A Revenue audit in Ireland is a Level 2 compliance intervention under Revenue's Code of Practice for Revenue Compliance Interventions, which has applied to interventions notified since 1 May 2022. Revenue gives 28 days' written notice, and until the audit starts a business can make a prompted qualifying disclosure that cuts the penalty (for example from 40% to 20% of the tax for a first careless default with significant consequences) and keeps its name off the tax defaulters list. Interest on late VAT runs at 0.0274% per day and cannot be reduced.
A Revenue audit examines whether specific returns, claims or declarations are accurate. It can cover one tax for one period or several taxes across several years.
Most cases are picked on risk, using Revenue's REAP system and real-time VAT and PAYE data. A few are picked at random.
The rules are set out in the Code of Practice for Revenue Compliance Interventions. Revenue's web page for it is dated 15 May 2026, but the Code itself is still the 1 May 2022 edition.
Revenue can start at any level, and an ignored Level 1 contact can lead to Level 2 or 3. Every notification states its level.
Level 1 covers reminders to file, requests to self-review an issue, profile interviews and Cooperative Compliance Framework engagement. A profile interview is a meeting to understand the business, and is not used where Revenue has already found a specific risk.
At Level 1 you can still self-correct without penalty (within time limits) or make an unprompted disclosure, the cheapest way to fix a mistake.
A risk review looks at one risk or a small number of risks on a return, and is usually done by letter. An audit is used where the risk is greater and is usually held at the business premises or by video call.
The old "aspect query" letter belonged to the 2019 Code. Under the current Code, a targeted query about one item on a return is normally a Level 2 risk review, and the letter will say so.
An investigation is for suspected serious evasion or fraud and can start with an unannounced visit. Once notified, a qualifying disclosure is no longer possible.
Revenue sends a "Notification of a Level 2 Compliance Intervention" to the business and its agent. A risk review or audit is treated as starting 28 days after the date of the letter (for an audit, unless another date is agreed).
From the date on that letter, an unprompted disclosure is off the table, but a prompted one is possible until the intervention begins.
Notify Revenue in writing within 21 days of the letter and request up to 60 days. For an audit, a disclosure can still be made on the day, before the books are examined.
The auditor shows identification, explains the purpose of the audit and offers the chance to make a prompted qualifying disclosure. The auditor then confirms the audit has started and examines the books and records, checks that all returns are filed and match them, and works out any liability (errors in your favour included).
Revenue may hold a pre-audit meeting about electronic and EPOS records and ask for data downloads. If paper records are taken away, a receipt is given and Revenue aims to return them within one month.
At the final meeting, where tax is due, Revenue asks for a written settlement offer covering tax, interest and penalties. Payment is due within one month of acceptance.
Revenue's guidance says to keep the originals of anything used to calculate income tax, corporation tax or CGT for six years. That includes sales invoices, purchase and expense receipts, nominal ledgers and accounting books. For VAT, records must be kept for six years, or until an inquiry or appeal is finalised if that is later.
Having all books, records and linking papers available when the audit starts is the first sign of full cooperation in the Code. Records held by your accountant should be back on your premises in time.
A qualifying disclosure is a written, signed disclosure of complete information about every matter giving rise to a liability. It must come with a declaration that it is correct and complete, and with payment of the tax and interest (an agreed phased payment arrangement counts).
It reduces the penalty, keeps the settlement off the defaulters list and rules out an investigation with a view to prosecution.
An unprompted disclosure is made before Revenue issues any Level 2 or Level 3 notification. If you tell Revenue in writing before such a notification that you intend to disclose, you can ask for up to 60 days to prepare it.
A prompted disclosure is made after a Level 2 notification but before the risk review or audit begins. For careless behaviour it must cover the tax and periods in the scope of the intervention. For deliberate behaviour it must cover all taxes and periods.
Penalties are a percentage of the tax underpaid and depend on behaviour, disclosure and cooperation.
