Around 600,000 taxpayers face a ranking system that will influence who is selected for tax audit, writes Dominic Coyle. The new Revenue system uses more than 100 variables to determine which taxpayers are more or less likely to be underpaying their taxes.
Everything from previous evidence of failing to comply with tax law or being late in filing a tax return to working in a particular business sector that has a poor track record or reporting lower profit margins than other similar companies could leave individuals or companies open to audit.
The Revenue Commissioners are rolling out the new computerised system following a successful pilot project in a number of tax districts. The Revenue is currently concluding staff training after which the system will be fully operational.
It will apply to all non-PAYE taxpayers in the State. Each of about 400,000 self-assessed individuals and roughly 200,000 businesses and partnerships will be allocated a ranking on the basis of how the variables apply to their situation.
"The analysis of the pilot programme has given us a very high level of confidence that the new programme is selecting the right cases for audit," a spokesman for the Revenue said last night.
However, he said Revenue was committed to retaining an element of much-feared random audit - with a minimum of 400 such investigations planned annually.
The number of audits carried out by the Revenue has been declining in recent years, according to sources in the industry, partly as staff were reallocated to high profile special investigations such as those on bogus non-resident accounts.
Accountants say the Revenue now conducts about 14,000 audits compared to around 30,000-35,000 a decade ago. Targeted audits tend to yield better returns for the Revenue - an average of about €30,000 compared to something between €5,000 and €10,000 on random audits.
Accountants have given a cautious welcome to the new regime. "This is something we would be broadly supportive of," said Brian Keegan, head of taxation at the Institute of Chartered Accountants in Ireland (ICAI).
David Fennell, senior tax manager at Ernst & Young, said computerisation meant the Revenue was now able to glean a huge amount of information on taxpayers that would previously have been filed in separate offices on different paper-based forms."From the practitioner's point of view, this is a good move as you do not want to waste the time of the ordinary compliant taxpayer," he said.
However, Mr Keegan warned there were likely to be teething issues. The tax office has been at odds with auditors in the past over glitches in its online service (ROS) that struggled to cope at peak times. Computer problems also saw a number of PAYE taxpayers temporarily lose their tax credits earlier this year.