Mr. Seamus McCarthy:

The 2015 account of the receipt of revenue for the State collected by the Revenue Commissioners was certified by me on 15 April 2016 and received a clear audit opinion. The account includes receipts of taxes and duties which are remitted by Revenue to the Exchequer and receipts collected by Revenue on behalf of other agencies. The account shows that total receipts of taxes and duties amounted to a net €45.8 billion in 2015. This represents an increase of €4.4 billion, or 10.6%, when compared to 2014. Within this figure, the most significant change related to corporation tax receipts, which increased by €2.3 billion, or 49%, year on year. As a result, corporation tax receipts accounted for 15% of the tax take in 2015, compared to 11% in 2014. Receipts collected by Revenue on behalf of other agencies also increased year on year by approximately 11%. Pay-related social insurance and health levy contributions accounted for over 89% of that category of receipts in 2015. These contributions are remitted directly to the Social Insurance Fund. Revenue’s administration and operational expenses are charged to Vote 9 - Revenue Commissioners, rather than the Revenue account. The appropriation account shows that the total spend by Revenue in 2015 amounted to €401 million, which represented an increase of 4% on the figure for 2014. Taking account of appropriations-in-aid of €82 million in 2015, net expenditure under the Vote amounted to €319 million.

Chapter 12 examines the actions taken by Revenue in recent years to tackle the issue of fuel laundering. Excise duty on mineral oils represents a significant proportion of the total excise duty collected each year. In 2015 it made up almost half of the total excise duty receipts of €5.5 billion collected by Revenue that year. Marked gas oil for agricultural and other off-road use is subject to significantly lower rates of tax than diesel intended for use in transport and passenger vehicles. Fuel laundering is an illegal process, whereby the markers are removed from the marked gas oil which is then sold on for use in road vehicles. The associated cost to the State includes the taxes forgone and the cost of removing and disposing of the waste dumped by fuel launderers. There were almost 1,000 cases of waste dumping between 2008 and 2015, with the clean-up costing the State almost €7 million. While Revenue carries out certain targeted analysis projects in the area of mineral oils, it does not have an estimate of the loss to the Exchequer as a result of fuel laundering.

From 2011, the detection of laundered fuel became more difficult because the sulphur content of marked gas oil was reduced to the same level as road diesel. To address the increased risk, Revenue developed a mineral oils strategy to combat the illegal trade. The strategy introduced a number of key measures to address the risk, including improved licensing arrangements for the sale of fuel, a supply chain reporting system to give Revenue details of the movement of fuel stocks, reckless trading provisions, a national risk-based sampling programme using portable analysers to detect the presence of the marker and a new fuelmarker in a joint project with the UK revenue and customs services. In combination, these measures act as a deterrent to fuel launderers. A random sampling exercise carried out by the Revenue Commissioners in January 2016 found no evidence of the new marker in the samples tested. I have made a number of recommendations to Revenue to tighten controls in the supply chain reporting system. I am glad to note that Revenue has accepted these proposals.

Chapter 15 outlines Revenue’s approach to monitoring and managing taxpayer compliance. Revenue undertakes a range of compliance interventions, including tax audits. Under its random audit programme, it carries out approximately 400 audits of randomly selected individual taxpayers and businesses each year. The results of the completed audits for the period between 2013 and 2015 consistently showed that approximately 60% of taxpayers selected for audit had paid the correct amounts of tax due, but approximately 40% of taxpayers selected for audit were found to have under-declared their tax liabilities. The results of comprehensive random audits can be used to provide an estimate of the audit gap; that is, losses as a result of non-compliance by registered taxpayers. The 2014 random audits suggested that, on average, registered taxpayers had underpaid their liabilities by an estimated 2% in the reference year. Revenue's main compliance work is its programme of risk-based tax audit. The results of the programme indicate that Revenue's detection work is generally well targeted. In 2015 some 68% of the risk-based audits resulted in identification of additional tax due. This is significantly higher than the non-compliance rate for the random sample. Although the number of compliance interventions undertaken by Revenue decreased between 2012 and 2015, the overall yield from its compliance activity has increased. It should be noted that there are likely to be losses of revenue from activity by economic agents that are completely outside the tax system, operating in the shadow economy. Revenue does not generate estimates of such losses which are referred to as the tax gap. By comparison, the UK revenue and customs service estimated the tax gap there to be 6.4% in 2013-14.