Level 2 Revenue Interventions
What is a Level 2 Intervention?
Level 2 interventions under the Compliance Intervention Framework involve risk-based reviews of the information provided by taxpayers in their tax returns. These reviews can range from focusing on a single issue in a return to conducting comprehensive tax audits.
As a taxpayer (and as an agent, if applicable), you will always be notified if a Level 2 intervention is initiated. Once you receive such a notification, you’ll have the chance to address any areas of default or non-compliance before the inquiry begins. You can do this by making a prompted qualifying disclosure and by fully cooperating with the intervention.
Types of Level 2 intervention
Examples of Level 2 interventions:
The Compliance Intervention Framework includes a two Level 2 interventions, namely the Risk Review and the Audit. In every case, Revenue will issue a “Notification of a Revenue Level 2 Compliance Intervention.”
The Level 2 compliance interventions usually centre on a specific risk that Revenue has identified for a particular year or period. However, if they find material risks across multiple years or periods based on a wide range of data sources, they may carry out a multi-year or multi-period compliance intervention.
Once notified of a Level 2 intervention, you’re entitled to make a prompted qualifying disclosure. If you’d like more information on what needs to be included in such a disclosure for it to be considered qualifying, please contact iREV directly.
Note that any Level 2 intervention can be desk-based or field-based. In the case of a desk intervention, Revenue won’t won’t need to visit your place of business. A field intervention will usually involve a visit to your place of business, or it can sometimes be done via videoconferencing.
Risk Review
A Risk Review is a focused intervention that examines a risk or a small number of risks on a tax return. For instance, Revenue may look at a specific aspect or issue on a return or examine a risk that they’ve identified from their REAP system (Revenue’s Risk Evaluation, Analysis and Profiling system).
Revenue Audit
A Revenue Audit is an examination of whether a person is complying with tax and duty legislation. Revenue pays particular attention to the accuracy of specific returns, statements, claims, or declarations. Revenue will initiate an audit (as opposed to a Level 2 Risk Review) when they perceive a greater level of risk.
During an Audit, Revenue may examine all risk indicators in a case (across taxes and periods), or they may focus on a single issue or single tax within the case. If they uncover any additional issues, taxes, or years/periods during the initial examination, they may extend the audit accordingly. If there are any arrears of tax outstanding at that time, they will need to be addressed.
Depending on the size and complexity of the case, a Revenue Audit may be carried out by an individual Revenue auditor or a team of Revenue auditors.
Notification of a Level 2 Intervention
If you receive a notice of a Level 2 Compliance Intervention, this notice will give you 28 days to prepare. If iREV is representing you, we’ll receive a copy of the notice as well.
The notice will clearly state what type of compliance intervention will take place, such as a Risk Review or an Audit. The intervention will cover a specific issue, tax, or period. It could be a comprehensive audit covering multiple years or periods.
If you receive a notice for a Risk Review, the intervention is considered to have started 28 days after the date of the letter, unless you have a legitimate and reasonable reason to request a different start date. If you receive a notice for an Audit, the intervention is considered to have started 28 days after the date of the letter, unless otherwise agreed.
If you’re subject to an audit, you’ll be given the opportunity to make a prompted qualifying disclosure before it starts.
Once you receive the “Notification of a Level 2 Compliance Intervention” letter, the opportunity to make an unprompted qualifying disclosure is no longer available. However, you can still make a prompted qualifying disclosure before the Risk Review or Audit starts.
Please note that once the intervention begins or is deemed to have commenced, you will no longer be able to make a prompted qualifying disclosure.
