Employees could be on the hook for taxes on Christmas lunches and retirement parties because of a Revenue clampdown on how companies account for entertainment expenses.
Tax officials are understood to have begun a series of audits of the expenditure businesses make on staff outings to determine whether the workers involved unwittingly owe benefit in kind taxes.
Revenue said there had been no change in policy regarding expenses but tax practitioners have reported a “hardening of positions”.
The matter was raised at the tax administration liaison committee’s audit subgroup and is due to be addressed at a meeting this week.
According to Revenue guidelines, bona fide staff entertainment is allowable as a deduction if certain conditions are met. It is understood that Revenue officials are examining cases where either entertainment was not open to all employees or it involved the provision of hospitality to clients.
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The change is part of an increase in intensity and scope of Revenue’s compliance interventions, which are now powered by algorithmic software and artificial intelligence that can sweep up and quickly process huge volumes of segmented tax data.
“The real-time data provided by employers assists Revenue in assessing risks associated with these benefit and payment types,” Revenue said. “This enhances Revenue’s data-driven assessments, focusing on the riskiest cases.”
