Right, let’s talk about the letter nobody wants to receive. You know the one—that crisp white envelope with the harp logo that makes your stomach drop faster than a pint of Guinness on a Friday evening.
I still remember my first Revenue audit back in March 2010. Not as the accountant, mind you—as the sweating business owner sitting across from two Revenue officers who looked like they’d rather be anywhere else. Fifteen years and hundreds of audits later (ACCA qualified 2008, CTA 2011), I’m the one sitting beside nervous clients, and let me tell you, it never gets easier.
But here’s the thing: A Revenue audit doesn’t have to be the disaster you’re imagining. In fact, I’d say 90% of the audits I’ve handled ended with the client owing far less than they feared. Some even got refunds. (Yes, really. I’ll tell you about that later.)
The Reality Check: You’re Probably Safe (But Let’s Not Get Cocky)
First, let’s address the elephant in the room. According to Revenue’s own statistics, they completed about 8,000 audits in 2023. With over 700,000 self-assessed taxpayers in Ireland, that’s roughly a 1% chance.
But—and it’s a big but—if your turnover is below €100,000, you can practically forget about it. Revenue isn’t going to spend a day at your premises for a few hundred euros. That’s like using a sledgehammer to crack a walnut.
Now, before you get too comfortable, remember what my old mentor used to say: “The best time to prepare for an audit is when you’re not having one.” Because trust me, trying to find that receipt from 2019 while a Revenue officer taps their pen on your desk? Not fun.
How Revenue Picks Their Victims (Sorry, “Audit Candidates”)
Here’s something most accountants won’t tell you straight: Revenue has a system called REAP (Risk Evaluation Analysis and Profiling). It’s basically like having a really suspicious neighbor who notices everything—except this neighbor has access to every financial database in the country.
REAP looks for things like:
- Your VAT returns not matching your income tax returns (rookie mistake)
- Profit margins way below your industry average (they know what every chipper in Dublin makes)
- Sudden drops in declared income (did you really earn less in 2023?)
- Cash businesses with suspiciously low cash takings (looking at you, hairdressers)
I had a client in Drumcondra—ran a small café. Beautiful spot, always packed. But his declared takings? Lower than a sandwich shop in Siberia. REAP flagged him faster than you can say “flat white.”
The Other Ways You End Up on Their Radar
Random Selection: Yes, it’s real. About 400 cases per year. Like winning the world’s worst lottery.
Third-Party Reports: Your ex-business partner, disgruntled employee, or that competitor who thinks you’re doing too well. I’ve seen it all. One client got audited because his neighbor reported his new Range Rover. (Plot twist: it was leased through the company. All above board.)
Special Projects: Revenue loves these. One year it’s construction, next it’s rental income. In 2023, they were all over online sellers. If you’re selling on Amazon or Etsy and haven’t declared it? Good luck with that.
The Letter Arrives: Don’t Panic (Much)
So it’s happened. The letter’s sitting on your desk, and you’re wondering if Portugal has an extradition treaty with Ireland. (They do. I checked. For a friend.)
Here’s exactly what happens next:
The 28-Day Notice (Used to be 21—Progress!)
Since May 2022, you get 28 days’ notice. Not 28 days to find a good accountant—28 days to:
- Notify Revenue if you’re making a qualifying disclosure
- Gather your records
- Stop hyperventilating
- Call your accountant (should be number 1, really)
What They’re Actually Looking For
The letter will specify:
- The type of audit (more on this in a second)
- The periods they’re examining
- The taxes they’re interested in
- What records they want to see
Pro tip: They usually know something already. That “routine” VAT check? They’ve probably spotted something specific.
The Three Types of Revenue Intervention (Know Your Enemy)
Under the new framework (since May 2022), there are three levels:
Level 1: The Gentle Nudge
This is Revenue being nice. Maybe too nice. They send letters like “Have you declared all your rental income?” Translation: “We know about your Airbnb, Patricia.”
If you get a Level 1, you can still make an unprompted disclosure. This is GOLD. Do it. The penalties are minimal.
Level 2: The Inspection
This splits into:
- Risk Review: Focused on one issue. Like a sniper.
- Audit: The full monty. They’re checking everything.
No more unprompted disclosures here. You’re in prompted disclosure territory. Penalties start at 3% but can go up to 100%. (Though I’ve never seen 100%. Revenue officers are tough, not monsters.)
Level 3: Investigation
If you’re here, you need more than an accountant. You might need a lawyer. And possibly a drink.
The Art of the Prompted Voluntary Disclosure (Your Get-Out-of-Jail Card)
This is where I’ve saved clients literally millions over the years. When that audit letter arrives, you have a golden opportunity: the prompted voluntary disclosure.
