Revenue’s data-driven, risk-based compliance delivers strong results

Revenue's 2024 Annual Report reveals compliance activities in action

Revenue recently published its 2024 Annual Report. The report provides interesting insights into Revenue’s compliance activities in 2024 and signals the risk areas that Revenue audit teams are likely to scrutinise in 2025 and beyond.   

Our Tax Risk & Controversy team examines the key data points from the report and analyses these against our practice experience of supporting taxpayers on Revenue interventions over the past 18 months. We also outline the steps that taxpayers can proactively take to mitigate the financial and business risks Revenue interventions can present.

In 2024, Revenue carried out 272,714 interventions, generating yield of €591.2 million. Additionally, Revenue secured 20 criminal convictions for serious tax evasion and fraud and published 86 tax settlements in the List of Tax Defaulters.

2024 marked the second full year for Revenue's Compliance Intervention Framework (CIF), and the report provides further insights into its operation and effectiveness.

Risk reviews are being used more to assess compliance

Revenue completed 4,334 risk reviews in 2024, an increase of 77% from 2023. This increase is consistent with our experience over the last 12 months.

Risk reviews remain a relatively new type of intervention, having only been introduced in 2022. As risk reviews are desk-based, they are an effective tool for Revenue to target specific risk areas without significant resource allocation. While a risk review is focused on a specific risk, it is important to note that the risk review notification triggers a taxpayer’s final opportunity to make a qualifying disclosure for the entire tax head. In our experience, this is often overlooked by taxpayers and can lead to increased penalties and a heightened risk of publication.

Profile interviews must be treated seriously

Revenue conducted 734 profile interviews in 2024, an increase of 16% from the prior year. In our experience, profile interviews are being used by Revenue to familiarise itself with a taxpayer’s risk footprint, typically in cases where a taxpayer hasn’t been audited for several years. Although profile interviews are “Level 1” interventions, they should be treated seriously as we are seeing instances of them being escalated to audits where risks are identified during the interview process.

Audits generate significant yield for Revenue

Revenue completed 1,075 audits in 2024. The total yield from these audits was €160.6 million, with the average yield of over €150,000 per audit significantly higher than that from risk reviews or profile interviews. This isn’t surprising given the more expansive scope of audits and the granular nature of data testing conducted.

The annual report doesn’t provide statistics on the tax heads being audited, but we have observed some trends from the interventions we are helping taxpayers navigate.

Large Corporates Division continue to carry out audits of single tax heads, presumably owing to the scale of the taxpayers and underlying data involved. While the scope of these audits is dictated by the risk profile of each taxpayer, we are seeing more scrutiny on corporation tax, particularly reliefs claimed by companies

Reflecting the profile of their case base, the audits conducted by Medium Enterprises Division and Business Division typically span multiple taxes. These multi-tax head audits require significant preparation to ensure that all tax underpayments are identified and proactively disclosed to Revenue.

Areas of Revenue focus in 2024

The report discusses specific compliance projects and focus areas for Revenue in 2024, which may extend into 2025.

• Transfer pricing: The report makes specific reference to Revenue’s compliance activity on transfer pricing. In 2024, seven new transfer pricing interventions were initiated, while 13 existing interventions were completed. Between 2015 and 2024, transfer pricing audits generated €788 million and have led to a restriction in trading losses of over €1 billion. Revenue has two dedicated transfer pricing audit teams in place, so we can expect this level of scrutiny to continue. Country-by-Country (CbC) Reports continue to inform high-level transfer pricing risk assessments conducted by Revenue and other tax authorities. In 2024, Revenue exchanged CbC data with 72 other jurisdictions.
• National share schemes project: This project examines all tax events arising for individuals in receipt of share-based remuneration, together with employers’ compliance with reporting obligations on share-based remuneration. In 2024, 449 interventions were closed with a yield of €17.5 million. 
• Contractors: On foot of Supreme Court judgement in the Karshan case, Revenue issued guidelines for determining the employment status of individuals in 2024. We are seeing the employment status of individuals being scrutinised on several live interventions, so there is clearly a renewed focus on this area.
• Social media and online platforms: This project focused on the tax affairs of individuals, such as influencers, who conducted business activities through online platforms. In 2024, Revenue completed 52 interventions in this sector, generating a yield of over €2.6 million. In our experience, Revenue enquiries are not just limited to the individuals in question but also extend to the businesses that engage with them.
• Tax avoidance: In 2024, Revenue yielded €46 million from 256 tax avoidance cases. There are currently 228 tax avoidance cases actively being challenged relating to 33 transactions. Areas of focus include transactions between connected companies and the transfer of assets abroad, transactions which appear to be cash extraction from companies by way of transferring assets at overvalue, and transactions between individuals and companies which appear to be arrangements to avoid income tax on payments. To withstand anti-avoidance challenges from Revenue, it is imperative that taxpayers have sufficient contemporaneous documentation to support the bona-fide purpose of transactions.

