Self-correction without penalty policy update

Revenue has informed us that it is updating its policy around the “self-correction without penalty” provision within Chapter 2 of the Code of Practice for Revenue Compliance Interventions. This change is effective immediately.

The code currently states that:

“In line with Revenue’s role in supporting voluntary compliance, taxpayers may avail of self-correction without penalty provided that the following conditions are met:

1. The taxpayer notifies Revenue, within the applicable time limit, (either in writing or in ROS) of the adjustments being made (Note: submitting an amended return on ROS does not constitute notification to Revenue – written notification is required),
2. The taxpayer provides a computation of the correct tax and statutory interest payable, and
3. Payment, in full, accompanies the submission.”

The code contained a specific provision whereby bi-monthly, quarterly or half-yearly remitters of VAT, who are self-correcting a net underpayment of less than €6,000, may include the amount of tax as an adjustment on the next corresponding VAT return following the one in which the error was made. In such cases, there is no requirement to notify Revenue and interest is not charged.

In September 2022, Revenue issued the Tax and Duty Manual (TDM) for Revenue Compliance Interventions - Operation of Payroll Taxes (Income Tax, PRSI, USC) by Employers. This guidance deals with cases where it is determined that the updating of an employee’s payroll record is required due to the incorrect operation of the Pay As You Earn (PAYE) system by an employer as a result of error or carelessness.

This TDM applies to any self-correction or qualifying disclosure received and/or Revenue compliance intervention initiated following the publication of the TDM. This TDM states that for current year cases, employers are permitted to treat untaxed emoluments (arising from incorrect operation) as being paid at the time they are identified, using the latest Revenue Payroll Notification available to calculate the correct liability in accordance with Regulation 11. In such cases, the liability due will be corrected through the next payroll submission (within the current tax year) rather than over multiple submissions. In these type of cases, where any additional emoluments are treated as paid at the next pay date, no interest arises. In such cases, there is no longer a requirement to also notify Revenue in writing of the correction being made.

For all other tax heads (other than those outlined above), taxpayers must continue to notify Revenue in writing or through ROS to avail of “self-correction” without penalty. This is necessary to ensure such amounts including statutory interest are brought to account correctly. Revenue are working to remove the notification requirement for all tax heads and will update TALC Audit Sub-Committee as the matter progresses.

The Code of Practice for Revenue Compliance Interventions will be updated shortly.