. In the case of new applicants arriving in Ireland from 1^st January 2023 onwards, please be aware that the portion of employment income which is eligible for Relief is 30% of their annual employment income above €100,000. For qualifying employees who arrived in Ireland before 1^st January 2023, however, their relief calculated as 30% of their annual employment income above €75,000.

3. Employees who qualify for SARP Relief are also eligible to receive certain travel expenses and certain costs associated with the education of their children in Ireland tax free.

4. Employees who have started their Irish role before actually arriving in Ireland, will not be entitled to claim SARP relief, unless (i) the employee was prevented from travelling to Ireland to take up his/her/their position here due to unforeseen circumstances beyond his/her/their control and (ii) the Irish employment duties carried out by the individual abroad do not exceed five “workdays” in the six months period prior to his/her/their arrival in Ireland.

5. Employees must have a PPS number when making their application.

6. Individuals should register their employment with Revenue before applying for SARP.

7. The SARP Relief cannot be claimed by new hires with no previous group employment history.

EMPLOYEES

SARP relief can be claimed by the employee in one of two ways:

1. Through the year-end Tax Return

An employee who receives SARP Relief is considered to be a “chargeable person” for Income Tax purposes.  He/she/they is/are required to submit an Income Tax Return to the Irish Revenue Commissioners in respect of each year for which relief is claimed.   The Form 11 Tax Return may be filed by way of a paper form or through the Revenue’s On-Line Service (ROS).

Employees who have registered and qualify for SARP must file a Form 11 Tax Return by 31st October following the end of the tax year.

2. Through payroll

By completing Part C of Form SARP 1A and submitting it to Revenue, SARP Relief can be granted at source through the employee’s payroll.

The employer is required to make this application only once.

Relief can be granted at source through payroll for the duration of the assignment, up to a maximum of five years, providing the employee continues to satisfy all the relevant conditions.

If you would like further information on the new SARP regime, please contact us to make an appointment.

The publication of Draft Residential Zoned Land Tax Maps by local authorities was announced today by the Minister for Finance, Paschal Donohoe T.D. and the Minister for Housing, Local Government and Heritage, Darragh O’Brien T.D.

Landowners have until 1st January 2023 to make a submission to the relevant local authority as to whether or not their land, on the map, satisfies the criteria to be liable to the tax.

This is part of the implementation of the Residential Zoned Land Tax (RZLT).

What is RZLT?

As you may remember, Residential Zoned Land Tax (RZLT) was introduced by Finance Act 2021 as part of the Government’s ‘Housing for All – a New Housing Plan for Ireland’.

Land within the scope of RZLT will be liable to an annual 3% tax based on its market value from 1^st January 2024 onwards.

RZLT will apply to land that on, or after, 1^st January 2022, is:

1. zoned for residential use and
2. serviced

In other words, where the land is zoned as suitable for residential development and serviced after 1^st January 2022, tax will be first due in the third year after it comes within scope.

The primary objective of RZLT is activate land for residential development and not to increase the Government’s tax revenue.

It will operate on a self-assessment basis, which places the filing and payments obligations on the landowners.  You must retain detailed records to enable the Revenue Commissioners to verify the correct amount of RZLT due and payable.

What should you do?

If you own land liable to RZLT, you must register for the tax.

You will be able to register for RZLT from late 2023.

You will be required to file an annual return to Revenue and pay any liability on or before 23rd May of each year, beginning in 2024.

Please be aware that interest, penalties and surcharges will apply in relation to cases of non-compliance, for example:

• in relation to undervaluation of land
• the late filing of returns.

Exclusions.

There are a number of exclusions from RZLT.

Certain properties are excluded from RZLT such as existing residential properties.

Homeowners will not have to pay the RZLT if they own a dwelling which appears on the local authorities’ RZLT Maps, and this property is subject to Local Property Tax (LPT).  In other words, residential properties liable for Local Property Tax (LPT) are not subject to RZLT.

If, however, your garden/yard/land is greater than 0.4047 hectares (one acre) then you must register for RZLT.

No RZLT, however, is payable by owners of these properties.

