REVENUE DEPARTMENTS,

APPROPRIATION ACCOUNTS, 1925-26.

REPORT OF THE COMPTROLLER AND AUDITOR GENERAL.

Out-turn for the Year.

1. It will be seen from the Abstract on pages 10 and 11 that the net amount to be surrendered on the Votes for Revenue Departments is 67,446. 14s. 1d., made up as follows:

2. A test examination has been applied by my officers, with satisfactory results, to the Store accounts of the three Departments.

Revenue Accounts.

3. A test examination of the Revenue accounts of the three Departments has been carried out in London and at various provincial centres,

VOTE 1-CUSTOMS AND EXCISE.

Remissions.

4. The return furnished in accordance with the directions contained in Treasury Minute of 31 December 1897 shows that there have been no cases during the year of extra-statutory remission of duty or abandonment of claim on account of revenue which involve a loss of 50%. and upwards.

VOTE 2-INLAND REVENUE.
Remissions.

5. I have been furnished by the Board of Inland Revenue with a schedule of the several cases, involving a loss of 50l. and upwards, in which claims for duty or interest receivable under the Revenue Acts were remitted during the year ended 31 March 1926, without statutory authority, from motives of compassion or equity arising out of particular circumstances in individual cases. The reasons given for remission appear on examination to be satisfactory. The total of the amounts shown as having been remitted during the year is 252,8561. 13s. 5d., as compared with 788,9201. 6s. 4d. in 1924-25, and 515,629. 5s. 1d. in 1923-24. The greater part of the sum remitted was on account of Income Tax and Inhabited House Duty. 120,7371. related to 165 cases in which (a) there was no real liability, or the liability was too doubtful to make it advisable to take legal proceedings for the recovery of the duty, or (b) estates were in bankruptcy or liquidation, and the duty was given up under the regulations made between the Inland Revenue and the Board of Trade, or upon the ground of the prospect of recovery being insufficient to justify proceedings; 54,6621. related to 230 cases of poverty, and 65,513. to 210 cases of assessment on salaries, interest, or directors' fees, which the Board of Inland Revenue were satisfied would never be paid.

In the course of my examination it was observed that certain cases of remission apparently proper for inclusion in the Schedule had not been entered therein, and I have addressed an inquiry to the Department on the subject.

Non-assessment to Tax.

6. The preceding paragraph relates to cases of remission of taxation by the Board of Inland Revenue, all of which are available for my audit, as, when an assessment to the tax has once been made by the Commissioners of Income Tax, I am able to satisfy myself that the tax is either collected, discharged, or remitted under proper authority.

But in the case of non-assessment to tax my position is entirely different. As stated in paragraph 8 of my Report on the Inland Revenue for the year 1921-22, documents relating to assessments to Income Tax (other than assessments of weekly wage-earners) are the property of the General and Special Commissioners of Income Tax and are regarded as not open to my inspection. I am therefore unable to say whether any cases or classes of case have not been assessed to tax, although legally liable for taxation.

It is however my duty, under Sec. 2 (1) of the Exchequer and Audit Departments Act, 1921, to ascertain that adequate regulations and procedure have been framed to secure an effective check on the assessment of revenue.

In this connexion my attention has been drawn to an Instruction issued to Inspectors of Taxes in August last, based upon an announcement made in the House of Commons on 6 July 1926 during the Debate on the Finance Bill, that certain educational charities would be granted concessions in respect of past years' liability for taxes.

This instruction directed the Inspectors when raising after 5 July 1926, for the first time, the question of liability in any such case, to confine their investigation to the year 1924-25 and subsequent years.

I feel bound to call attention to this instruction, but in the circumstances explained above I am unable to say to what number of cases it has been applied or what amount of tax has thus escaped assessment.

VOTE 3-POST OFFICE.

Excess Expenditure over Estimate.

7. A deficit of 107,8071. 13s. 10d. has arisen on this Vote.

A Supplementary Estimate for 847,000l. net was presented in February 1926 providing for additional expenditure on subhead K, Engineering Materials, subhead P, Wireless Broadcasting, and subhead Q, Civil Pay (Arrears), after taking into account anticipated savings on other subheads and additional Appropriations in Aid.

The supplementary provision was more than sufficient to meet the expenditure upon subheads K and Q, there being a saving of 4,6091. 5s. 4d. and 43,4721. 8s. respectively upon these subheads. There was however excess expenditure upon subhead P, and seven other subheads the most important of which were subhead I, Engineering Establishment, 161,3311. 3s. 7d., and subhead N, Superannuations, 131,626l. 10s. 5d.

The excesses were attributable in the case of subhead I, to making good storm repairs during the last quarter of the year, which had not been anticipated when the Supplementary Estimate was prepared, and in the case of subhead N, mainly to the fact that the retirements in the month of March were abnormally heavy.

As the total of ordinary receipts was 26,3411. 17s. 7d. in excess of the combined original and supplementary estimates for Appropriations in Aid, this sum can be appropriated in diminution of the gross deficit, in which case the net excess to be voted will be 81,4651. 16s. 3d., or