Here’s how it works:
Week 1: Tell Revenue you’re making a disclosure. This buys you time.
Next 60 days: Find every single issue, calculate what you owe, and write a big check.
One client in Blackrock—let’s call him Tom—got an audit notice in September 2023. We found €47,000 in undeclared income. Sounds bad? Without the disclosure, he was looking at:
- Tax: €15,000
- Interest: €4,500
- Penalties: Up to €15,000
- Total: €34,500
With the disclosure?
- Tax: €15,000
- Interest: €4,500
- Penalties: €2,250
- Total: €21,750
That’s €12,750 saved by being honest. Plus, his name stayed out of the tax defaulters list. (His wife was particularly happy about that part.)
D-Day: When Revenue Comes Knocking
I’ve sat through more Revenue audits than I’ve had hot dinners. Here’s what actually happens:
The Opening Meeting
Revenue officers are usually… normal people. I know, shocking. They’ll outline:
- What they’re examining
- What they need to see
- How long they expect it to take
One officer told me over tea (yes, you should offer tea): “We’re not trying to catch people out. We just want the right tax paid.” I nearly fell off my chair.
What They Actually Do
They’ll want to see:
- Bank statements (all of them—including that Isle of Man account you “forgot” about)
- Sales records
- Purchase invoices
- Payroll records
- The books (please tell me you have books)
They’re particularly interested in:
- Cash lodgements not matching declared sales
- Personal expenses running through the company
- Missing trader invoices (especially in construction)
- Directors’ loans that look suspiciously like tax-free income
The Awkward Questions
Be ready for:
- “These lodgements of €9,999—why always just under €10,000?”
- “This supplier—can we contact them?”
- “Your GP ratio is 15% below industry standard. Why?”
- “These fuel receipts—450 liters of diesel for a Smart car?”
True story: A client claimed his Labrador as a security expense. The audit was going well until the “guard dog” fell asleep under the Revenue officer’s chair.
Real-Life Audit Horror Stories (And Happy Endings)
The Restaurant That Couldn’t Count
April 2023, Italian restaurant in Temple Bar. The owner, let’s call him Giuseppe, had two sets of books. One for Revenue, one for reality. Classic mistake.
Revenue’s opening move? They sat in his restaurant for a week, counting customers. Their count? 40% higher than his declared sales.
The damage? €180,000 in tax, interest, and penalties. Could’ve been worse—they initially calculated €300,000, but good record-keeping on his actual sales saved him. Still ended up on the defaulters list, though. His mama back in Italy was not impressed.
The Builder’s Redemption
Contrast that with John, a builder from Lucan. October 2023 audit, focusing on subcontractor payments. He’d messed up—paid several subbies without getting their C2s first.
But John kept everything:
- Every invoice
- Every bank transfer
- Every text message about jobs
We made a disclosure for €23,000. Revenue accepted it, minimal penalties. Why? Cooperation and good records. The officer actually said, “If everyone was this organized, we’d be out of a job.”
The Accidental Victory
My favorite? Mary from Howth, audited in January 2024 for rental income. She was terrified—hadn’t declared her granny flat rental for three years.
Plot twist: When we reviewed everything, she’d over-declared other income. The undeclared rent was €18,000, but she’d overpaid tax on dividends by €21,000.
Result? Revenue owed HER €3,000.
The officer’s face was priceless. Mary bought me the best bottle of wine I’ve ever had.
Common Mistakes That’ll Cost You Dearly
After 15 years of this, I’ve seen every mistake in the book. Here are the ones that really hurt:
1. The “It’s Grand” Approach
Thinking small amounts don’t matter. Revenue’s computers don’t care if it’s €50 or €50,000—irregular is irregular.
2. The Invoice Shuffle
Missing purchase invoices, especially from UK suppliers post-Brexit. “But I have the bank statement!” doesn’t cut it.
3. The Family Discount
Paying your spouse €50,000 as a “marketing consultant” when they can’t turn on a computer. Revenue wasn’t born yesterday.
4. The Cash Amnesia
“I don’t really deal in cash.” Meanwhile, your lodgements look like you’re running an ATM.
5. The Lifestyle Audit Failure
Declaring €30,000 income while driving a Tesla and holidaying in Dubai. They notice these things.
One client—I kid you not—posted Instagram photos from his yacht while claiming business losses. The Revenue officer had screenshots. Game over.
