In the ever-evolving landscape of taxation and financial regulations, it is crucial for businesses to stay informed about changes that may impact their operations. One such development that is set to take effect in January 2024 is the Enhanced Reporting Requirements (ERR) for expense reporting to Revenue. This significant update, recently featured prominently in the media, carries important implications for employers. In this blog post, we will dive into what ERR entails, what expenses it covers, and the options available to businesses for compliance.
Enhanced Reporting Requirements (ERR) Explained
ERR is a legislative change introduced through Section 897C of the TCA 1997 under the Finance Act 2022. It mandates that employers provide detailed reports to Revenue regarding specific payments made to employees and/or directors. The crucial aspect of ERR is that these reports must be submitted to Revenue before the actual disbursement of these payments. This shift in reporting aims to enhance transparency and compliance in expense management.
ERR encompasses a wide range of expenses, and employers need to be diligent in their reporting. Here is a breakdown of the expenses that fall under the ERR purview:
Travel & Subsistence:
- Travel Vouched
- Travel Unvouched
- Subsistence Vouched
- Subsistence Unvouched
- Eating on-site
- Site-based employees (including “Country Money”)
- Emergency Travel
- Small Benefit (e.g., vouchers or tangible items, limited to a maximum of two benefits in a tax year, with a cumulative value not exceeding €1,000)
- Date provided
- Value (*Note: The exemption applies to the first two qualifying benefits.)
Remote Working Daily Allowance:
- Number of days
- Amount paid
- Date paid
Options for Compliance
To adhere to ERR, employers have a couple of options for submitting these reports:
- Direct Submission to ROS (Revenue Online Service) via payroll: Employers can choose to report expenses directly through the ROS platform, which is a secure and efficient way to ensure compliance. This method allows for a direct line of communication with Revenue and is particularly relevant for expenses processed through payroll.
- Third-Party Expenses Management Companies: Businesses may use a third-party expense management company to oversee the reporting process on their behalf. These specialized service providers are well-versed in the intricacies of expense reporting and can offer valuable expertise to ensure compliance.
As businesses prepare for ERR compliance, there are essential considerations to keep in mind:
- Timing: ERR comes into effect on January 1, 2024. Adequate preparations should be made to ensure a seamless transition to the new reporting requirements.
- Cost: While ERR compliance is essential; businesses should also be aware of the associated costs. Setting up the necessary processes and documentation may require an initial investment, and ongoing administrative fees may apply.
- Accuracy: The accuracy and completeness of expense reporting are paramount. Errors or omissions could lead to compliance issues and potential penalties.
The Enhanced Reporting Requirements (ERR) represent a significant shift in expense reporting to Revenue, requiring employers to provide detailed information about various payments made to employees and directors. By understanding the scope of ERR, exploring compliance options, and preparing in advance, businesses can ensure a smooth transition.