In January, Revenue issued their usual New Year bulletin of initial tax results for the previous year. The headline figures of tax yields contain no surprises, as these results had already been well flagged in the Department of Finance Exchequer returns. However, it seems that there has been a positive trend in tax compliance levels by reference to the percentages for timely filing and payment.

In monitoring compliance, Revenue divide their “customer” base into three segments – large cases identified as having an aggregate direct and fiduciary tax liabilities of half a million Euro or more, medium cases with liabilities over €75,000, and then there's the rest – all the smaller cases.

Compliance levels as reported for large cases are up by 5 percentage points, from 91% to 96%, with a broadly similar increase for medium cases. The biggest compliance increase was for the smaller cases. Compliance levels have increased from less than three out of four in 2008 to four out of five during 2009, a significant improvement. A cynical analysis might suggest that there are fewer businesses and self-employed in operation during 2009, and that those which had been struggling in 2008 were also probably struggling with their tax obligations as well. Nevertheless, this positive trend does add credence to the indicators from taxes collected that the dramatic decline in tax revenues may have bottomed out at the end of 2009.

Less convincing are the yields from Special Investigations, which despite figures coming in from the Deposit Interest and Trusts & Offshore Structures investigations, added little enough to the cumulative yields from these anti-evasion activities. Though the number of Revenue audits declined, the yield increased. This is a compelling argument for the effectiveness of fewer, more targeted audits which can remedy evasion but do not add to the compliance burden for legitimate taxpayers.
The level of assurance checks, at over 360,000, remains a matter of concern for compliant taxpayers. These yield an average of less than €200 per check, but probably cost the business sector far more in terms of time and productivity lost in dealing with them. Members will be well aware of how such assurance checks slowed the processing of refund claims especially in the first three quarters of 2009.