Our last blog was about Revenue focus areas for 2024 that will continue into 2025. But our Revenue friends have made things very clear for us with a specific list of focus areas for 2025 too. They will increase the pressure on non-responders to queries and intervention letters. Their view is this sort of behaviour is not acceptable. Code for, if you give us the two fingers, we’ll hunt you down. Like Liam Neeson going after the daughter’s kidnappers in Taken. That level of commitment to finding you!
But, in fairness to Revenue, they are right to go after a lot of this stuff. It relates to fraud, non-compliance, under declaration of income, or non-declaration. A lot of the usual stuff appears on their lengthy list, but there are some new areas too. I’ll break down the list into
- Property
- Construction
- VAT
- Returns
- Other Areas
- Summary
Property
Income from accommodation-sharing platforms like AirBnB gets a specific mention. While AirBnB gets a mention they talk about platforms in the plural so other ones are in the frame too. These accommodation platforms must share the information with Revenue every year. As such, Revenue know the income you got so it’s up to you to declare it and pay your taxes on the profit.
There is a specific mention of CG50 applications. This is where CGT clearance is sought from Revenue where you sell assets over a certain value. Like a house or apartment for over €1 million. The problem is Revenue give clearance and don’t get a CGT return and possible payment too in some cases. Given that the value of the asset sold is high the potential loss of tax is also high. And there could be a lack of understanding by the taxpayer too, thinking they don’t need to file a return. Tread carefully here, as the surcharge is 5% or 10% of the liability for not filing a return and then interest at 8% per annum for non-payment.
What is interesting is that there’s no mention of rental income in general. There may be some reasons for that. This list of focus areas relates to the business division. Many landlords will be in the personal division. Plus, Revenue already have information about your rental income from lots of sources. Armed with this, it’s a matter of time before they catch up with those who are not declaring or under-declaring.
Construction
In 2025 Revenue will look at employed versus self-employed, bogus self-employment and missing RCT. Per their notes
“This will also involve the forestry sector and meat plants”
The obligation is on the employer to verify if a person who works for them is an employee or self-employed. There are new guidelines since the Supreme Court judgement in the Karshan [Dominoe’s Pizza] case. If a self-employed person is actually an employee, then the employer must deduct payroll taxes for payments to that individual.
RCT is a tricky area, and Revenue will impose penalties here if the Returns and payments don’t match. Brenda has great knowledge in this space and helps many of our construction clients with RCT. It was an issue in 2024 and will continue into 2025. This is a ‘must be right’ with any construction business. It will be too costly otherwise.
VAT
From their notes, there are a few issues on Revenue’s radar in relation to VAT like
- Abandoned VAT claims
- VAT Section 22 estimates
- High-risk areas
Abandoned VAT claims
Where there’s a large VAT refund claim, and Revenue look for supporting documentation, the claim is abandoned. There is no reply from the tax agent or the taxpayer. The Revenue view is that this is potential fraud and they plan to increase interventions. This could include visits to the tax agents in question.
VAT S22 Estimates
Revenue issue VAT S22 estimates when a taxpayer doesn’t submit VAT returns or submits nil returns. It is an estimate of the VAT due and, if this is ignored, it finds its way to the Sheriff for collection. Once it goes there you are into sheriff’s fees and interest. In these cases, a potential threat is to cancel debt warehousing if you are in that. Remember that one of the rules to remain in debt warehousing is that current taxes must be up to date. That means filing returns on time and paying the taxes owed.
High-Risk Areas
Under the VAT High-Risk areas, they talk about a
“Significant increase in activity including on VAT postponed accounting, omitted intra-community acquisitions and related gaps on returns.
VAT carousel fraud is another high-risk area. Typically, fraudsters can buy goods free of VAT and resell them on the domestic market, inclusive of VAT, and at a lower price than competitors. Fraud happens when the VAT is not paid to the Revenue. Fraudsters then often disappear with the collected VAT. This type of fraud happens with motor cars and mobile phones.
Returns
Revenue’s issue is they are not getting Tax returns from certain sectors. Or the returns that they are getting are not right with an under-declaration of income. Those mentioned include
- Driving instructors. An analysis of returns has identified issues with the income declared.
- Couriers and delivery drivers. No returns and activities that relate to the shadow economy
- Social media influencers. Revenue are drafting guidance about the valuation of non-cash benefits
- Food and alcohol in relation to couriers and short-term letting
- Car wash and valeting
- Shadow economy is a top priority. They comment on businesses that open and close in a short period of time. VAT and PAYE issues are the main concerns.
- Cryptocurrency tax obligations. They are talking about the lack of a CGT return and payment for those selling their crypto at a profit.
Form 46G
Businesses and companies are required to file a Form 46G return to Revenue. That form contains details of payments made by them to third parties for services provided with a value of over €6,000 in an accounting period. Revenue note that
” Form 46G compliance will have a bigger focus in 2025 both in terms of the quality of the returns and absence of the returns. This form is an important source of information for Revenue. Revenue’s approach to penalties for Form 46G non-compliance is under discussion internally”.
Revenue can cancel tax clearance and refuse tax repayments when this form is not filed. They do this with VAT RTDs, but I haven’t seen it with 46Gs yet. It’s coming though!
Other Areas
Other areas include some of those mentioned in our last blog. Share-based benefits compliance activity will continue from 2024 into 2025. They will have a fresh set of 2024 Income tax returns to examine after going through the 2023 returns.
They mention sectors with significant wage differences. The issue is between advertised wages and returns through payroll with suspected cash payment top-ups. Plus, cash-only businesses and the use of Revolut.
Identity theft and the misuse of taxpayers’ PPSN numbers in payroll. Speaking of payroll Revenue will focus on the
- Accuracy and quality of returns
- Reporting on or before payment which relates to ERR and
- The correct use of RPNs
“This activity will involve penalties, for example, where there are repeat issues, and the employer has already been advised of the need to alter their behaviour”
Summary
So, it seems like everything is a Revenue focus area for 2025, right? No, if you are doing things right then there’s nothing to worry about. Speaking to a businessman in the gym on Wednesday morning his view was that you’d be foolish to think that you can get away with stuff. My view is why would you bother, especially if you have a company and you’re paying tax at 12.5%.
Often, the business owner or company director thinks that everything is right, but it isn’t. Small things in payroll can catch you out like paying expenses and benefits before you report them. Not having the correct VAT rates or claiming VAT on things when you shouldn’t. Not operating postponed accounting correctly and the list goes on.
This stuff isn’t enjoyable and it’s not your strong point so why do you do it? Getting the numbers right and investing in a quality bookkeeping process will reap rewards. Outsourcing that to a team that loves doing this stuff while giving you business insights is possible. You’ve got to want to do it and be willing to change. Sure, don’t they say that a change is as good as a rest!
Do you want to get things right in 2025 and beyond? If so, start here
