Dáil Éireann díospóireacht -
Tuesday, 12 Mar 1996

Vol. 462 No. 8

Written Answers. - Random Audits.

Kathleen Lynch

Ceist:

31 Kathleen Lynch asked the Minister for Finance if, further to his reply to Parliamentary Question No. 84 of 6 February 1996, the results of the random audits carried out in 1995 are now available; the additional tax yield, if any, resulting from these audits; the average number of random audits carried out on farmers and the self-employed in each of the years from 1990 to 1995; his views on whether the number of random audits is sufficient to ensure tax compliance; the plans, if any, he has to review the system of random audits; and if he will make a statement on the matter. [5590/96]

Minister for Finance (Mr. Quinn)

According to the Revenue Commissioners work on its random audits of self-assessment tax returns initiated in 1995 is not yet completed. The available details at this stage are as follows:

Total number of random audits initiated	99
(This number includes companies and self-employed individuals)
For self-employed (including farmers):
Number of random audits completed at 8 March 1996	25
Number of random audits completed which yielded additional tax liability	5
Total additional revenue	£10,978
Average yield per case — including cases with no additional liability	£439

These figures include the results for farmers which are broken down as follows:

Number of random audits completed at 8 March 1996	10
Number of random audits completed which yielded additional tax liability	3
Total additional revenue	£7,500
Average yield per case-including cases with no additional liability	£750

The random audit programme began in 1992. No new random cases were selected in 1993 for audit due to concentration of resources on work related to the tax amnesty and major restructuring of the audit programme. The total number of random audits of tax returns from all self-employed persons and companies which were initiated in the years 1992, 1994, and 1995 was 370. Some 237 of these have been completed up to 8 March 1996 in respect of all self-employed persons, including farmers. Therefore, random audits have been completed at an average of about 79 over the three years. The corresponding annual average number of completed audits for farmers only is 24.

The vast majority of cases who are selected for audit are selected on the basis of perceived defects in their tax returns or supporting accounts and not on a random basis. The total number of these comprehensive targeted Self-Assessment audits initiated in 1995 (including companies) are 4,129. These are in addition to normal PAYE (employers) and VAT audits. The purpose of the random element of the audit programme is to demonstrate to taxpayers that there is a risk of audit for every self-assessing taxpayer even where incorrect returns have the appearance of being correct. However, experience suggests that taxpayer behaviour is influenced more by the perception of Revenue's ability to detect suspect tax returns in a systematic way, rather than by the risk of random selection of a return.

The Revenue Commissioners have advised me that all their audit programmes, including the random programme, will be kept under review. They have, however, in light of the experience to date, no plans to increase the percentage of audits chosen at random.