A total of 23 taxpayers each made agreed settlements of more than £100,000 with the Revenue Commissioners in 1997 after audits of their income tax returns. Their settlements totalled £6,961,318 - an average of nearly £300,000 each.
Another 57 taxpayers had to pay between £50,000 and £100,000 each to settle their tax affairs after comprehensive audits of their income tax returns, according to the 1997 annual report from the Comptroller and Auditor General, which was released yesterday. The report from the C&AG showed that comprehensive audits of income tax returns led to agreed settlements in 1,993 cases in 1997, with taxpayers making payments totalling £27.3 million. Another 20 cases involving a total of £317,882 were referred to the Collector General for "enforcement action". And 46 cases were settled by restrictions of losses carried forward to future years.
Settlements involve the payment of the underpaid or unpaid taxes due, together with interest charges and penalties. A total of 2,584 comprehensive audits of income tax returns were carried out in 1997. Returns were accepted - no additional tax was payable - in only 525 cases. Comprehensive audits of corporation tax returns resulted in some 734 agreed settlements, which brought in an additional £27.9 million to the Revenue. Some 42 companies had to pay over £100,000 each - they paid a total of £16.7 million, an average of almost £400,000 each. A total of 1,051 comprehensive corporation tax audits were carried out, yielding £31.9 million between agreed settlements, cases referred to the Collector General and restriction of losses carried forward to future years.
Just over 5,000 audits on PAYE employers yielded £14.1 million while 7,764 value-added tax audits yielded £39 million. Audits of contracts generated £8.1 million while 315 capital acquisitions tax audits yielded £3.3 million. The Investigation Branch of the Revenue carried out 77 audits, which generated £3.7 million in new tax payments.
But the C&AG noted a fall in audits undertaken by the Revenue in 1997 to 18,762 from 19,767 the previous year, and a fall in the tax yield from audits to £131 million from £141 million. Explaining this reduction, the Revenue told the C&AG that 13 staff had been redeployed to the Compliance and Criminal Assets Bureau and nine investigation branch staff had been redeployed to the prosecution policy unit.
The report shows that the there was a high degree of taxpayer compliance under the self-assessment schemes, with 86 per cent of the 1996/97 income tax returns issued sent back to the Revenue by May 31st, 1998. This was up from 84 per cent for the previous tax year. Some 77 per cent of the corporation tax returns issued had been sent back to the revenue by May 31st, up from 74 per cent. Legal proceedings for failure to file income tax returns were instituted in 591 cases, with proceedings instituted in 329 cases for failure to file corporation tax returns. Total fines imposed in the 291 cases heard in 1997 were £174,060.
The amount of tax outstanding continued to fall. At the end of May 1998 there was £1,329 million owed to the Collector General, down from £1,690 million at the end of May 1996. But the C&AG pointed out that the Investigation Branch of the Revenue achieved only three successful prosecutions in 1997 "despite a big push in this area". Some 23 cases were on hand at the end of the year, with 20 still under examination and decisions to prosecute made in three cases.
A fine of £500 was imposed in one case. The second case resulted in a disqualification to act as a company director and a suspended prison sentence of six months, while the third case resulted in a fine of £12,000 on a company and a two-year suspended prison sentence on a director of the company.
Suggestions from the C&AG for improving PAYE audit procedures and control procedures included using computers to select PAYE cases for audit and better recording and classifying of details of audits.
A total of just under £14 billion was collected by the Revenue Commissioners in 1997. Some £5.2 billion came from income taxes and £3.7 billion from value added taxes.