Customs & Excise's VAT receipts have leapt by more than £100m over the last six years despite a cut of more than 50% in the number of VAT audits conducted by the department over the period, according to a National Audit Office report released yesterday, writes Damian Wild. But, despite acknowledging the 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 undertook 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 the audits they carried out on 'low-risk' traders, though mainly of small amounts. But Customs dismissed claims by that 'low-risk' VAT traders were becoming less compliant. Sir John Bourn said: 'Customs deserves credit for deploying resources intelligently so that returns are increased.'
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