Code of Practice for Revenue Auditors 2002 Code – Clarification

Clarification on Code of Practice Second Qualifying Disclosure and Mitigation of Penalties

The purpose of this note is to clarify Revenue’s policy on the mitigation of penalties on foot of a second qualifying disclosure. Current practice on this issue is contained in Revenue’s Code of Practice for Revenue Auditors at paragraph 10.4 of page 34 and is reproduced below:

“It is inappropriate that penalties should be mitigated on foot of disclosures of recurring defaults in the categories of deliberate default or gross carelessness.

• The mitigation of penalties, for a disclosure which is the second qualifying disclosure made by a taxpayer disclosing tax defaults in these categories, is to be restricted by 50%”.

Confusion has arisen amongst practitioners on the practical application of this 50% restriction in the case of a second qualifying disclosure in these categories. This is clarified below.

Where a disclosure, which is a qualifying disclosure for the purpose of mitigation of penalties, is made by a taxpayer in the category of deliberate default or gross carelessness, the net penalty after mitigation is as set out in the table in paragraph 9.4, at page 26 of the Code of Practice. The relevant parts of that table which apply to a first qualifying disclosure in these categories are as follows:

Where there is a second qualifying disclosure in these categories mitigation of the net penalty is restricted by 50%, and is as follows: