The Revenue Commissioners carried out fewer investigations into taxpayers' returns last year, and netted £7 million less than in 1995, the Comptroller's report has found.
It also found that in nearly 40 per cent of cases where income tax returns were audited, settlements varied from £1 to £5,000, and in 23 per cent of cases, no additional tax was due.
In 1996, the Commissioners carried out 19,767 revenue audits, compared to 23,294 in 1994. Last year, their investigations yielded £141 million, compared to £148 million in 1995.
The Comptroller queried the reduction in the number of audits. His office was told that the reduction occurred primarily due to a change in strategy where some resources were switched form single "taxhead audits" in the VAT and PAYE areas to comprehensive audits. Resources were also moved to larger cases which took more time. The Commissioners said this has led to a higher yield on average per case.
Additional training also reduced the number of audit days available during 1996.
The Commissioners said the reduction in the yield from anti-avoidance work reflected the long-term nature of challenging avoidance schemes and the size of tax loss associated with each scheme. It also reflected the strengthening of anti-avoidance legislation in recent years.
The Comptroller's report shows that comprehensive audits yielded almost £70 million, while VAT audits yielded £33 million. Audits of employers' PAYE yielded almost £20 million.
The figures show that comprehensive audits of income tax returns yielded more than £100,000 in 21 cases, or 1 per cent of audits, while in 46 cases (2 per cent of audits), the yield was £50,000£100,000.
Comprehensive audits of Corporation tax returns yielded £45 million and 1,376 cases were investigated. In 28 per cent of cases, or almost one-third of the audits, no additional tax was payable. In 34 per cent of cases, settlements ranging from £5,000 to £50,000 were agreed. In 26 per cent of cases, agreed settlements ranged from £1 to £5,000.
The Commissioners also carried out 52 random audits. Additional liabilities of £68,860, including £17,760 in penalty and interest charges, were assessed in 14 cases. The returns of the remaining taxpayers were accepted as originally submitted.