Summary:

• Registration is available from late 2023.
• Each local authority will publish a Final RZLT Map by 1st December 2023 indicating what lands are subject to the RZLT.
• The RZLT will first fall due on 1st February 2024.
• The pay and file date will be 23^rd May 2024.
• If a homeowner owns such a dwelling and the land/gardens/yards attached to it are greater than 0.4047 hectares (1 acre), they will be required to register for the RZLT with the Revenue Commissioners but will not be liable to pay the tax.

For full information, please click:

https://www.gov.ie/en/publication/fbad0-residential-zoned-land-tax/?_cldee=pGqqP87nFB2cRDW2HeolsCPXUpzM4oJGbkS0FTFnkfAOidPYtjzIqfeGfW2_3PSo&recipientid=contact-7f5d2b33fbf9e71180fb3863bb358f88-0837673b37e04a398fdd86a896db4181&esid=1f53b22f-5a5c-ed11-9562-6045bd90529b

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-22a/22a-01-01.pdf

https://www.revenue.ie/en/property/residential-zoned-land/due-date-excluded-properties.aspx

Today, Minister for Finance, Paschal Donohoe T.D., and Minister for Public Expenditure and Reform, Michael McGrath T.D. presented Budget 2023.

GLOBAL MOBILITY & EMPLOYMENT

Minister Donohoe announced an extension to a number of existing personal tax reliefs including:

• Special Assignee Relief Programme (SARP) is to be extended to the end of 2025.  The minimum income threshold for an employee to qualify for SARP is being increased from €75,000 to €100,000 for new entrants.  Existing claimants will not be affected by this change.  In other words, this higher qualifying threshold will not apply to current claimants availing of the relief.

• Key Employee Engagement Programme (KEEP) is to be extended to the end of 2025.  The lifetime company limit for KEEP shares will be raised from €3 million to €6 million.  KEEP is also being modified to provide for the buy-back of KEEP shares by the company from the relevant employee.
• Foreign Earnings Deduction (FED) which is a relief for employees who are tax resident in Ireland and who travel out of the State to temporarily carry out employment duties in certain qualifying countries was extended for a further three years to the end of 2025. FED provides relief from income tax on up to €35,000 of income.

• Another significant development was the doubling of the Small Business Exemption from €500 to €1,000 effective from 2022. Employers will also be permitted to grant an employee two vouchers/non-cash awards in a single year, provided the cumulative value of the two vouchers does not exceed €1,000.

PERSONAL TAX

Key measures include:

• A significant increase in the Standard Rate Cut-Off Point to €40,000 for single individuals and €49,000 for married couples with one earner. This means that a single person can now earn an additional €3,200 before paying tax at the 40% Income Tax rate.

• An increase of €75 in the Personal Tax Credit, Employee Tax Credit and the Earned Income Tax Credit (all currently set at €1,700). For the tax year 2023 onwards the new tax credits be each be €1,775

• An increase of €100 in the Home Carer tax credit. From 2023 it will be increased to €1,700.

• A reintroduction of the rent tax credit of up to €500 for renters in the private sector for 2023 to 2025. It will be possible to claim this tax credit on a retrospective basis in relation to rent paid in 2022.  One credit per person can be claimed per year.

• The Sea-going Naval Personnel Tax Credit has been extended to the end of 2023.

• An increase in the ceiling of the 2% USC rate from €21,295 to €22,920.

• The exemption from the top rate of USC for medical card holders, and those aged over seventy years earning under €60,000 will continue beyond 2022. In other words, the reduced rate of 2% USC will be extended until the end of 2023.

• There is no increase to Employer’s PRSI rates.

ENTERPRISE

• The Temporary Business Energy Support Scheme (TBESS) was introduced to support trading businesses. The scheme will be open to businesses carrying on a Case I trade that are tax compliant and have experienced a significant increase in their natural gas and electricity costs. Businesses carrying on trading activities will be eligible for a refund of 40% on the increase in electricity and gas prices, subject to a monthly cap of €10,000 per trade.  Detailed information on the scheme has not yet been published, however, it is believed the scheme will operate by comparing the average unit price for the relevant period in 2022 with the average unit price for the corresponding period in 2021. If the increase in average unit price is more than 50% then the business will be eligible for the scheme. Businesses will be required to register for the scheme and to make claims within the required time limits.  This scheme is subject to State Aid approval from the EU.

