Tax audits by Revenue likely to rise

THE number of tax audits carried out in 2010 is set to increase in light of last year’s €24.6 billion exchequer deficit, it has been claimed.

Speaking at a seminar in Cork yesterday, on Tax Audit hosted by McAvoy & Associates and Ulster Bank, Dara Burke, tax director of McAvoy & Associates, told an audience of professional accountants that, in the light of the 2009 deficit, it is highly likely the number of tax audits will increase.

Ms Burke said the yield from tax audits last year amounted to less than 2% of the total tax yield and that, in light of the current economic circumstances, it would be surprising if Revenue were not to take steps to try and increase this.

“In order to increase the number of audits carried out, Revenue will begin to put emphasis on achieving a speedy turnaround of the cases they select for audit,” she said.

Ms Burke pointed out tax audits present a particular challenge to taxpayers and their advisers. The combination of interest on underpaid tax and penalties can create a very heavy financial burden on businesses, particularly in a time of recession.

At the same time, professional advisers are often subject to increased workloads and sometimes to very considerable professional stress.

Ms Burke advised careful preparation is the key to achieving the best possible outcome when a client is selected for a tax audit.

“Such preparation includes making sure to be up-to-speed with the latest tax laws and practices and carrying out an in-depth review of the client’s tax return before engaging with Revenue,” she said.

A chartered accountant and a member of the Institute of Taxation of Ireland, Ms Burke is a principal of McAvoy & Associates and achieved first place in Ireland in the final Institute of Taxation examinations.