Dáil Éireann díospóireacht -
Wednesday, 8 Oct 1997

Vol. 481 No. 2

Written Answers. - Revenue Audits.

Eamon Gilmore

Ceist:

38 Mr. Gilmore asked the Minister for Finance the steps, if any, he intends to take to increase the numbers of investigations in taxpayers' returns, in view of the fact that the report of the Comptroller and Auditor General found that the numbers audited declined in 1996 and netted £7 million less than in 1995; and if he will make a statement on the matter. [15647/97]

Jimmy Deenihan

Ceist:

52 Mr. Deenihan asked the Minister for Finance if he will request the Revenue Commissioners to substantially increase the number of random audits undertaken by them; and if he will make a statement on the matter. [15683/97]

Minister for Finance (Mr. McCreevy)

I propose to take Questions Nos. 38 and 52 together.

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

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 very successful. It is also less intrusive on compliant taxpayers.

The level of audit activity varies from year to year depending on the audit programme undertaken by the Revenue Commissioners. The scope and extent of the audit programmes, in general, reflects Revenue's professional assessment from year to year of where tax is most at risk and where resources might therefore be devoted to best effect.

The explanation for the reduction in the number of cases audited and the yield from those audits in 1996 relative to 1995 was provided by the Revenue Commissioners in response to inquiries by the Comptroller and Auditor General and is outlined in his report for 1996. The most important factor was the change in audit strategy to larger cases and comprehensive audits covering all tax heads. It should be noted that despite the decline in absolute numbers of audits and resultant yield, the audits actually undertaken in 1996 led to a higher average yield per audit than in 1995.

The purpose of random audits is to demonstrate that there is a risk of audit for every self-assessing taxpayer. The results show that the additional yield from random audits was significantly less than what was achieved from targeted audits. For this reason the Revenue Commissioners have indicated that the main emphasis will continue to be placed on identifying audit cases through the screening process rather than on expanding the random aspect of the programme.

On this basis, Revenue's targeted approach is the most effective means of collecting unpaid taxes. The operation of the audit programme is of course kept under review by the Revenue Commissioners.