Office of the Comptroller and Auditor General - Press release VFM examination report on Value Added Tax Collection and Control

Press release issued on 29 April 1998

Office of the Comptroller and Auditor General
Press Release
Value for Money Report on Value Added Tax Collection and Control

The Comptroller and Auditor General, Mr. John Purcell, has undertaken an examination to establish the extent to which current VAT collection and control procedures are operated efficiently and effectively by the Office of the Revenue Commissioners, with particular reference to the results achieved from registration, collection, control and enforcement work. The examination also sought to identify opportunities for further system refinements which would increase the effectiveness of the procedures.

The overall conclusion was that the Revenue Commissioners were effective in collecting VAT due and the comments in the report should be read in that context. The main points made in the report are summarised overleaf.

A report on the examination was presented to Dáil ?reann today.

For further information about the report contents, please contact:

Fergus O’Brien at (01) 679 3122

Main Findings

Collection procedures for VAT can be regarded as being efficient with an overall compliance level of 90% achieved generally for all traders and almost 100% in the case of large liability traders.

Revenue needs to review the operation of the annual accounting scheme for small traders in order to improve compliance rates.

Revenue’s policy of directing its auditing effort at groups where tax is considered most at risk is appropriate, though more random audits should be undertaken to establish estimates of the overall level of voluntary compliance.

The detection of unregistered traders is hindered by a lack of knowledge of the extent of this area within the black economy. The examination found that better use could be made of information from audit activity and from the Companies Registration Office to assist in detecting unregistered traders.

Traders are assigned a risk rating at registration for the purposes of planning VAT audits but there is scope for further development of the risk assessment system. Targets for carrying out new business education visits which could be used to gather information for risk rating are not being met by some district tax offices.

VAT audit activity is good value for money and the allocation of more resources to audit would probably further increase the yield.

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