We are seeing an increase in Irish Revenue compliance activity in relation to Enhanced Reporting Requirements (ERR). Irish Revenue have been issuing Level 1 Compliance Interventions under the Code of Practice for Compliance Interventions where required ERR returns have not been filed, or have been filed incompletely.

ERR has applied since 1 January 2024 and requires employers to report certain non taxable expenses and benefits paid to employees on or before the payment date via Revenue Online System (ROS). Reportable categories include travel and subsistence payments, small benefit exemption items and the remote working daily allowance.

What we are seeing from Revenue

While Revenue adopted an initial ‘service to support compliance’ approach during ERR implementation, this has now transitioned into formal compliance activity.

In recent months, Revenue has commenced issuing Level 1 notifications to employers for ERR non compliance. A Level 1 intervention is a formal compliance step by Revenue and should be addressed with care. Where issues are not satisfactorily resolved within Revenue’s specified timelines, there is a clear risk of escalation to a Level 2 intervention.

Why this matters for employers

Escalation from a Level 1 to a Level 2 intervention materially increases an employer’s risk exposure.

Level 2 interventions typically involve:

  • Higher penalties and interest.
  • A wider PAYE and employment tax scope, extending beyond ERR.
  • More detailed examination of expense policies, payroll practices and governance.
  • Increased likelihood of ongoing Revenue scrutiny.

Importantly, Revenue expects employers in receipt of Level 1 notifications to fully regularise all outstanding ERR obligations, rather than simply acknowledge correspondence from Revenue.

Key actions for employers

Where a Level 1 notification has been received (or may be received), employers should respond urgently by following the below steps:

  • Confirm whether ERR filings are complete and accurate from 1 January 2024 onwards.
  • Ensure filings meet Revenue’s data, schema and validation requirements.
  • Remediate historic gaps promptly to reduce escalation risk to a Level 2 compliance intervention.
  • Put in place a sustainable process for ongoing, real time ERR compliance.

How we can help support compliance with ERR

RSM supports employers through outsourced ERR compliance and remediation, including:

  • Targeted ERR exposure reviews following Revenue contact.
  • Completion of historic ERR back filings.
  • Ongoing managed ERR filing services.
  • Technical review of expense classifications aligned to Revenue guidance.
  • Acting as ERR agent in communications with Revenue.

If helpful, we would be happy to arrange a short call to discuss current Revenue activity, your ERR position, and how we can practically support you in managing this risk. Please contact Caoimhe Neary, Tax Partner here. 

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