• Amendments will be made to the R&D tax credit regime with respect to how repayments are made under the scheme which will ensure the regime is regarded as a “qualifying refundable credit” for the purposes of the Pillar Two Model Rules. Currently the R&D tax credit is firstly offset against current and prior year corporation tax liabilities followed by repayment over three instalments. The current system is being changed to a new fixed three-year payment system. A company will have an option to call for payment of their eligible R&D Tax Credit or to request for it to be offset against other tax liabilities. In other words, the changes will enable taxpayer companies to call for the payment of their R&D tax credits in cash or for these to be offset against its tax liabilities in this three-year fixed period. The existing caps on the payable element of the credit are being removed. The first €25,000 of a claim will now be payable in the first year.  Transitional measures will be introduced for one year for those that already engaged in R&D activities and claiming the credit

• An extension to the Knowledge Development Box regime for a further four years to 31^st December 2026. Currently the KDB provides for a 6.25% effective rate of corporation tax on profits generated from exploiting certain assets, including patents and software developed through R&D activities carried out in Ireland. In preparation for the changes under the OECD Pillar Two agreement, the effective rate under the KDB regime is to be increased from 6.25% to 10%.  The policy document released by the Department of Finance states that the commencement of this rate will be determined by reference to international progress on the implementation of the Pillar Two Agreement but it is expected in 2023.

• The extension of the Film Corporation Tax Credit until December 2028. Film relief is granted at a rate of 32% of qualifying expenditure which is capped at €70 million.

PROPERTY

Help-to-Buy Scheme

The scheme will continue at current rates for another two years and will expire on 31^st December 2024

Vacant Homes Tax (“VHT”)

A VHT will apply to residential properties which are occupied for less than 30 days in a 12 month period.

Exemptions will apply where the property is vacant for “genuine reasons.”

The applicable tax rate is three times the existing local property tax (“LPT”) rate

Residential Development Stamp Duty Refund Scheme

The stamp duty refund scheme will continue until the end of 2025.

The stamp duty residential land rebate scheme allows for a refund of eleven-fifteenths of the stamp duty paid on land that is subsequently developed for residential purposes. was due to expire on 31 December 2022. It has been extended to the end of 2025.

Pre-letting Expenses on Certain Vacant Residential Properties

The limit for landlords claiming allowable pre-letting expenses is to be increased from €5,000 to €10,000.

The vacancy period is to be reduced from 12 months to 6 months.

Levy on Concrete Blocks, Pouring Concrete and other Concrete Products

A 10% levy was announced in response to the significant funding required in respect of the defective blocks redress scheme. A 10% levy will be applied to concrete blocks, pouring concrete, and certain other concrete products

This levy applies from 3rd April 2023.

VAT

9% VAT rate for hospitality and tourism sector

The 9% VAT rate currently in place to support the tourism and hospitality sectors will continue until 28^th February 2023.

9% VAT rate on electricity and gas supplies

The temporary reduction in the VAT rate applicable to gas and electricity supplies (from 13.5% to 9%) will be extended to 28^th February 2023.

Farmers’ Flat-Rate Addition

The flat-rate addition is being reduced from 5.5% to 5% in accordance with criteria set out in the EU VAT Directive.

This change will apply from 1^st January 2023.

Zero-rated supplies

From 1^st January 2023 VAT on newspapers, including digital editions will be reduced from 9% to 0%.

On 27th April 2022 Revenue updated its guidance material to provide clarity on the tax treatment of transactions involving crypto-assets.  This latest publication also provides worked examples.

The terms “cryptocurrency” and “cryptocurrencies” are not defined.

The Irish Central Bank places cryptocurrencies, digital currencies, and virtual currencies into the same category of digital money. It is important to bear in mind, however, that although defined in this manner, these “currencies” are unregulated and decentralised which means that no central bank either guarantees them or controls their supply.

