New Code of Practice for Revenue Compliance Interventions

The Revenue Commissioners have published a Code of Practice for Revenue Compliance Interventions, which will come into effect on 1 May 2022. It is not necessarily a revolutionary measure by Revenue as the new Code is effectively replacing a previous Code; however, there are some significant changes and we outline the main provisions below.

Offshore matters

Previously, a taxpayer was excluded from mitigation of penalties where any matters contained in a disclosure directly or indirectly related to offshore matters. The contentious measure could apply to undeclared tax on foreign source income such as foreign rents, foreign investment products, foreign pensions etc. Considering the complexities involved in, say the tax treatment of offshore funds, the exclusion from mitigation of penalties created a minefield for taxpayers and their advisors. The introduction of what was effectively a ban on the benefits of mitigated penalties in disclosures that involved offshore matters was seen to go against Revenue policy on interventions, which has been to encourage taxpayers to regularise their tax affairs when they become aware of a tax default. By imposing the full rigours of the penalty regime, it was perceived to be a disincentive for taxpayers to submit disclosures that included offshore matters.

Finance Act 2021 and the new Code have now addressed this position and have removed the prohibition on mitigation of penalties when offshore matters are included. This measure is welcomed and should provide more of an incentive for taxpayers to come forward and regularise their tax affairs, especially where offshore matters are involved. The taxpayer can now include tax defaults relating to offshore matters in disclosures and benefit from mitigated penalties.

Additional measures introduced in the new code

The new Code introduces a 3-tier structure in terms of Revenue interventions. 

Level 1 contains basic types of intervention e.g. self-reviews, profile interviews, and self-correction. Unprompted qualifying disclosures are permitted for taxpayers under Level 1. One point to note in relation to a Level 1 intervention is that Revenue has advised that they may publish notices regarding various compliance issues through the media, press releases etc. There may not be direct contact from Revenue to a taxpayer.

Level 2 contains more in-depth interventions, whereby a new concept “Risk Review” is introduced. Level 2 also contains the general Revenue audits which have been part of the previous Code. The taxpayer cannot avail of an unprompted qualifying disclosure once they are notified of a Level 2 intervention.

Level 3 is effectively Revenue investigations, whereby the taxpayer cannot avail of a qualifying disclosure. 

One of the main points is around the new Risk Review which, along with Revenue audits, is a Level 2 intervention. The old Code provided that once a taxpayer is notified of a Revenue audit, they cannot avail of an unprompted qualifying disclosure – the implications being increased penalties and possible publication as a tax defaulter. The new Code continues this practice for audits. However, the new Code classes the new Risk Review in the same category as a Revenue audit – once a taxpayer is notified of a Risk Review, they cannot avail of the benefits of an unprompted disclosure. An area of contention is the scope of the intervention for which Risk Review was introduced. It is understood that the Reviews are to examine a risk or a small number of risks on a tax return where a full audit is not warranted. Yet, notwithstanding that the issues are not serious enough to warrant a Revenue audit, the taxpayer cannot avail of an unprompted qualifying disclosure once they are notified of a Risk Review. We now have the position whereby aspect and assurance type queries (where previously the taxpayer could avail of the benefits of an unprompted qualifying disclosure) may now fall within the remit of a Risk Review and the taxpayer will no longer be in a position to avail of an unprompted qualifying disclosure.

Another key point in terms of Risk Reviews is that the subject matter of the review may focus on some narrow tax-related issue that Revenue requires clarification on. It may seem to be a relatively innocuous issue. However, if a prompted qualifying disclosure is submitted, the disclosure should cover all tax defaults in relation to that particular tax head and the time period specified in the Review (unless the default is in the deliberate default category, in which case it should cover all tax heads and all tax periods). Revenue may contend that it is not a qualifying disclosure if the disclosure only contains details of a tax default relating to the precise subject matter which is the focus of the Risk Review and if it subsequently comes to light that there are other tax defaults relating to the same tax head and for the period referred to in the intervention. This will create extra costs for the taxpayer and creates extra risk in terms of a possible omission from a disclosure that could deem it to be unqualified.

In terms of time limits, there is an extension to the limits for which the taxpayer receives notice that a Risk Review and Audit will commence – from 21 days previously to 28 days under the new Code. 

There is also an extra 7 days provided to the notice period for a taxpayer to request a 60-day period to prepare a prompted qualifying disclosure. 

The criteria for publication as a tax defaulter have changed. The old Code provided that settlements, where the combined tax, interest and penalty exceeded €35,000, were publishable. The new Code provides that where the tax underpayment or a refund incorrectly claimed is less than €50,000, publication does not arise. Interestingly, unlike the old Code, the revised threshold of €50,000 refers to tax only – not inclusive of interest or penalty. 


The above points are just some of the main provisions introduced by the Finance Act 2021 and the new Code of Practice. Please note that other provisions were introduced, and Finance Act 2021 and the new Code should be reviewed in their entirety. It will be interesting to see how the new Code works in practice. The old Code effectively provided taxpayers with an opportunity to get minor tax issues regularised with the benefit of an unprompted qualifying disclosure and could avail of lower penalties and non-publication as a tax defaulter. This was notwithstanding that the taxpayer may have been initially contacted by Revenue; for example by way of an aspect query. However, the new Code effectively provides that once the taxpayer is notified of a Revenue audit or a Risk Review, the unprompted disclosure is not an option and a more detailed review will be required to ensure that the conditions required for a prompted qualifying disclosure are met. It could be a busy few weeks ahead for taxpayers and their agents to get any unprompted disclosures into Revenue by 1 May – before Revenue commences issuing Risk Review letters. 

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