Reference no: EM131754460

Question: The Inland Revenue has introduced a self-assessment system for tax payments whereby citizens themselves calculate the amount of tax to be paid on income each year. Naturally, the Inland Revenue checks such self-assessments, although it does not have the resources to check them all each year. At the start of the new system, it was felt that at least 90 per cent of such self-assessed tax returns would be correctly completed by the citizen (with the remainder containing errors which are either accidental through miscalculation or deliberate as the result of an attempt to defraud). Some months after the start of the new system a sample of 1750 self-assessments has been rigorously checked. 11.8 per cent were found to be incorrect in some way. Comment on the initial view that at least 90 per cent would be correctly completed.