The C&AG's report for 2005 gives Revenue a clean bill of health, and puts an interesting spotlight on several topical developments.

REAP

REAP is the acronym for Revenue's new computerised case screening system for Revenue Audits. It used to be known as ESKORT There's an ongoing debate as to whether or not the rules it uses for selecting cases should be published, and certainly they're not yet generally available.

However, one area which Mr John Purcell, the C&AG, looked at in some detail was the extent to which Revenue cross refer their Stamp Duties payment records to detect Capital Gains Tax which might be due. REAP apparently examines such cases –

• “Already the system (REAP) included risk related rules which were used to highlight individual cases. The rules checked cases with regard to the following:

• mismatch between an asset purchase (either from Stamp Duty or CGT data) and declared income
• an asset sale (either from Stamp Duty or CGT data)
• CGT liabilities outstanding or paid late
• a mismatch between a CGT payment and the non-inclusion of CGT information on a return (or the absence of a return), or
• the payment of a CGT liability against declared income.”

The C&AG also queried the extent to which taxpayers seek to bring moneys in under CGT rather than Income Tax rules, and it would appear from Revenue comments that schemes to arrive at such substitutions, while maintained under review, are not widespread by any means.

Appeal Commissioners

It is sometimes observed that Revenue have a far better perspective than taxpayers on what kind of cases are presented for determination by the Appeal Commissioners because by definition, they are a party to every case. While this may be so, it seems that the C&AG encountered some difficulties in his examination of the management of Appeals. He had to resort to using the identifiers applied to suspend enforcement proceedings in the Collector General's computer system to get details of the cases involved. As Mr Purcell put it:

• “the Appeal Commissioners were not a tribunal of record and were not required to, and did not, retain a written record of determinations, proceedings or documents submitted. The Appeal Commissioners or Revenue did not retain statistical or summary records. Revenue estimated that between 500 and 600 cases had been lodged with the Appeal Commissioners in 1999, and that approximately 250 cases were heard and decided annually. The remaining appeals were either withdrawn or settled prior to a hearing.”

Despite the lack of statistics, it appears that the causes, course and effects of Appeal Hearings are the subject of considerable interest within Revenue.

“The Appeals Committee [an internal Revenue committee] circulates decisions taken e.g. how a case is to be handled, and whether counsel is to be retained, to the individual officers, to regional liaison officers, and to all Assistant Secretaries. In cases where the retention of counsel has been approved, details of the issues are placed on the Revenue intranet for general information of staff. Where the question at issue is already awaiting hearing by the higher courts, or has previously been dealt with in some other way, further similar cases will be returned to the region or division to await the outcome of the previous case or to be dealt with in accordance with the previous decision. The case officer provides the Committee with brief reports at each appeal stage of cases where counsel has been authorised. The Committee makes a six-monthly report to the Revenue Board on the progress of cases under appeal to the higher courts.”

Other topics of interest examined by Mr Purcell include the Revenue Audit Programme, Prosecutions, the various Special Investigations, and VAT and E-Commerce. Accountants in multinational organizations or with multinational clients will find a chapter called International Aspects Of Revenue Operations of particular interest, as it covers the rationale behind our Double Taxation Agreements and the extent that the various mutual assistance, recovery of taxes and information exchange agreements operate.