Throughout Revenue’s updated document the term “crypto-asset” is used, which includes cryptocurrencies, crypto-assets, virtual currencies, digital money or any variations of these terms.  Revenue state that the information contained in their most updated guidance is for tax purposes only.

Under Section TCA97 Ch4 s71–5, an individual who is resident in Ireland but not Irish domiciled is liable to Irish income tax in full on his/her/their income arising in Ireland, and on “non-Irish income” only to the extent that it is remitted to Ireland.

This is known as the remittance basis of taxation.

It’s important to keep in mind that the remittance basis of taxation does not apply to income from an office or employment where that income relates to the performance of the duties of that office or employment which are carried out in Ireland.

Section 29 TCA 1997 is the charging section for Capital Gains Tax.

s29(2) TCA 1997 states that a person who is Irish resident or ordinarily resident and is Irish domiciled is chargeable to Irish CGT on gains on all disposals (on his/her/their worldwide assets) arising in the year of assessment regardless of whether the gains are remitted to Ireland or not.

s29(4) TCA 1997 states that an individual who is Irish resident, or ordinarily resident,  but not Irish domiciled is chargeable on gains arising on disposals of Irish assets in the year of assessment as well as on remittances to Ireland in the year of assessment in respect of gains on the disposals of foreign assets.  In other words, an Irish resident/ordinarily resident but non domiciled individual is liable to Irish CGT on remittances in respect of gains arising on the disposal of assets situated outside the state.

From professional experience, the location of the crypto asset is often difficult to prove.

According to Revenue’s most recent publication:

“… where a crypto-asset exists ‘on the cloud’, it will not actually be situated anywhere and therefore, cannot be
viewed as ‘situated outside the State’.”

If the crypto-asset isn’t located anywhere and isn’t, therefore, considered to be a “disposal of an asset outside the state” then the remittance basis of taxation does not apply and the gain arising will be liable to Irish Capital Gains Tax based on the residency rules of the individual.

As you can see, it is very much the responsibility of the taxpayer to be able to prove the location where the gain arose on the disposal of the crypto-assets.

Revenue have outlined their record keeping provisions in relation to all taxes as follows: https://www.revenue.ie/en/starting-a-business/starting-a-business/keeping-records.aspx

In situations where the records are stored in a wallet or vault on any device including a personal computer, mobile phone, tablet or similar device, please be aware that these records must be made available to Revenue, if requested.

As with all taxes, full and complete records must be retained for six years in accordance with legislation. It is important to keep in mind that these provisions apply to all taxpayers, including PAYE only taxpayers.

For further information, please follow the link: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-02/02-01-03.pdf

Today, 14th April 2022. the Irish Revenue published guidance (Revenue eBrief No. 090/22) on the tax treatments of Ukrainians, who continue to be employed by their Ukrainian employer while they perform the duties of their employment, remotely, in Ireland.

The Guidance material outlines a number of concessions which will apply for the 2022 tax year.

PAYE

As you’re aware, income earned from a non-Irish employment, where the performance of those duties is carried out in Ireland, is liable to Irish payroll taxes irrespective of the employee’s or employer’s tax residence status. However, by concession, the Irish Revenue are prepared to treat Irish-based employees of Ukrainian employers as not being liable to Irish Income Tax and USC in respect of Ukrainian employment income that is attributable to the performance of duties in Ireland.

Ukrainian Employers will not be required to register as employers in Ireland and operate Irish payroll taxes in respect of such income.

Please be aware that this concession only relates to employment income which is (a) paid to an Irish-based employee (b) by their Ukrainian employer.

In order for the above concessions to apply, two conditions must be met:

1. The employee would have performed his/her/their employment duties in Ukraine but for the war there and
2. the employee remains subject to Ukrainian income tax on his/her/their employment income for the year.

Corporation Tax

The Irish Revenue will disregard for Corporation Tax purposes any employee, director, service provider or agent who has come to Ireland because of the war in Ukraine and whose presence here has unavoidably been extended as a result of the war in Ukraine.

Again, such concessionary treatment only applies in circumstances where the relevant person would have been present in Ukraine but for the war there.

