It is a fundamental principle of the Self Assessment system for Income Tax, Corporation Tax and Capital Gains Tax that returns filed by compliant taxpayers are accepted as the basis for computing tax liabilities.
This same principle applies to the PAYE and VAT systems. Revenue promotes compliance with the tax system through vigorous pursuit of those who do not file returns and by auditing selected returns and taking appropriate action against tax evaders.
What Triggers An Audit ?
Almost all audits are carried out for a reason. Only a small percentage of cases (in the order of 5% at the time of writing) are selected at random. You should therefore assume that Revenue are turning their attention to you because:
This of course does not necessarily mean that any further tax is due, or that any matter was indeed incorrect. It can be an extremely traumatic experience and few people in business will admit to being prepared for a thorough investigation of their business or tax affairs.
This is why it is very important that you consult your tax adviser before responding to any notification received of an impending Revenue audit.
We at Michael F. Dolan & Co. can minimize the impact of a Revenue Audit by: