Diversity

Tax
57
BRASS TAX
Current developments
Revenue audits have always presented
a challenge. However, the audit
techniques currently being used by
Revenue have brought matters to a
new level. Most audits now consist of
electronic or eAuditing testing, which
involves Revenue obtaining data
downloads and doing the testing at
Revenue’s offices using sophisticated
data analysis software designed to detect
inconsistencies and errors as well as
fraudulent activity.
If an error is discovered and an
additional tax liability is found to be due,
Revenue will almost certainly charge
statutory interest (8% or 10% per annum
depending on the tax involved) and
often a penalty, which will vary in size
depending on a number of factors:
The UK Spring Budget 2017 was delivered recently, but was
it bland or bullish? Leontia Doran investigates.
• Was the error disclosed by the
taxpayer?
• Was the error material and was it
deliberate?
• Did the taxpayer co-operate with the
auditor?
• Has the taxpayer made previous
disclosures?
The level of penalty is much greater
where a disclosure has not been made,
and Revenue is usually slow to permit
an argument of “innocent error”. Where
a penalty in excess of 15% is applied by
Revenue, this can lead to the taxpayer
being published in the national
newspapers unless that matter was
disclosed in advance. It is therefore vital
that sufficient time is allowed to prepare
for a Revenue audit and that any matters
of which the taxpayer is aware are
disclosed prior to the audit.
The code has recently been updated
and it is important that any taxpayer
who is selected for Revenue audit makes
themselves aware of its provisions – in
particular, in relation to the applicability
of penalties and the other more serious
sanctions mentioned above.
JIM KELLY
Jim Kelly is a Director in Grant Thornton’s
tax department.
Spring is in the air. But was there a spring in Chancellor Hammond’s step when
he delivered his first (and last!) Spring Budget on 8 March? With the triggering of
Article 50 imminent, many expected further measures showing that Britain is “open
for business”. These measures, and the word “Brexit”, were absent from his speech.
The Chancellor’s approach seemed to be ‘steady as she goes’ on Budget day. There
were perhaps three tax headline items – increased national insurance (NIC) for
the self-employed, a concession on the Making Tax Digital (MTD) timetable and
a reduction in the dividend allowance. But just a week later, the Chancellor did a
u-turn on his Class 4 NIC proposal, confirming the changes will not go ahead. The
increase in Class 4 NIC alone was expected to raise over £2 billion in tax revenue by
2022. How will the Chancellor now fill this gap?
MTD is to be delayed by one year (until April 2019) for businesses below the VAT
registration threshold – a move that is not entirely surprising. This deferral is
welcomed as it allows more time for software testing and businesses to prepare for
the change. But does this go far enough? In these uncertain times, businesses need
certainty. A final announcement on the complete exemption threshold is needed
soonest – this is currently set at £10,000. We would like to hear your views (contact
leontia.doran@charteredaccountants.ie) on MTD and how it will affect your daily
work.
And finally, with under a year to the proposed commencement of the Northern
Ireland corporation tax regime on 1 April 2018, the reforms necessary to put the
Northern Ireland Executive’s finances on the sustainable footing required to
complete corporation tax devolution should not be forgotten.
In the meantime, the Coleraine Enterprise Zone forges ahead. The pilot scheme for
the new zone was formally designated by HM Treasury in August 2016. The zone will
offer 100% enhanced capital allowances for qualifying expenditure in year one.
Leontia Doran is Taxation Specialist at Chartered Accountants Ireland.
www.accountancyireland.ie