Even in the current market climate Revenue officials are continuing to focus on certain business sectors for potential tax issues. At present, we understand that a number of cash businesses in the County Galway area have been visited by Revenue officials and these visits are expected to continue.
Revenue officials have general powers of enquiry and inspection under the taxes legislation to enter a premises at a reasonable time where they have reason to believe that any trade or business activity is or has been carried on or records relating to the activity are located.
These visits do not constitute the commencement of a Revenue audit but businesses should be aware that a visit could spark such an audit or enquiry.
All business groups, corporations, sole traders, and individual taxpayers should be aware that where Revenue determines that an audit should be carried out, it will usually include a complete review of the tax affairs of the business as indicated in an audit notice for a particular tax period.
It is possible for the audit to extend to other tax years where Revenue discovers any material discrepancies or non compliance issues.
Revenue may carry out an audit on all or a number of the different taxes (such as VAT, PAYE/PRSI, income tax, corporation tax, RCT etc ) at a given time during the course of an audit investigation. Notwithstanding that there may be underpaid tax, there is also a substantial number of administrative compliance matters relating to each tax head which could incur severe interest and penalties if proper procedures were not adhered to when filing returns.
A particular area of interest to Revenue continues to be where individuals are engaged to provide services to a business and are categorised as ‘self employed’ when the indicators may be that ‘employee’ status would be more appropriate.
In most cases, this issue is foremost on the audit agenda as a number of tax heads and administration concerns may arise particularly in the area of PAYE/PRSI but RCT, VAT, corporation tax and income tax could also be affected by the misclassification.
Each case must be considered on its own merits and all relevant facts taken into account in determining whether an individual is correctly classified as self-employed or as an employee.
As the usual outcome of a Revenue audit or misclassification of employment is the payment of substantial tax, interest, and penalties, it is vital that you have a full and frank discussion with your tax advisor to identify all possible inaccuracies and potential problem areas. These issues should then be rectified as soon as possible and hopefully prevent the initiation of a Revenue audit or enquiry.
KPMG tax advisors, Odeon House, Eyre Square, Galway are available to assist in all matters relating to personal and corporate tax affairs. For a confidential discussion, contact Mary Heffernan or Geraldine Lee on 091 534600.