THE Revenue Commissioners expect to collect just over a quarter of the £1.95 billion outstanding in unpaid taxes, according toe the report, which was published yesterday.
The Comptroller and Auditor General, Mr John Purcell, points out that taxpayer compliance with the self-assessment system continues to slip. There has been no detailed study by the Revenue Commissioners of the level of tax evasion in the self-assessment system, he states.
The Revenue expects to collect just £553 million of unpaid taxes out of £1.95 billion outstanding at the end of May. Last night the Revenue rejected the £1.95 billion figure as an "unreal debt" boosted by "exaggerated" assessments.
But its estimate of the level of outstanding taxes that can be collected is more optimistic this year, up from £509 million last year. The £1.95 billion in outstanding taxes is an accumulated total of taxes unpaid over a number of years. PAYE accounts for the largest amount of unpaid tax - at £720 million - followed by corporation tax (£268 million) and VAT (£275 million).
The Revenue's estimate of the amount likely to be collected takes into account - the level of liquidations and business closures of firms with overdue payments, and historical collection patterns. Last year, the Revenue wrote off £80.5 million in unpaid taxes, according to information supplied to the Comptroller and Auditor General. VAT (£34.6 million), PAYE tax (£29.6 million) and corporation tax (£11 million) accounted for most of the writeoffs.
Liquidation, receivership and bankruptcy were the main reasons given for writing off tax owed, accounting for £54 million. Other reasons included "cannot be traced/outside jurisdiction", and compassionate grounds.
After an examination of the cases involved, Mr Purcell said he was satisfied with Revenue actions.
The sheriffs who collect unpaid taxes paid over £75.8 million to the Revenue Commissioners in 1995, down from £88.4 million in 1994. Some 7,213 cases considered unsuitable for collection by the sheriffs were referred to two firms of solicitors, and £9.7 million was recovered. In the previous year the 3,763 cases referred to the solicitors yielded £10.2 million.
Taxpayer compliance with the self-assessment system has fallen since 1991. In the past four years, compliance by income tax payers fell from 98 per cent to 79 per cent for the 1994/95 tax year, while compliance by firms paying corporation tax slipped from 82 per cent to 73 per cent.
In 1995 legal proceedings were instituted in 364 cases for failure to file income tax and corporation tax returns. Fines were imposed in 122 cases, leaving 242 cases to be heard.
Some 22,848 audits were completed by the Revenue in 1995, yielding £146 million. This compares with 29,180 audits in 1994 yielding £135 million. Of 67,101 tax returns examined last year, 5,903 were selected for possible comprehensive audit. Of these cases, 3,200 involved income tax returns while 2,703 involved corporation tax returns. Some 229 cases were subsequently dropped and audits were initiated in 4,228 cases.
Commenting on Revenue audits, the Comptroller and Auditor General said that despite a high level of inadequate record-keeping by self-assessed taxpayers, no prosecutions were initiated. He suggested that the penalty of £1,200 for failure to keep proper, records may be too low.
While useful work has been done in audits, Mr Purcell pointed out that it is difficult to determine the extent and nature of the work, and how settlement terms are arrived at, as the work has not been well documented.