Revenue Compliance Interventions – Operation of Payroll Taxes (Income Tax, PRSI, USC) by Employers

Revenue eBrief No. 176/22

Revenue Compliance Interventions – Operation of Payroll Taxes (Income Tax, PRSI, USC) by Employers

Revenue has published a new Tax and Duty Manual – Revenue Compliance Interventions – Operation of Payroll Taxes (Income Tax, PRSI, USC) by Employers.

The purpose of this manual is to provide guidance for caseworkers conducting compliance interventions in respect of employers who have incorrectly operated payroll taxes.

This guidance deals only with cases where it is determined that the updating of an employee’s payroll record is required due to the incorrect operation of the Pay As You Earn (PAYE) system by an employer as a result of error or carelessness.

The guidance set out in this Tax and Duty Manual will apply to any self-correction or qualifying disclosure received and/or Revenue compliance intervention initiated following the publication of this Tax and Duty Manual.


4. Payroll Submission Errors
Payroll errors may arise for a variety of reasons including, for example operating Emergency Tax when an RPN is available, not using the latest RPN, incorrect valuation of a benefit in kind, the non-operation of benefit in kind at the time it was received etc.

Revenue guidance confirms that employers should review notional pay regularly, at least quarterly, to ensure payments reported to Revenue are as accurate as possible.

Where an error arises in the operation of the PAYE system, the employer is required under section 985G(6) Taxes Consolidation Act 1997 to correct the incorrect Return by amending the relevant payroll submission(s) to reflect the correct income and tax position using the employee’s RPN in operation at the
time. Subsequent returns may also require amending where more than one Return is found to be incorrect due to the employer error.

As set out in Section 2 above, our approach to initiating PAYE compliance interventions has changed, reflecting the real-time nature of PMOD. Our intention is to address issues as early as possible, preferably within the year in which they arise. The decision to initiate either a Level 1 or Level 2 compliance intervention will depend on the particular circumstances of the case.

The processes set out below provide the mechanism for addressing Current and Prior Year corrections and associated liabilities arising due to the incorrect operation of payroll taxes where an employer fully cooperates with the Compliance Intervention. Please note that the procedures outlined in TDM Part 42-04-59 – Credit in respect of tax deducted from emoluments of directors and employees and Part 42-04-23 – Unpaid Remuneration, still apply.