Safeguarding Your Business During a Revenue Audit: Expert Tips and Tricks

Your first reaction to an audit notification letter from Revenue may be one of surprise - maybe even tinged with a little panic.

In truth, a revenue audit is not as daunting as it may seem. If you’ve been recording financial information and are willing to put in a little preparation, you can pass an audit with flying colours, and very little stress. 

 

First things first: what is a Revenue audit and what does the process look like? 

When Revenue issues notice of an audit, they intend to review your business’s tax returns for the previous year and compare them to your tax records. This will be stipulated in your letter. Whatever the period, it’s important that you have been maintaining accurate business records and meeting all necessary filing deadlines.

A Revenue audit involves the following steps:

1. The visiting auditor will explain the purpose of the audit and how long it should take.
2. You’re given the opportunity to disclose whether you suspect you have avoided paying some tax.
3. Your books and records are examined.
4. If your return is largely correct, you will be informed as soon as possible.
5. If your return will need to be adjusted, the auditor will discuss why and will be provided written notification.
6. You have a final interview where you will be asked to agree on the total settlement on Revenue audit penalties.
7. Once an agreement is reached, you can pay the auditor who will give you a receipt.

One way many modern businesses maintain financial records is by using proven, reliable software for SMEs. 

 

As per Revenue’s auditing information, your business can be chosen for one of three reasons:

1. Screening tax returns: This is where Revenue assesses your returns and compliance history for any patterns or trends. This is the most common method of selecting a business or taxpayer for audit.
2. Projects on business sectors: Revenue might focus on a particular business sector, trade, or profession when choosing businesses or taxpayers for an audit.
3. Random selection: A small number of audit cases are selected using this method.

Furthermore, your notification letter gives you 21 days of notice to prepare. 

 

So, how can you prepare for an audit of your financial statements? Or, more precisely, how can you successfully pass an audit without breaking a sweat?

Firstly, consider an internal audit. You’ve more than likely been maintaining your financial records, so it’s a good idea to run through them to make sure everything is accurate. Doing so will also act as a reassessment of your internal processes with regard to controls over financial reporting.

In preparation for a Revenue audit, you could seek the advice of an external accountant. This individual can assess:

• The information/records you intend to supply to Revenue. 
• Potential faults and issues related to the information/records.
• Tax reliefs that may be assessed by Revenue. 

It’s likely they will advise on how to approach the actual audit and what to expect. 

 

Another smart move when preparing for Revenue audit is to review their Code of Practice. This document will provide answers to any lingering questions and help ensure you have everything in order.

Revenue provides detailed guidelines and resources on how to prepare and what to expect.

You can also seek out additional resources from the Irish Tax Institute and Chartered Accountants Ireland who offer a wealth of information and professional support for tax-related issues. 

There are plenty of reliable webinars, articles, and guides available to help businesses prepare for and manage a revenue audit effectively.

Guidance for audits

 

Being proactive and thorough in your preparation can significantly ease the audit process. Remember, the key is not just to survive an audit, but to come out of it with improved processes and confidence in your compliance practices. It’s an understatement to say that there’s a lot of paperwork involved in running an SME. From employment contracts to invoices and tax records, there’s a lot to stay on top of. That’s why outsourcing may be the answer. 

Outsourcing payroll services frees up time and reduces overhead costs such as employing an in-house payroll department. With SD Worx, formerly Intelligo, you can avail of MegaPay Outsourced which takes care of your payroll processes for you. Our payroll software ensures compliance with the latest payroll regulations, generates ad-hoc reports on demand, and pays your staff on time, every time. It’s even backed up with enterprise grade security in the form of Microsoft Azure and AES 256 encryption to protect your payroll data.

For a secure and affordable payroll solution used by businesses across the globe, talk with us today!