Letters from the Revenue: Requests for transaction information

Tuesday, February 15, 2011

by Nick Ryan

Has one of your clients received a letter from Revenue requesting information about a range of services received or provided or details of a particular transaction? Was the letter lacking in detail in this request for information or reason as to why Revenue wanted the information? These letters should come with an official health warning and we strongly recommend your clients treads very carefully in dealing with them.
Although the letter appears innocuous this information request from experience is the tip of a very big iceberg. The iceberg represents the detailed investigation undertaken by Revenue about a type of business, industry or product/transaction flow. The letter represents the means to the end in producing the additional revenue they have identified. In the cases I have been involved with to date how a business has managed the request has determined how costly the process has been. For those that have ignored the seriousness of the request the costs can be significant.
A key point to remember that these letters can provide Revenue with the facility to open a Revenue audit which can in itself be a significant cost in time for a business without considering the potential financial cost and audit can also produce.
If your client receives one of these letters we would recommend that the following actions be considered and taken:
• Look at what the information requested is and clarify with your client its relevance to their business.
• Ascertain from your client whether they have any concerns over their VAT compliance.
• Call us for a free no obligation discussion for that independent expert VAT opinion.
• We recommend your client completes our free VAT Risk Assessment questionnaire as this can assist in identifying any issues or concerns over the management and control of VAT.
• Any concerns need to be addressed and an appropriate course of action needs to be agreed and actioned.
• Open a dialogue with Revenue, look to establish what is behind the request and seek additional time to fulfil it.
• Once all the information is gathered, review and identify any potential or actual exposures and, based on this, prepare a disclosure.
• We would recommend your client obtain an independent third party review to ensure nothing is missed.
• As part of our services we can provide businesses with a complete management of the Revenue audit including “dummy” audits and management of the actual audit to ensure the best outcome for the business.
I have no doubts from my experience in dealing with these letters to date that every information request letter issued by Revenue has an assessment for additional VAT, and possibly PAYE, in mind either for the recipient of the letter or for another party connected with this information. The “walk softly and carry a big stick” message from Revenue as outlined in their revised Code of Practice is carefully emphasised through this request for information approach. We would recommend businesses adopt a similar approach by looking to manage their VAT function as efficiently as possible while ensuring they have the expert support to hand should they require it.

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