I thank the Chairman and members for the opportunity to make a statement in respect of chapters 3.1 to 3.7 of the Comptroller and Auditor General's report for 2007. The Comptroller and Auditor General already referred to some of the figures, so I will skip over them in the interests of expediency.
Chapter 3.1 shows the figure for net receipts. While, as the Comptroller and Auditor General stated, this shows an increase of almost €2 billion on 2006 figure, it was over €1.8 billion below the Exchequer target figure for the year. With the exception of income tax there was a shortfall in all the major taxes. However, in view of subsequent events, it can be seen as a comparatively successful year in terms of revenue collection. The single largest contribution to the shortfall was in stamp duty receipts. This came about as a result of the slowdown in the property market.
Paragraphs 3.2 and 3.3, as the Comptroller and Auditor General said, deal with the writing-off of taxes and analysis of major write-off cases. It is important to put the write-off in context. The amount written off in 2007 was approximately €118 million, which was slightly down on the previous year. Revenue, like every other tax administration or business, inevitably experiences some bad debts. Our objective is to minimise these in every way possible and we will only write off tax when we are satisfied it is genuinely uncollectible or uneconomic to pursue. Amounts written off should be viewed in the context of the amount of tax collected.
As a percentage of the gross tax, including PRSI, collected in 2007, the amount written off was less than 0.2% and was the lowest ratio of write-off in the past seven years. Tax is written off for administrative purposes only to prevent uncollectible tax from clogging up the system and distracting our focus. This is in accordance with best international practice, including recommendations from the IMF. With the exception of examinership, if information comes to light that the status of a taxpayer who has had tax written off changes, we can reinstate the tax and pursue it in the normal way.
Paragraph 3.4 deals with outstanding tax and shows the balance outstanding at €1.286 billion or 1.9% of gross collection. While this is marginally up from 2007, when it was at a historic low, it clearly illustrates our continued success in improving payments compliance in recent years. Ten years ago, outstanding debt stood at 7.4% and was as high as 62% in the 1980s.
The remaining paragraphs are mainly concerned with managing compliance and Revenue audits. Our approach to managing compliance is multifaceted and involves getting returns and payments on time, an area where we have made very good progress. The Revenue audit programme, to which the Comptroller and Auditor General referred, is an established and successful means of ensuring compliance with the self-assessment system, and from 14,300 audits in 2007 we collected €688 million. We have a much larger programme of assurance checks which give us coverage and presence across the tax base. In 2007, we carried out in excess of 237,000 such checks, yielding €46 million. We also collected €30 million in tax arrears in the course of audits, bringing the total recovered under all the interventions to more than €763 million. Another part of our compliance armoury, if one likes, is the publication of cases where there is default. We published 555 cases in 2007. The total amount of tax, interest and penalties in published cases was €144 million.
Increasingly, our compliance programmes are focused on a sectoral approach and so, for example, a large amount of our audit activity in 2007 was focused on the construction sector which yielded €130 million. A further €15.5 million of arrears and €22 million in assurance checks was collected from this sector but we had projects in many other sectors. As part of the sectoral approach the largest cases representing the greatest amount of tax are managed in a large cases division.
In accordance with our risk-based approach, cases are selected for intervention based on the presence of various risk indicators and other information with the aid of our computerised risk system to which the Comptroller and Auditor General referred. The use of REAP is helping to change the way we look at our compliance programmes. Taking account of the tools available to us, we are developing and planning to publish a new compliance strategy later this year which will reflect the impact of REAP and the changed economic environment.
The Chairman asked that I make a few specific comments on the internal audit function in Revenue. We have had a full internal audit function in place for more than 20 years. The internal audit branch remit extends over all areas of the organisation. It has unrestrained access to all systems, records, reports and personnel and operates in accordance with the internal audit standards published by the Department of Finance. The head of internal audit reports to the board and has direct access to me as Accounting Officer.
We also have an internal audit committee in place since 1999. The committee comprises five members, four of whom are external to Revenue, including its chairperson and vice chairperson. The purpose of the committee is to oversee the internal audit function and to advise the board on the operation and development of that function. Its terms of reference are set out in a charter agreed between the board and the committee. The committee also meets our external auditor, the Comptroller and Auditor General.
In the two-year period 2007 to 2008, a total of 26 audits were completed by our internal audit unit, comprising a mixture of original audits and follow-up audits. All original audits are followed up to ensure recommendations arising from the findings are implemented by management to the satisfaction of the internal audit branch, the internal audit committee and the board.
Some examples of the audits carried out in the period mentioned are as follows: the management and control of capital assets; the write off of uncollectible taxes, which it does every year; computer badge security; the control of non-EU imports by Customs and Excise; and the integrity of the tax register. Copies of all reports are sent to the Office of the Comptroller and Auditor General for its information.