For any individual or relevant entity availing of the concessional tax treatment, it is essential that he/she/they retain any documents or other evidence, including records with the individual’s arrival date in Ireland, which clearly shows that the individual’s presence in Ireland and the reason the duties of employment are carried out in the state is due to the war in Ukraine.  These records must be retained by the relevant individual or entity as Revenue may request such evidence.

For further information, please follow link: https://www.revenue.ie/en/tax-professionals/ebrief/2022/no-0902022.aspx

The Revenue Commissioners published a new Code of Practice for Revenue Compliance Interventions today which will be effective from 1^st May 2022 and will apply to all compliance interventions notified on/after that date.  The revised Code applies to all taxes and duties, with the exception of Customs.

The revised Code reflects Revenue’s new Compliance Intervention Framework and the key changes include:

1. A three tier designation of Revenue Interventions and

2. The introduction of Risk Review categories of Intervention.

Level 1

Level 1 Interventions are aimed at assisting taxpayers to bring their tax affairs in order voluntarily.  They are designed to support compliance by reminding taxpayers of their obligations. They also provide them with the opportunity to correct errors without the need for a more in-depth Revenue intervention. These include the following:

1. Self-reviews

2. Profile interviews

3. Bulk issue non-filer reminders

4. Actions that fall under the Co-operative Compliance Framework.

The expected outcomes of Level 1 Interventions:

1. Liability under relevant tax head(s).

2. Statutory Interest

3. Reduced penalties. In situations where self correction is an option, no penalties should arise.

4. No Prosecution.

5. No Publication.

In Summary:

• Level 1 interventions can only occur where the Revenue Commissioners have not already engaged in any detailed examination, review, audit or investigation of the matters under consideration.

• Examples include VAT verification check letters requesting backup documentation to support refund claims, reminder notifications in relation to outstanding tax returns, questionnaires for R&D Tax Credit claims, requests to self-review on specific issues, etc.

• A Level 1 Intervention allows for an unprompted qualifying disclosure.

• Unprompted qualifying disclosures cannot be made at any level other than Level 1.

• The definition of a Profile Interview has changed in the new Code. A Profile Interview will now be used by Revenue to familiarise itself with a specific taxpayer.  Previously it was used to assess a set of taxpayer risks to ascertain whether or not a Revenue audit was required.

• If the Revenue Commissioners identify a compliance risk during a Profile Interview, they may initiate a Level 2 or Level 3 intervention.

• A Level 1 Compliance Intervention allows for (i) self corrections and (ii) unprompted qualifying disclosure.

• When making an unprompted qualifying disclosure, it is essential to disclose the tax defaults for the tax heads and the tax periods which are the subject of the disclosure. To be completely compliant, the taxpayer must also include all previously undisclosed tax defaults in the ‘deliberate default’ category under any tax head and/or any tax period.

Important Change

According to the new Code, self-corrections can continue to be made the taxpayer is within the relevant time limits

From 1^st May 2022 any such self-corrections must be made in writing.

The submission of an amended return on ROS will no be longer sufficient to qualify as a written notification.

Therefore, to qualify as a self correction, a written notification must be provided as well as any amendment made on ROS.

Level 2

One of the more fundamental changes to the revised Code is the introduction of the ‘Risk Review’ as a Level 2 Intervention. Level 2 interventions are used by Revenue to confront compliance risks ranging from the examination of a single issue within a Tax Return to a full and comprehensive Revenue Audit.  An ‘unprompted qualifying disclosure’ will not be available to a taxpayer who receives notification of a Risk Review in respect of the specified tax head and tax period.  Taxpayers will, however, have the option to make a prompted qualifying disclosure when notified of a Level 2 intervention.

There are two types of Level 2 Interventions:

1. Risk Reviews

2. Audits

Level 2 Interventions – Risk Review

• A Risk Review is generally a desk based intervention which focuses on a particular issue or issues contained in a tax return or a risk identified by Revenue’s own system.

• Unlike level 1 interventions, there is no option for a taxpayer to make a self-correction or an unpromoted qualifying disclosure once they have been notified of a level 2 compliance intervention.