Co-Operative Compliance Framework 

The Co-operative Compliance Framework (CCF) encourages a collaborative relationship between Revenue and taxpayers, focusing on enhancing voluntary compliance. At the end of 2024, Revenue reported 130 corporate groups in CCF, meaning that five new groups joined in 2024.

All companies participating in CCF are required to have a Tax Control Framework (TCF) in place. We are beginning to see more granular queries from Revenue in this regard, with companies being asked to provide supporting documentation to evidence the existence of a TCF. This includes requests for process maps, governance structures and control testing programmes. These requests are in keeping with what we observe from tax authorities in the UK and Australia.

Revenue time limits

Revenue typically has four years to dispute an assessment to tax. The time limit applies where a taxpayer has provided a “full and true” disclosure in the tax return, with exceptions for no return, insufficient return, fraud or neglect. Revenue is prepared to challenge transactions outside of this time limit and whether a tax return is “full and true”. Three recent cases of Revenue v Tobin [2024] IEHC196 (“Tobin”), Hanrahan v The Revenue Commissioners [2024] IECA 113 (“Hanrahan”), and O'Sullivan v The Revenue Commissioners [2024] IEHC 611 (“O`Sullivan”) considered when a tax return is “full and true”. These decisions clearly demonstrate that it is highly fact-dependent and set a high bar as to what is considered to be “full and true”.

In summary, these judgments have held that for a tax return to be “full”, it must include all material facts and information relevant to the assessment. In certain circumstances, information that relates to prior periods or information not requested on the tax return form can be relevant material facts. Furthermore, for the return to be “true”, it must be “accurate” or “correct” in all material respects.

Given the prescribed format, complexity and extent of information sought in tax returns, tax return preparation needs careful oversight. It is important to pay increased attention to the completion of returns to maintain greater certainty around when a tax period is "closed”.

Looking ahead

The report provides some insight into the areas that Revenue will focus on in 2025.

2024 marked the first fiscal year for Pillar Two, with Revenue investing significant efforts to develop its systems for registration, return filing, payments and information exchange. Moving into 2025, the focus will be on effective implementation. Already, we are seeing Revenue use CCF to assess companies’ readiness for Pillar Two compliance. Revenue is seeking information on calculation methodologies, the application of the safe harbours, and underlying processes and controls.

The annual report makes specific reference to Revenue’s employment tax compliance programme, which includes the examination of the payment of staff expenses, the provision of benefits and salary payments to employees, and the classification of workers for tax purposes. Revenue has amassed vast quantities of data from employers through the Enhanced Reporting Requirements (ERR) filings, and we expect that this will shape compliance activity in the months ahead.

We’re here to help you

Our diverse Tax Risk and Controversy team, which includes experienced former Revenue officials, solicitors, barristers and tax experts, brings a wealth of knowledge in handling all aspects of revenue interventions, tax disputes, appeals and proactive tax risk management. We are here to help you navigate the complexities of Revenue interventions and disputes, ensuring that both monetary and reputational risks are effectively managed. Contact us today for expert advice.