Airbnb hosts at new risk of Revenue audits

Short-term accommodation market in tax compliance focus

THE Revenue Commissioners are to launch a special audit crackdown of Airbnb hosts after analysing the results of a letter campaign to 12,000 providers of the short-term letting service.

Revenue has been intensifying its focus on Airbnb income for over a year but until now has stopped short of launching a full ‘compliance project’, which is an intense focus on a high-risk sector.

However, in recent weeks, Revenue has told senior accounting representatives that it intends to escalate launching such a project and has already begun a pilot compliance programme.

Revenue has spent several months analysing the results of the letter campaign to Airbnb hosts which urged them to comply with income tax obligations and warned them to come forward with undeclared income.

At a recent meeting focusing on audits, Revenue officials told accountants and legal representatives that it was launching the ‘compliance project’ for short-term letting of accommodation.

Compliance projects require taxpayers to answer specific questions and disclose details of their tax affairs. If this is not deemed satisfactory, Revenue will move to audit the individual’s tax affairs. Unprompted disclosures can reduce penalties but the most serious cases can lead to criminal prosecutions.

Revenue told the Sunday Independent that in recent weeks it has initiated a pilot compliance programme, writing to around 30 taxpayers known to receive Airbnb income.

Compliance projects are typically implemented when Revenue believes there is a high level of risk of underpayment of tax in a particular area.

According to Revenue’s audit code of practice: “Projects can range from unannounced compliance visits to full comprehensive audits.

“In many instances, Revenue will have gathered intelligence on a sector in advance from a number of sources… They [taxpayers] are asked to review their returns, paying particular attention to certain areas of risk that Revenue has identified.”

The September minutes of the meeting of the audit sub-committee of the Tax Administration Liaison Committee (TALC), seen by the Sunday Independent, reveal for the first time that “Revenue are preparing to implement a compliance project in relation to short-term letting of accommodation”.

Prior to this Revenue had insisted that no specific project existed and data was still being analysed.

Other recent compliance projects covered in the meeting include a medical locums project and officials told the meeting that 267 audits and 278 aspect queries (seeking specific tax details) have opened to date under this project.

A spokesman for Revenue said: “Revenue is alert to the risks posed by online business in all its forms, including the provision of short-term accommodation.

“In September 2018, Revenue wrote to approximately 12,000 people in receipt of income from the provision of short-term accommodation to remind them to include this income on their tax returns.

“The letters also provided guidance on the correct tax treatment of this type income and gave details on how to correct returns already made, where necessary.”

As a follow-up to these letters Revenue has recently started a pilot compliance programme, writing to approximately 30 taxpayers in receipt of this income to ensure that the income has been returned correctly.

“As this programme is currently on-going, no further information is available,” he added.

In 2017, about 23,000 Irish people earned a total of €115m from letting all or part of their homes through Airbnb.

The company has been providing Revenue with details of thousands of hosts as part of an information sharing agreement.