Revenue Audits for Self Employed Business Taxpayers- Why Professional Help in Knowing the System will Save you Sleepless Nights!
It’s Monday morning and you walk into your business premises, confidently looking forward to a productive working week and mulling over the tasks you have carefully planned for the day.
You place your hot freshly brewed coffee next to your laptop while reaching over for the pile of post that has arrived this morning and you quickly scan over to see one of those brown encased envelopes with the symbolic Harp printed in the top middle of the envelope. You notice the envelope is thicker than the usual ones you get, so you are intrigued as you slice open the top with your silver plated envelope knife. Sliding the letter out of the envelope whilst holding your breath, your heart pumps faster as you begin to realise this is no ordinary letter from your local tax office.
Welcome to the Good, the Bad and the Revenue Audits!
If you a self employed business owner the chances are that you have been here at some point in your business life and statistics show that you are increasingly likely to receive one of these letters. From my own experience there has been a noticeable increase in Revenue audits, enquiries and specific interventions, they are on the increase and have been for a number of years because we are living in an increasingly compliance led world. Government systems have improved with technology and are focused to identify higher risk areas. It is a necessary evil to maintain the credibility of the system.
The receipt of a Revenue Audit letter can invoke many emotions in the business persons mind...surprise, sadness, self-pity, fear OR all of these are possible!. If you have a tax accountant, as most business people do, then the good news is that they are always copied in on correspondence from the Revenue Commissioners so it is possible that they have already seen this letter before you. If they are pro-active then they will have digested its contents, are ready to contact you and have formulated a mental plan of approach. Prompt attention is necessary as there is normally a response deadline given in the communication and in the case of a formal audit notification a date when you are expected to attend either at their local office or at your business premises.
There could be many reasons why Revenue have selected you, it could be random but also like many of their interventions could be down to a very specific matter that has caught their attention. For example disproportionate profit margins, incomplete or incorrect EU statistical boxes on your VAT return, significant travel and subsistence claims or a low level of Directors salaries.The list of reasons could be many but the common factor here is that those mentioned above are all common red flag issues to Revenue and are avoidable.
This is a time for calm and clear thinking, Whilst you might be surprised and disappointed that you have been selected for scrutiny and examination of your financial records it is by no means something that you should overly worry about if you follow good business practices and work with a competent qualified and experienced tax accountant. There is a procedure that must be followed by Revenue and the Taxpayer, you are given reasonable and fair time to do this and it is a procedure that we are familiar with. I strongly believe that the best preparation for a Revenue Audit starts at the beginning of our accountant/client relationship via the quality of service, systems and client communications.
Good financial data management from the very start of your business is very important to its ongoing financial success as Revenue interventions can potentially be very time consuming, costly and can present unexpected tax bills that can pull heavily on the cash flows and sustainability of your business.
Our systems have moved to a high quality cloud accounting system to manage financial data more efficiently, enable data sharing amongst the key users and a focus on collaboration on the important matters for the business.
We can help with all matters connected with a Revenue Audit including liaising with Revenue on your behalf, self-reviewing your financial records, quantifying if a disclosure of any unpaid taxes is appropriate,minimising your exposure to penalties and interest, attendance at the audit as your representative and ultimately representing you to a very high level of professionalism and capability.
If you would like to hire us to advise you how to reduce the risk of being selected for a Revenue Audit or to set-up or review your financial systems then you can contact me personally at mc@omahonydonnelly.ie