• A written notification will be issued to the taxpayer.

• The notice will specify the scope of the tax review, outlining which information is to be provided within a twenty eight day period.

• The notification will also clarify whether the intervention is a risk review or an audit.

• The review will take place twenty eight days from the date of the notification.

• Generally, Risk Reviews will be carried out by correspondence.

• Taxpayers will have twenty one days in which to notify Revenue if they intend to make a prompted qualifying disclosure.

• A prompted qualifying disclosure can be made within twenty eight days of a notification of a level 2 intervention, with the possibility of requesting an additional sixty days.

• In circumstances where a prompted qualifying disclosure is made, it must be made along with the relevant tax and statutory interest paid, before the expiry of the twenty eight day period.

• The prompted qualifying disclosure must include all underpayments in respect of that particular tax head for the period in question and not just the particular issue which is the subject of the Risk Review. If the taxpayer fails to disclose any underpayments at this point then it is likely that higher penalties could ensue along with an increased risk of publication on Revenue’s Tax Defaulters List.

• A prompted qualifying disclosure may allow the taxpayer the opportunity to mitigate penalties, avoid prosecution and/or avoid publication on the tax defaulters’ list.

• Failure to respond to the Risk Review Notification may result in an on-site visit by Revenue or a full Revenue Audit.

Level 2 Interventions – Revenue Audit

A “Revenue Audit” is an examination of the compliance of a taxpayer.  It focuses on the accuracy of specific tax returns, statements, claims, declarations, etc. Broadly speaking, the operation of a Revenue Audit will remain the same under the revised Code.  An audit will be initiated where there is a greater level of perceived risk.  Also, please keep in mind that an audit may be extended to include additional tax risks depending on information discovered by Revenue during the audit process.

The main stages in a typical Revenue audit are unchanged under the new Code and can be summarised as follows:

1. The taxpayer receives a Notification Letter which confirms the type of compliance intervention to be undertaken as well as the tax head(s) and period(s) covered. The notice also contains the audit commencement date and location in addition to the books and records to be made available for inspection.

2. The audit will commence twenty eight days after the date of the notification.

3. It is possible for businesses to request an alternative date in circumstances where the commencement date is not feasible for them.

4. A pre-audit meeting can be carried out, where necessary, to ascertain the nature and availability of electronic records.

5. It is possible to make a prompted qualifying disclosure before the start of the Audit. In order to make such a disclosure, tax and statutory interest must be paid in full.  A penalty does not need to be included.  The taxpayer must sign a declaration that the disclosure is complete and correct.

6. Taxpayers may request an additional sixty days in order to prepare a prompted qualifying disclosure. This must be done within twenty one days of the date of the Audit Notification.

7. Opening meeting – At the start of this meeting, the Auditor explains the purpose of the audit and indicates how long it should take. At this point, the Taxpayer has the opportunity to make a prompted qualifying disclosure.  This meeting provides the taxpayer with the opportunity to demonstrate to Revenue the tax controls in place. The Revenue auditor will examine the books and records as well as the prompted qualifying disclosure, raise queries and interview the taxpayer.  The information and explanations provided by the taxpayer will define the focus areas of the audit as well as influencing its outcome.

8. Revenue will meet the Taxpayer to outline the audit findings.

9. If the tax return is correct, the taxpayer will be informed as soon as there is certainty. If, however, the return requires amendment, the Auditor will discuss this with the Taxpayer and provide written clarification.

10. At the close of the audit there will be a final meeting to agree on the total settlement when the taxpayer should pay the required amount to the Auditor.

11. Following on from the audit, assessments may be raised or actions carried out to recover additional or disputed tax liabilities, where necessary.

Level 3 Intervention

Level 3 interventions take the form of investigations. These would generally be focused on suspected tax fraud and evasion.  A ‘Revenue Investigation’ is an examination of a taxpayer’s affairs where Revenue believes that serious tax or duty evasion may have occurred.  As the Revenue investigation may lead to a criminal prosecution, it is always recommended to seek expert professional advice and assistance in such situations.

