Factors influencing the decision to investigate/start an enquiry

Investigations and non-random enquiries

The following factors may increase the risk of selection:

  • Obvious errors in the return
  • Late submission, or late payments
  • Submitting more than one year at one time
  • Unexpected or fluctuating margins or other financial ratios
  • Employer compliance issues
  • Providing large benefits in kind to employees, particularly directors
  • Loans to directors and/or participators
  • Overseas issues
  • Large provisions
  • Cash business
  • Business in a sector being targeted by the Inland Revenue
  • Apparent lack of means to meet private living expenditure for owners/directors
  • Complex technical issues.
  • Qualified audit report.

Although the risk of selection can not be eradicated completely, it can be reduced by taking the following actions:

  • Ensure that Returns are submitted and payments made timeously
  • Check submissions carefully to avoid obvious errors
  • Consider the factors that are likely to attract Revenue attention; review them to identify potential problems in advance. Provide additional explanation or information where it might assist the Revenue officer’s understanding of what has happened, particularly if the results appear unusual.

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