Your Survival Toolkit: What You Need RIGHT NOW
Stop reading this and check you have:
The Non-Negotiables
- Bank statements (all accounts, including personal)
- Sales records (daily Z-reads if retail)
- Purchase invoices (organised by month/supplier)
- Payroll records (including P30s, P35s, P45s)
- VAT returns and workings
- Tax computation files
The Surprisingly Important
- Mileage logs (they love checking these)
- Directors’ meeting minutes
- Loan agreements
- Rental agreements
- Asset registers
The Often Forgotten
- Till rolls
- Appointment books
- Credit card statements
- PayPal/Stripe records
- Revolut statements (yes, they know about your Revolut)
The New Rules: What Changed in 2022
The new Code of Practice (May 2022) brought changes. Some good, some… less good.
The Good
- 28 days notice (up from 21)
- Clearer intervention levels
- Publication threshold up to €50,000 (from €35,000)
The Not-So-Good
- No more “aspect queries” (everything’s at least a Level 2)
- Risk reviews can escalate quickly
- Less flexibility for minor errors
The Ugly
- They’re using more data analytics
- Information sharing with other agencies is increasing
- Penalties for “careless” behavior are stricter
Playing the Long Game: Audit-Proofing Your Business
Here’s what I tell every client, whether they’re facing an audit or not:
1. Segregate Everything
Business is business, personal is personal. That €200 Tesco shop? Unless you’re feeding the office, it’s not a business expense.
2. Document Like Your Life Depends on It
Every transaction needs a story. “Miscellaneous” is not a story.
3. Review Quarterly
Don’t wait until year-end. Quarterly reviews catch errors while they’re fixable.
4. Use Technology (But Understand It)
Cloud accounting is great. But “the computer did it” isn’t a defense.
5. Get Professional Help
A good accountant costs money. A bad audit costs more.
I tell clients: “Pay me €2,000 a year to keep you compliant, or pay Revenue €20,000 when you’re not.” Usually works.
When to Really Worry (And When Not To)
Don’t Panic If:
- Your records are good but messy
- You’ve made honest mistakes
- The amounts are small
- You cooperate fully
Start Worrying If:
- You’ve hidden income deliberately
- You can’t explain large cash lodgements
- Your lifestyle doesn’t match your declarations
- You’ve been here before
Call a Lawyer If:
- Revenue mentions “criminal investigation”
- They’re asking about offshore accounts
- Multiple years of deliberate under-declaration
- The numbers are life-changing
The Secret Weapon: Building Relationships
Here’s something they don’t teach in accounting school: Revenue officers are people. Treat them with respect, and they’ll often reciprocate.
Best audit I ever attended? The client had everything perfectly organized, offered good coffee, and answered honestly. The officer found €8,000 in errors. Could’ve pushed for penalties but said, “The cooperation here has been exceptional. Pay the tax and interest, we’ll leave it at that.”
Worst audit? Client was hostile from minute one. Same level of errors, but walked away with maximum penalties.
The Bottom Line: It’s Not the End of the World
Look, I get it. A Revenue audit feels like someone’s examining your soul with a magnifying glass. But remember:
- Most audits find something, but it’s rarely catastrophic
- Cooperation dramatically reduces penalties
- Good records are your best defense
- Revenue wants compliance, not destruction
Since writing our guide on capital allowances, I’ve had dozens of clients discover they’re due refunds during audits. One manufacturing client found €45,000 in unclaimed allowances while being audited for VAT. The Revenue officer actually helped identify them.
And with all the Budget 2025 changes, there are more legitimate ways to reduce your tax bill than ever.
Your Action Plan (Do This Today)
- Check Your Compliance: When did you last review your tax position?
- Organize Your Records: Start now, not when the letter arrives
- Make Disclosures: If you know something’s wrong, fix it before they find it
- Get Professional Help: A good accountant is like insurance—you hope you don’t need them, but you’re glad they’re there
Final Thoughts from the Trenches
After 15 years and hundreds of audits, here’s what I know:
Revenue audits are like going to the dentist. Nobody enjoys it, it’s occasionally painful, but regular check-ups prevent major problems. And sometimes, just sometimes, you walk out feeling better than when you walked in.
The businesses that sail through audits aren’t the ones with perfect records—they’re the ones that try to do the right thing and can prove it.
So stop losing sleep over that envelope that might never come. Focus on running your business properly, keep decent records, and if Revenue does come knocking?
Give me a call. I’ll bring the good coffee.
Based on current Revenue procedures as of June 2025. Tax legislation changes faster than Dublin weather, so always check current rules. And no, knowing someone who knows someone in Revenue doesn’t help. I’ve asked.
And remember: Ireland’s effective corporate tax rates vary wildly by sector. Understanding your industry norms might just save your bacon in an audit.