The Personal Finance Section of The Sunday Business Post provides timely advice on how to avoid getting into trouble with the taxman and how to survive a dreaded audit.
Brian Keegan, director of taxation at Chartered Accountants Ireland, lists the dos and don’ts for the self-employed in the run-up to the October deadline for tax returns. He then takes an illuminating tour through the audit process, starting from the receipt of an enquiry letter from the Revenue Investigations Branch through to how to deal with what can be a very stressful process.
Of course, like most things in life, prevention is better than cure. The first thing of note is the nature of the system: it is based on self-assessment. That means it’s up to you to get it right and keep the powers at be satisfied you have declared all of your income.
You are likely to attract an audit if you fall foul of the Risk Evaluation Analysis and Profiling (REAP) software programme the Revenue uses to assess the likelihood of figures not adding up. The grim REAP holds details of your tax payment history, your returns of income, payments you may have received from other government agencies, your Vehicle Registration Tax records, whether you paid a Non Principal Private Residence Levy and other income-related information.
REAP uses statistical analysis to look for discrepancies in returned expenditure items and income declared eg if you bought a car worth €100,000 and have a declared income of €20,000 you could have questions to answer.
The article then gives advice on how to handle an audit and the various penalties and sanctions a body can expect.
Best advice: best avoided!