TAXATION
How to avoid a Revenue Attachment Order
BY
Mark Ryan
How to avoid a Revenue
Attachment Order
Mark Ryan outlines how best to avoid Revenue Attachment Order for
your client or your business.
Mark Ryan, CPA is a
Director with Quintas
one of Ireland’s leading
accountancy firms.
The recent publicity regarding the
collapse of the transport company Target
Express highlighted the impact the placing
of an attachment order by Revenue can
have on a business. In the case of Target it
led to the collapse of the business with the
loss of 400 jobs.
Based on reports released by the company
and the liquidators it took just 7 days from
the date the attachment order was
enforced (Friday 24th August) to the
day the liquidator agreed a deal to sell the
assets of the company to one of its main
competitors (Friday 31st August).
Revenue issued a statement at the
time noting that in general “it only
pursues enforcement options after
specific engagement with the business.
Enforcement options like liquidation,
bankruptcy and attachment are only used
as a last resort in cases where the debt
problem is serious and intractable”.
The Power of Attachment
In the case of an attachment order
Revenue have special powers under tax law
that does not require them to get a court
order to freeze a bank account and/or to
contact a companies customers to demand
direct payment of the liabilities due. The
attachment order remains in place until
such time as the full liability has been paid.
Unfortunately attachment orders are a
common practice by Revenue and they
are most likely on the increase given the
continued credit squeeze and the
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deterioration in the economy. Revenue’s main
focus is to collect tax and there is a process
in which they go about their business of
gathering cash on behalf of the exchequer.
In 2010 they issued 4,228 attachments
which rose to 4,463 in 2011 and which they
used to collect over €30m in taxes last year.
In the first 7 months of 2012 revenue have
issued 2,519 attachments.
How to avoid an Attachment Order
I have outlined below some of the issues
that need to be taken into account to avoid
this action being taken by Revenue:
REAP (Risk Evaluation, Analysis
and Profiling)
This is Revenue’s software system which it
uses to profile each tax payer and business
in the state. This is the main tool that
Revenue use when selecting businesses for
a revenue audit. In most cases 5% of audits
are random with the remainder being
based on sectoral analysis, specific tax
risks and on some of the criteria outlined
further below. This has proven to be a very
successful information tool for Revenue
and it is important to understand how this
system works.
Compliance
It is a basic requirement of all tax payers
(individuals and companies) to ensure
that they are aware of the relevant tax
deadlines and ensuring that they are
meeting the compliance deadlines for the
relevant taxes that they are registered
for. With the implementation of Revenues
Online Service (ROS) the interaction between
the tax payer and Revenue has improved
considerably and it is important that both
your tax agent and your business are
registered for ROS. This will allow you to
view your deadlines, liabilities and tax history
in real-time and also allow you to receive
important notifications from Revenue.
Communicate
If you are falling behind in the submission
of your returns or if you are struggling to
pay the tax liabilities as they fall due, it is
important to contact Revenue to explain
your situation and to agree a timeframe
for getting everything up to date. In the
main Revenue are happy to work through
problems with tax payers and approaching
Revenue is not something that should
be feared. If you are not confident to deal
directly with Revenue then your tax agent or
accountant will be able to help in this regard.
If you have outsourced your Revenue
compliance it is important to ensure that
you get regular updates on the discussions
with Revenue as ultimately the responsibility
for compliance and prompt payment to
Revenue rests with the tax payer.
Phased Payment Arrangements
Although Revenue will not negotiate on
the amount of tax that is due they are very
much aware that businesses are under cash
flow pressure due to the current economic
climate. They are willing to negotiate
installment arrangements but they will not
at any stage take on the role of funding a
business that is having cash flow problems.
There is a formal process called a Phased
Payment Arrangement. An application form
needs to be completed and submitted to
Revenue with some financial information to
support the installment proposal. This will
include recent bank statements, accounts
and cash flow projections depending on the
amount of the tax liability.
In all instances, interest will apply to the
phased payment arrangement, both on the
accrued debt and for the duration of the
phased payment arrangement. It must be
noted that there is no guarantee that Revenue
will enter into an installment arrangement.
It is extremely important that you do not
make a payment commitment that you
ACCOUNTANCY PLUS. ISSUE 04. DECEMBER 2012
BY
TAXATION
Mark Ryan
How to avoid a Revenue Attachment Order
will not be able to repay on time over the
agreed period. It is important to complete a
full cash flow review of your business for a
minimum of 12 months, as one of the main
conditions of an arrangement is that all
future returns are submitted on time and
paid in full as they fall due.
demand or warning letter can have dire
consequences for the business. In the case of
a demand letter Revenue give a 7 day notice
of actions that they will take that are in the
main irreversible once they are set in motion.
to have these discussions from a position
of strength rather than as a last resort
when it maybe too late.
Cold Audit Overview
Self-Review and Update
It maybe advisable to complete a ‘cold audit
overview’ of where your business stands
today and to complete a statement of the
assets and liabilities of the company. This
review should be able to project problems
that may come down the road if the
business was to experience some shortterm cash flow problems due to a fall in
income for a couple of months or for some
other unforeseen event.
Having dealt with Revenue on numerous
occasions over the years I have found
that in the main they are approachable,
reasonable and willing to help out
within the parameters that the tax
legislation allows. The problems arise
where they feel they are being ignored or
where they become concerned that there is
the possibility that they will not be paid tax
that the business is effectively collecting on
behalf of the government.
It is important to review your revenue
position on a monthly basis to ensure that
there are sufficient funds in place to meet
the businesses short-term commitments.
It would be advisable to set up separate tax
bank accounts to provide for future tax
liabilities i.e. VAT, PAYE/PRSI, Income tax or
Corporation tax.
It may also be advisable to avail of Revenues
monthly direct debit system which will
reduce the frequency of Vat and Paye/Prsi
returns to one per annum and which if used
properly will allow the business to manage
its cash flow more effectively
Revenue Correspondence
Given the current pressures on the
exchequer and the current circa €15bn
shortfall in tax receipts versus expenditure
it is almost certain that Revenue will chase
down anyone they feel will be a threat to
their collection of taxes.
If I had one last piece of advice it would be
to treat Revenue like you would any other
creditor and try to have open and honest
communication with them at all times.
Ex
Co clu
nt siv
en e
t
Do not ignore correspondence from
Revenue as a lack of communication or
a delayed response from a tax payer to a
This would allow the business owner to
approach each of their creditors (banks,
revenue and key suppliers) to set out a plan
that will hopefully head off any problems
before they arise. If you feel that you
have lost control of your finances and are
unsure how much you owe to Revenue,
I would suggest that you complete this
review as soon as possible to avoid your
business running into trouble which it
may not have sufficient funding in place to
survive. As with all negotiations it is easier
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