Compliance Framework Document
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Enda Jordan
Director Corporate Tax Services |
Over the past few years, the Revenue Commissioners have undergone
a major restructuring. As part of this, they have established
a ‘Large Case Division’ (LCD) to deal with the
tax affairs of Ireland’s largest companies and wealthiest
individuals.
When created, the intention was that the LCD would deal with
approximately 300 of the largest corporate groups (with an
annual turnover of over €127m) and 200 wealthy individuals
(with assets in excess of €50m and an annual income of
over €1.27m). In addition, the LCD includes a specific
division to deal with the Financial Services Industry.
Following the selection of companies and individuals for
the LCD, the Revenue sought initial meetings with the management
of the chosen companies in order to outline the purpose
of the LCD and its modus operandi. Indeed, most companies
that have their affairs now dealt with by the LCD will have
had some level of Revenue audit or contact in the last 12
months.
The Revenue indicated that one of the goals of the LCD
was to encourage high tax compliance by these large companies
and the Financial Services sector. As part of the LCD approach,
the idea of agreeing a tax 'compliance framework' with companies
was muted by the Revenue, indicating that companies which
agreed such frameworks with them would benefit to the extent
that the Revenue would intrude as little as possible on
their businesses. In addition, the Revenue indicated that
where interpretation of law was sought from the Revenue,
the Revenue’s resources available for dealing with
such queries would be biased in favour of taxpayers who
agreed compliance frameworks.
In return, the Revenue will expect the taxpayer to agree
with the Revenue as to what constitutes high compliance
and what the taxpayer must do to achieve this. The taxpayer
would also be expected to talk to the Revenue before engaging
in an arrangement or structuring transactions that might
be perceived as tax avoidance. As readers will appreciate,
what the Revenue might interpret as tax avoidance might
be regarded as prudent tax management by a business person.
 Despite
the early flurry, little has happened in relation to agreeing
compliance framework documents with any individual companies.
However, the matter has reactivated itself in the last few
months and the Revenue now seems to be searching for appropriate
‘guinea pigs’. It is still unclear as to what
exactly the Revenue will expect from taxpayers who agree
to the framework document and, indeed, concerns have been
raised about the appropriateness of such an approach by
the Revenue at all. It is likely that before the next edition
of this newsletter, more information will be available as
to the benefits and burdens of an agreed compliance framework
document and we will comment on the matter further at that
time.
However, if any company is approached by the Revenue in
relation to agreeing a compliance framework document, we
recommend you contact your Ernst & Young Tax Partner
to discuss the position.
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