Almost 40% underpaid tax in 2015, say C&AG

The Comptroller and Auditor General’s (C&AG) latest report suggests nearly 40 per cent of people assessed by the Revenue Commissioners’ random audit programme in 2015 were found to have underpaid their tax liabilities.

The average liabilities from the study – including penalties and interest – was €18,500.

More alarmingly, the Revenue’s random audits since 2008 have consistently demonstrated that around a third of taxpayers have underpaid their tax liabilities. The Revenue’s compliance programme audits up to 400 randomly chosen businesses and taxpayers every year.

The figures suggest that the Revenue’s audits and non-audit interventions are improving the government’s tax take, increasing from €492m in 2012 to €642m in 2015.

The result of the Revenue’s most recent random audit programme suggests the audit gap i.e. the amount the Government loses each year due to non-compliance by taxpayers registered with the Revenue, is around two per cent of the overall estimated liability.

The C&AG’s report shows the number of published cases has been in steady decline since its peak in 2012. In addition, the number of convictions obtained in cases found suitable for criminal prosecution has dropped from 50 in 2012 to 28 in 2015.

The report also states that the Revenue did not choose to estimate the tax gap i.e. the wider measure of the difference between tax owed on all economic activity and the figure physically retrieved.

“The Revenue considers that the science of estimating such a gap is insufficiently developed to provide a useful reliable estimate of tax non-compliance levels,” it said.

Last updated: 3rd October 2016