Public Accounts Committee Hearing, 13 December, 2007
Revenue Vote 2006.
Opening Statement by Revenue Chairman, Frank Daly.
Thank you Chairman and members of the Committee for this opportunity to make a short opening statement in relation to the paragraphs of the 2006 Comptroller and Auditor General's Report which are being examined here this morning, namely paragraphs 3.1 to 3.6.
Paragraph 3.1 shows net receipts for 2006 at €45,536 million which represents an increase of over €6 billion, or 15%, on the figure for 2005. That overall strong growth in tax yield was spread across the whole range of taxes. Commensurate with this growth in tax yields was an impressive growth in the volume of our business. For example, year on year 2005 to 2006, personal callers to Revenue increased by 17% to over 900,000, telephone callers increased by 29% to over 6.8million, the number of PAYE employments increased by over 5% while self assessed numbers, company registrations and VAT registrations all increased by 8%. Looking back just five years our customer base has increased by 25% for PAYE employments, 33% for companies and 48% for self assessed taxpayers.
Paragraph 3.2 deals with tax write-offs and shows the amount written off in the year as €119.6 million. As I have said before to the previous Committee, Revenue, like every other tax administration or business, inevitably experiences some bad debt. Indeed the lion's share (some €92m) of the amount written off in 2006 related to insolvency type cases. Our objective remains to minimise this in every way possible and we will only write it off when we are satisfied that it is genuinely uncollectible or uneconomic to pursue. Amounts written off should of course be viewed in the context of the amount collected. As a percentage of the total tax collected in 2006 the amount written off was less than one fifth of one per cent of the gross collection of over €62 billion.
Paragraph 3.3 deals with outstanding tax or arrears and shows the balance outstanding at 31st March, 2007 as €1.107 billion. This is down €48m on the 2006 figure. Arrears of tax as a percentage of total gross receipts now stand at an all time low of 1.78% - at less than 2% this is one of the best results for any Tax Administration worldwide. We have already surpassed our Statement of Strategy 2005 – 2007 goal of reducing arrears to 2.5% of gross collection by 2007. It clearly illustrates our continuing success in improving payments compliance over the past number of years. Taxes outstanding have now fallen every year from a high of €5.466 billion (62.5% of gross receipts) in 1985.
Paragraph 3.4 reports on the Revenue Audit Programme which is an established and successful means of ensuring compliance with the self-assessment system. The yield from the 13,626 audits completed during 2006 was almost €650m.
In addition to audit activity, over 176,000 assurance checks were carried out yielding some €42m. Over €22m in arrears of tax was also collected by Revenue officers in the course of audit interventions. The total recovered under these interventions therefore amounted to well over €700 million.
Details of 601 cases settled in 2006 were published under the provisions of section 1086 of the Taxes Consolidation Act 1997. The total amount of the tax interest and penalties in published cases was €154m.
2006 saw a continuation of our policy of focusing compliance interventions on a sectoral basis. 25% of our national audit and compliance staff were devoted to the construction sector alone, which yielded €125m in tax, interest and penalties.
Following a 12 month trial period, a computer based risk analysis system was introduced into all Districts in mid 2006. The REAP system (Risk Evaluation Analysis and Profiling) was developed on the basis of the experience and knowledge of Revenue staff and taps into the extensive data and information sources to which Revenue has access. This system reflects Revenue's intention to target its activities at risky cases and allocate its resources accordingly.
Paragraph 3.5 deals with prosecutions for serious tax evasion. Although the cases reported on here are the most serious dealt with by Revenue, they only represent the tip of the iceberg in terms of prosecution activity undertaken by us. For example, in addition to the cases reported on in that Paragraph a further 515 convictions were obtained for smuggling offences, such as cigarette smuggling, unlicensed trading, marked mineral oil offences and oil laundering, and there were 1,295 convictions for non-filing of tax returns.
Finally, Paragraph 3.6 deals with Revenue's major legacy investigation projects, most of which are now nearing completion. The focus of our ongoing work in these projects is to follow-up taxpayers who had not availed of opportunities to come forward voluntarily to Revenue. By the end of 2006, the cumulative yield from these projects had reached €2.28 billion. A further €111 million recovered during 2007 has brought the running total as at end November 2007 to €2.39 billion.
Thank you Chairman