The figures in question are not indicative of the current position since they relate to income arising in the year ended 5 April 1997. For the 1999-2000 tax year, it is estimated that the number of self-employed tax units, including proprietary directors, with gross incomes above £30,000 is of the order of 76,000 or about 27% of the total The corresponding figure for PAYE taxpayers, excluding proprietary directors, is 172,900, representing just under 15% of the total. Proprietary directors are basically self-employed persons who have incorporated their businesses, with themselves as employee-directors, and although paying tax on their salaries under PAYE, are more akin to the self-employed than to ordinary wage and salary earners. It should also be borne in mind that not all the self-employed have large incomes; there would be a large proportion of individuals in this class with low incomes, for example, smaller farmers, small shopkeepers, low investment incomes and so on.
An integral part of the self-assessment system applying to the self-employed is the audit programme, under which taxpayers' returns and accounts are examined either by way of desk audit or field audit to ensure proper declaration of income and deductions. The great majority of cases who are selected for audit are selected on the basis of perceived defects in their tax returns and not on a random basis. 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. There is also a small random element. The target for the number of random audits is being reviewed at present. These comprehensive self-assessment audits are in addition to normal employers PAYE and VAT audits. Approximately 1% of income tax returns are subject to comprehensive audit annually; when PAYE/PRSI, relevant contracts tax and VAT audits are included, audit coverage is approximately 6% of the self employed taxpayer base.
In addition to audits, revenue is increasingly charging penalty interest on those who do not pay
their tax on time. In 1998 there were 2,295 prosecutions of self-employed taxpayers for failure to
file returns.
In general, the scope and extent of the compliance and audit programmes reflects Revenue's