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National Audit Office report: HM Customs and Excise: Improving VAT Assurance

HM Customs and Excise: Improving VAT Assurance

"Customs and Excise deserve credit for deploying resources intelligently so that returns are increased. Their well-focused approach has yielded clear benefits but even more revenue could be brought in by directing greater effort at the highest risk traders".

"Customs and Excise deserve credit for deploying resources intelligently so that returns are increased. Their well-focused approach has yielded clear benefits but even more revenue could be brought in by directing greater effort at the highest risk traders".

Sir John Bourn, 24 November 1999

 

Sir John Bourn, head of the National Audit Office, today reported to Parliament on HM Customs and Excise’s collection of £29.6 billion VAT from the majority of the UK’s 1.6 million registered VAT traders.

The Department’s strategy has been to shift auditing effort towards those traders presenting the highest risks to the revenue and, since 1994-95, the net additional revenue discovered by assurance staff has increased from £5.98 per £1 spent to £7.48 in 1998-99. Sir John’s report highlights the scope for further improvement.

Sir John notes that between 1992-93 and 1998-99 VAT assurance staff numbers have declined from 4548 to 4179 and the number of audits undertaken by them have fallen from 350,000 to 180,000 per annum. Nonetheless, the net additional revenue generated by these audits increased from £862 million to £992 million at constant prices.

The National Audit Office conclude that the Department should:

  • look to further increase the proportion of high and exceptional traders audited each year, so as to maximise the additional revenue assessed per audit. During the period 1994-95 to 1998-99, the proportion of audits directed at high and exceptional risk traders increased from 31 per cent to 38 per cent. This increase did not, however, reach the levels previously envisaged by the Department;
  • examine the scope to deploy a greater proportion of existing resources on direct audit work and ensure that trained assurance staff are not diverted to work not necessarily requiring their skill levels; and
  • continue to promote centralised booking of trader audits; ensure that local offices maintain adequate, accurate and up to date trader information; and investigate the scope for streamlining the trader reporting process.

 

Publication details:

ISBN: 0105566071 [Buy from TSO]

HC: 15 1999-2000

Published date: November 24, 1999