Careless behaviour has "significant consequences" when the tax underpaid exceeds 15% of the tax correctly payable, tested separately for each tax and period. Deliberate behaviour means intent, such as repeated omissions from the books or false documents.
| Category of behaviour | No disclosure, no full cooperation | No disclosure, full cooperation | Prompted qualifying disclosure | Unprompted qualifying disclosure |
|---|---|---|---|---|
| Careless without significant consequences | 20% | 15% | 10% | 3% |
| Careless with significant consequences (first disclosure) | 40% | 30% | 20% | 5% |
| Deliberate (first disclosure) | 100% | 75% | 50% | 10% |
Source: Code of Practice for Revenue Compliance Interventions, sections 2.13 and 2.14. Disclosure rates assume full cooperation.
A second disclosure within five years costs more (careless with significant consequences: 30% prompted, 20% unprompted; deliberate: 75% and 55%), and a third gets no reduction.
No tax-geared penalty applies where the total default is under €6,000 and is not deliberate. Innocent errors also carry no penalty, but interest still applies.
Revenue publishes settlements quarterly in Iris Oifigiúil and on its website. A settlement is not published where a qualifying disclosure was accepted, where the tax in the published amount is €50,000 or less, or where the penalty is 15% or less of the tax. Lists stay on Revenue's website for no more than two years.
Interest is charged daily from the original due date until payment, and the Code states that no mitigation is available. The rate is 0.0274% per day for VAT, RCT and employer PAYE, PRSI and USC, and 0.0219% per day for income tax, corporation tax and CGT.
These rates have applied since 1 July 2009. Check after Budget 2027 (6 October 2026) for any changes.
Assumptions: a VAT-registered business returned €32,000 of VAT for one bi-monthly period when the correct figure was €40,000. The shortfall is €8,000. This is its first qualifying disclosure, the error was careless (not deliberate) and the tax is paid 365 days after the original due date.
Step 1, category. €8,000 / €40,000 = 20%, which is more than 15%, so this is careless behaviour with significant consequences. The €8,000 is also above the €6,000 no-penalty limit.
Step 2, interest. €8,000 x 0.0274% = €2.192 per day. €2.192 x 365 days = €800.08.
Step 3, penalty under each route.
| Route | Penalty rate | Penalty | Tax + interest + penalty |
|---|---|---|---|
| Unprompted qualifying disclosure | 5% | €400 | €9,200.08 |
| Prompted qualifying disclosure | 20% | €1,600 | €10,400.08 |
| No disclosure, full cooperation | 30% | €2,400 | €11,200.08 |
| No disclosure, no full cooperation | 40% | €3,200 | €12,000.08 |
Caught within the self-correction time limit, it would cost €8,800.08 with no penalty. Disclosing before any letter saves €1,200 against a prompted disclosure and €2,800 against the worst case. As the tax is under €50,000, none of the four routes leads to publication.
We help businesses review their position, prepare qualifying disclosures and deal with Revenue during risk reviews and audits. See our tax services or book a quick chat. The free compliance calendar tracks filing dates, and the cyber health check can help you review how securely your records are kept.
Related reading: VAT registration threshold in Ireland, Form 11 and preliminary tax for sole traders and RCT explained.
Yes. Revenue gives 28 days' notice, and until the risk review or audit begins you can make a prompted qualifying disclosure. An unprompted disclosure is no longer possible from the date on the letter.
Where the shortfall is over 15% of the correct tax, it is 40% with no disclosure, 30% with full cooperation, 20% with a prompted disclosure and 5% with an unprompted one. Smaller careless errors attract 3% to 20%.
Not if a qualifying disclosure is accepted. Settlements are also not published where the tax is €50,000 or less, or the penalty is 15% or less of the tax.
Revenue's guidance is six years. For VAT, if an inquiry or appeal is open, keep the records until it is finalised if that is later.
An aspect query was a short, targeted check under Revenue's 2019 Code. Under the current Code, from 1 May 2022, a targeted check on one item is normally a Level 2 risk review, and the letter states the level.
Last checked: 3 October 2026. Written by the M.A. Whately team. This guide is general information, not advice for your situation; talk to us before acting on it.
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