One-third of self-assessed 'underdeclaring' tax

ALMOST ONE-THIRD of self-assessed taxpayers may be significantly underdeclaring the amount of money they owe to the Revenue Commissioners, the Comptroller and Auditor General John Buckley has concluded.

Presenting his review of the Revenue accounts for 2007 to the Oireachtas Public Accounts Committee yesterday, Mr Buckley said that the Revenue had taken in more than €47 billion, about €1.8 billion short of target.

This compares with a projected €37 billion tax take for 2009.

The Revenue had written off €117 million in taxes in 2007, including €2.5 million in “automatic write-offs” of amounts of less than €1,000, which can be considered too costly to pursue. The figure of €117 million was down from almost €120 million in 2006.

In an analysis of sectoral risks, Mr Buckley singled out the security industry, which he said was heavily represented among the companies in which taxes had been written-off.

Six companies had been responsible for a combined write-off of €6.7 million.

But Mr Buckley said the State’s complement of about 20 sheriffs had brought in €249 million in 2007 from a total of 43,157 cases referred to them.

He expressed strong concern over Revenue audits which he said should be the “cornerstone” of a self-assessment system.

In 2007 random audits had yielded €468 million, while “comprehensive” or targeted audits had yielded €344 million.

There was strong historic experience that about 60 per cent of non-compliant taxpayers were still non-compliant four years later – and 20 per cent were actually worse, he said.

These figures had been gleaned through a “re-audit programme”designed to follow up on tax evaders.

But Mr Buckley expressed concern that the last re-audit programme completed by the Revenue was in 2002.

Mr Buckley concluded that it was “important for Revenue to carry out a meaningful programme of re-audits”.

The lack of re-audits for “recidivist” tax evaders was criticised by Labour TD Róisín Shortall, who said it was “very worrying that throughout the last six years of the Celtic Tiger, there was no re-audit programme”.

But Revenue Commissioners chairman Josephine Feehily said it was planned to publish a new compliance strategy later this year.

Ms Feehily said that managing compliance was “multi-faceted” involving a large programme called “assurance”.

This scheme yielded €46 million in 2007. A further €30 million of arrears was also collected in the course of audits, while increasing compliance programmes were focused on a sectoral approach.

She said the sectoral approach identified potential risks and had been successful. She said a computerised “risk-analysis system” had 28 separate sources of information which was processed in conjunction with other information to ascertain high-risk elements.

Answering questions from Fianna Fáil TD Seán Fleming and committee chairman Bernard Allen TD of Fine Gael, Ms Feehily said that it would be technically possible for a high-net worth individual to be non-resident for tax purposes in any country.

But she said that any income earned in this country, even by non-residents, would be subject to tax.

She said that there were currently more than 5,000 non-resident taxpayers in the Republic.