Compliance Risk Management

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Compliance Risk Management Revenue Developments
Séamas O Cathasaigh
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Credibility

• In 1988 we had 60,000 tax appeals on hands
• In 1988 tax arrears were at 54 of the tax take
• In 2009 the tax arrears were less than 3 and the
  appeals can be measured in hundreds rather than
  thousands

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Self Assessment

• Self assessment was introduced in 1988
• Era of huge change in Customer Service
• Revenue On-Line Service (ROS)
• Managing the risk

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Basic process flow
e return
ITS Data warehouse Risk system
Tax return
Customer
Data entry
Tax assessment

• Risk rules e.g.
• Lateness
• Late payment
• Non payment
• Wrong ratios
• Solvency
• Sudden change

Auditor
High risk cases
Case selector
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Case Selection

• Old Method - Inspection of paper Returns of
  Income 1/3rd per year
• Tackling the riskiest cases
• Computerised analysis -risk assessment - REAP
• Sectoral or local knowledge
• Random/Re-audit

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Focus on Risk

• Whole case management approach to managing
  compliance
• Simplify and reduce contacts with compliant
  taxpayers
• Focus on risk-driven targeting of interventions
  against non-compliance
• Segmentation
• Influencing behaviour

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Risk Evaluation Analysis and Profiling - REAP

• Eskort software/REAP built by Revenue
• Behavioural rules created, based on the
  experience of our auditors, constantly being
  reviewed
• All self-assessed taxpayers receive a
  risk-ranking based on several years data
• Case Selection by trained case selectors

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Risk Evaluation Analysis and Profiling - REAP

• Focus on the Top 20 of REAP currently 60 of
  audits from Top 20
• Balance for Re-Audit, Random, Sectoral Projects,
  Special Investigations, Local Knowledge, Evidence
  based projects
• Risk run for all cases three times a year
• Data from Returns, Third Party, Government
  payments etc.

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Other Technology

• Common Registration System
• All registrations in one system since 1996
• Integrated Taxation System
• PAYE Business
• Integrated Case Management (ICM) System
• Debt management/Enforcement
• Return Non- Filers
• Audit
• Prosecutions

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Other Technology (contd.)

• Systems underpinned by
• - Data Warehouse
• - Revenue Online Service (ROS) eFiling
• - Data Capture / Scanning of Paper Returns
• - Receipt of Data from other Sources

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Change Management

• Regular Regional meetings/training sessions held
  by the REAP Team
• Representative Liaison Groups
• Formal part of the UL Diploma and Degree
  programmes
• Partnership - Quality Audit Standards
• Annual Risk Conference

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Case Management System

• Aid to Case Selection
• Appropriate intervention in a well-chosen case
  not always audit
• Tracking of compliance interventions
• On-Line approval system
• Mandatory reporting
• Representative Project Board

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Code of Practice for Revenue Audit

• Reflects legislation and practice
• Certainty and consistency of approach
• Details taxpayers rights and obligations
• Statutory basis for auditors powers
• Details conduct of audit
• Primarily concerned with audit
• Consultation with Revenue auditors and tax agents

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Key Success Factors

• Consultation and communication
• Project governance
• Quality control
• Continuous review/international
  benchmarking/innovation
• Strong focus on how technology developments can
  assist

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Go raibh maith agaibh!Thank you!
Séamas O Cathasaigh
email socathas_at_revenue.ie
14 December 2010