A taxpayer is not entitled to make a qualifying disclosure from the date of commencement of the investigation, however, a taxpayer can seek to mitigate penalties by cooperating fully with a level 3 intervention.

Taxpayers will generally be notified of a Level 3 intervention in writing.  However, in certain cases Revenue may carry out an unannounced visit or may carry out investigations without notifying the taxpayer in writing.

Just to reiterate, once an investigation is initiated, the taxpayer cannot make a qualifying disclosure in relation to the matters under investigation.

FINAL POINTS

The main changes in the new Code of Practice for Revenue Compliance Interventions are:

1. The new Risk Review which is classed in the same category as a Revenue Audit. Once a taxpayer is notified of a Risk Review, the option of making an unprompted qualifying disclosure is removed.  This means the taxpayer will be subject to increased penalties and possible publication on the Revenue’s Tax Defaulters’ list.

2. A Risk Review generally requires clarification of a specific tax related issue, however, in order for a prompted disclosure to qualify, the disclosure must cover all tax defaults in relation to that particular tax head and the period(s) outlined in the notification. If, however, the default is considered to be in the deliberate default category, the disclosure must cover all tax heads and all tax periods.

3. There is a 28 day period between the date of the Notification and the commencement of the Risk Review or Audit.

4. Under the new Code, where the tax underpayment or an incorrectly claimed refund is less than €50,000, publication on the Revenue’s Tax Defaulters’ list will not arise. This increased threshold relates to the tax liability only and does not include interest and/or penalties.

5. Under the new Code, the exclusion from mitigation of penalties in relation to disclosures pertaining to offshore matters has been removed. This means the taxpayer can now include tax defaults relating to offshore matters in qualifying disclosures and benefit from mitigated penalties.

For full information, please click: https://www.revenue.ie/en/tax-professionals/documents/code-of-practice-revenue-compliance-interventions.pdf

To book an appointment to discuss any Revenue correspondence you may have received in relation to a Level 1, Level 2 or Level 3 Intervention, please email us at queries@accountsadvicecentre.ie

On 21st December 2021, the Government announced the expansion of supports for businesses impacted by public health restrictions that came into effect from 20th December 2021 to 31st January 2022 including changes to:

1. the Employment Wage Subsidy Scheme (EWSS)
2. the Covid Restrictions Support Scheme (CRSS) and
3. the Debt Warehousing Scheme

A summary of the developments to the schemes is outlined below.

1. The Employment Wage Subsidy Scheme (EWSS)

On 9th December 2021 it was announced that the enhanced subsidy rates under the EWSS will continue until 31st January 2022.  In other words these enhanced rates will be paid in respect of payroll submissions which have pay dates in December 2021 and January 2022.

Today, Minister Donohoe confirmed that the EWSS will also be reopened for certain businesses who would not otherwise be eligible for the scheme.

Employers can re-join the scheme from January 2022 if they meet the following conditions:

1. they previously claimed support under EWSS which they were correctly entitled to
2. they anticipate that their combined turnover for December 2021 and January 2022 will be down by at least 30% as compared with their combined turnover for December 2019 and January 2020.
3. for businesses established between 1st May 2019 and 31st December 2021 their average monthly turnover for December 2021 and January 2022 must be down by at least 30% when compared with the average monthly turnover across the period August 2021 to November 2021 or on a pro-rata basis in circumstances where the business was established during this period.
4. The business must have tax clearance.

Employers who qualify for re-entry to the EWSS will receive support from 1st January 2022 onwards. These businesses can remain in the scheme until its expiry date of 30th April 2022.

Please bear in mind that the business must experience a 30% reduction in (a) turnover or (b) customer orders during a particular reference period to qualify.

Businesses that commence trading operations from 1st January 2022 onwards will not be eligible for the scheme.

For further information, please click: https://www.revenue.ie/en/corporate/press-office/budget-information/2021/crss-guidelines.pdf

2. The Covid Restriction Support Scheme (CRSS)

From 20th December 2021, the CRSS opens to businesses within the hospitality and indoor entertainment sector such as bars, restaurants and hotels as well as theatres and cinemas that are now required to close by 8pm each night until 31st January 2022.

The eligibility criteria regarding the reduction in turnover has also increased to no more than 40% of 2019 turnover.  Previously it was no more than 25% of the 2019 turnover.

Companies, self-employed individuals and partnerships that carry out a taxable trade can apply for the CRSS.

A qualifying person who meets the revised eligibility criteria can make a claim to Revenue in respect of each week that the eligible business/trading activity is affected by the imposed Covid restrictions.

A qualifying person who carries on such a business is eligible to make a payment claim under the Covid Restrictions Support Scheme if:

• the weekly turnover from the relevant business activity in the claim period will be no more than an amount equal to 40% of the average weekly turnover in a reference period.
• For most businesses the reference period will be 2019.
• For businesses established between 26th December 2019 and 26th July 2021, the reference period will depend on the date on which the business was established.
• the eligible business must have tax clearance for the relevant claim period and must intend to resume trading after the Covid-19 restrictions have been lifted.

For businesses established in the period between 13th October 2020 and 26th July 2021, they are eligible to apply for support under the scheme, however, they are first required to register for CRSS via ROS.  It will only be possible to make a claim once the business has an active CRSS registration.

If the eligible business meets the revised criteria to qualify for the scheme and has previously received CRSS payments in relation to a business premises carrying out a trading activity which was affected by the current public health restrictions, this business can make a CRSS claim using the ROS e-Repayments facility from 22nd December 2022.

Claims can be made in blocks of up to three weeks at a time.  The respective amounts due will be paid by Revenue in one single payment. The normal repayment period is three days from the date the claim was submitted.

In circumstances where a qualifying person carries on more than one eligible business activity from separate/different business premises, then it is possible to make a separate claim in relation to each trading /business activity.

If it’s possible for the business to reopen without having to prevent or significantly restrict access to it’s premises, then this business will not qualify for CRSS.  A business will not be eligible for the CRSS for periods where it chooses or decides not to open.

In situations where it is not feasible for a qualifying person to continue carrying on a relevant business activity during the period of restrictions, a claim for support under the CRSS can still be made.  This is on condition that the eligibility criteria have been met. In order to qualify, the person must have actively carried on the relevant business activity up to the date the latest public health restrictions were imposed and must intend to continue carrying on that same activity once those restrictions have been eased.

The weekly payment is calculated as follows

• 10% of average weekly turnover up to €20,000 i.e. €2,000
• 5% of average weekly turnover in excess of €20,000 up to a maximum of €60,000 i.e. €3,000
• The maximum payment is €5,000 per week.

For the purposes of the CRSS, the “Average weekly turnover” is defined as:

• the average weekly turnover in 2019 in the case of a business established before 26th December 2019,
• the average weekly turnover between 26th December 2019 and 12th October 2020 in the case of a business established during that period, or
• the average weekly turnover in the period 13th October 2020 to 26th July 2021 in the case of a business established during that period.

For further information, please click the link: https://www.revenue.ie/en/corporate/press-office/budget-information/2021/crss-guidelines.pdf

3. Debt Warehousing Scheme

The Revenue Commissioners have confirmed that November/December 2021 VAT liabilities and December 2021 PAYE (Employer) liabilities will be automatically warehoused for businesses which are already availing of the scheme.

The Government confirmed that the Covid restricted trading phase of the Debt Warehousing Scheme (Period 1) will be extended by three months to 31st March 2022 for taxpayers who are eligible for the COVID-19 support schemes. This effectively means that tax debts arising for such affected businesses in the first three months of 2022 can be warehoused.

The zero interest phase of the Debt Warehousing Scheme or Period 2 will begin on 1st April 2022 for those businesses and will run until 31st March 2023.

For further information, please click the link: https://www.revenue.ie/en/corporate/communications/documents/debt-warehousing-reduced-interest-measures.pdf

The Revenue Commissioners acknowledge the on-going efforts by taxpayers and agents and in light of the current Covid-19 developments, the Pay and File deadline for ROS customers has been extended to Friday, 19th November at 5.00pm.

For full information, please follow link: https://www.revenue.ie/en/tax-professionals/ebrief/2021/no-2112021.aspx