But, despite acknowledging the department's success, NAO chief Sir John Bourn urged Customs to do more to increase VAT revenues, by targeting high value traders and requiring staff to concentrate on direct audit work.
Between 1992 and 1999 VAT assurance staff numbers fell from 4,548 to 4,179 and the number of audits they undertake each year dropped from 350,000 to 180,000 per annum, according to the report Improving VAT Assurance.
At the same time net additional revenue generated by these audits increased from £862m to £992m, assuming constant prices. Since 1994-95 net additional revenue discovered by assurance staff has increased from £5.98 per £1 spent to £7.48 in 1998-99. The proportion of audits aimed at 'high' and "'exceptional risk'traders rose from 31% to 38% over the same period.
Staff at one VAT office said trainees had discovered errors in half theaudits they carried out on 'low risk' traders, though mainly of smallamounts. But Customs dismissed claims by junior staff that 'low risk' VAT traders were becoming noticeably less compliant.
Sir John Bourn said: 'Customs and Excise deserve credit for deploying resources intelligently so that returns are increased.'
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