Written Answers. - Number of Audits.

Batt O'Keeffe

Question:

45 Mr. B. O'Keeffe asked the Minister for Finance if he has satisfied himself with the amount of audits being currently undertaken by the Revenue Commissioners under targeted audits and general audits. [7000/96]

I am satisfied with the number of audits carried out by the Revenue Commissioners under the various audit programmes.

In 1995, about 23,000 audits were completed under the various tax audit programmes. This represents a coverage of approximately 8 per cent of the taxpayer base. This level of audit coverage compares favourably with the level of audits carried out in other tax administrations which have self-assessment systems.

The vast majority of Revenue audits are targeted audits. This means that most cases are chosen for audit following a risk analysis which may suggest the possibility of incorrect returns for any of the taxes. Selection of cases on this basis has proved to be successful. It is also less intrusive on the complying taxpayers.

The direct yield from audits has risen from £106 million in 1992 to £138 million in 1995. However, it should be borne in mind that the overall yield from audit programmes does not consist only of the amounts recovered directly from audits. There is also a much greater indirect yield from taxpayers who file more accurate returns due to their perception of the risk of detection of tax evasion and the consequential cost in terms of additional tax, interest and penalties. The indications are that this strategy is successful. The Revenue is also satisfied from its records and from its interaction with taxpayers, business groups and tax advisors that there is a strong awareness of the risk which Revenue audit poses to the non-complying taxpayer. The growing knowledge of Revenue auditors of specific businesses and the practices within particular sectors, which comes partly from the specialisation in different economic sectors, is underpinning the improving detection rate and supporting the general perception of Revenue's ability to identify tax evasion.