Tax audit in the company - how to prepare for it?

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Tax audit in a company is usually associated with feverish verification of documents. What is the best way to prepare for tax inspections? There are several ways to do this.

Who can conduct the inspection and can it be unannounced?

Inspections in one-person companies are authorized, inter alia, by the tax office, the Social Insurance Institution, the National Labor Inspectorate or the tax inspection office. The type of the initiated procedure determines the scope of the controllers' powers. As for the tax office, it is authorized to carry out control procedures in the field of tax liabilities, e.g. VAT or PIT.

Tax audit is usually an announced activity. The taxpayer should receive the notification of the initiation of the inspection no later than 7 days before its commencement. However, if the inspection does not commence within 30 days from the date of delivery of the notification, the taxpayer should receive another notification informing about what elements of the records will be checked, and therefore it is possible to prepare for the inspection.

The notification of the inspection should include:

  • designation of the authority;
  • date and place of issue;
  • designation of the controlled;
  • indication of the scope of control;
  • instruction on the right to submit a correction of the declaration;
  • signature of the person authorized to notify, and if the notification was issued in the form of an electronic document - a qualified electronic signature or a signature confirmed with an ePUAP trusted profile.

In practice, however, there are situations where the inspection is not announced. The notification about the inspection is not sent if it is to concern, for example:

  • untaxed revenues,
  • undeclared business activity,
  • doubts about the refund or overpayment of VAT,
  • preparatory proceedings initiated by the authority suspecting a crime (fiscal or criminal),
  • checking the physical inventory or cash register records.

Attention!

The business constitution stipulates that an inspection is carried out after an analysis of the probability of violating the law in the course of conducting business activity. Thus, the offices cannot select any companies to be audited. Companies which public authorities suspect (after analyzes) of breaking the law may be inspected.

Tax audit may be carried out on the basis of an authorization

The document referred to as the authorization plays an important role during a tax audit. In addition to the signature of an authorized person (head of the competent tax office), a properly prepared one should contain:

  • date and place of drawing up the document,
  • precise markings of the tax office,
  • designation of the controlled entity (e.g. NIP number),
  • indication of the legal basis for the inspection (tax ordinance, act),
  • personal details of all inspection officials as well as their identity card numbers,
  • scope of control activities,
  • duration of the control.

The indication of the exact scope of the control activities plays a special role. An official seconded to an enterprise for inspection may receive only those documents relating to the tax liability and the period of time indicated in the authorization. In other cases, the control activities are unlawful and can therefore be appealed against.

The control activities are carried out at the controlled seat, in another place where the documentation is stored, and in places related to the activities carried out by him and during the hours of its operation. If the tax books are kept or stored outside the registered office of the controlled entity, the controlled entity, upon request of the controller, is obliged to provide access to the books at its premises or in the place where they are kept or stored, if making them available at the premises may significantly hinder the ongoing operations of the controlled entity.

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What documents are checked by the tax inspection?

During the inspection, each entrepreneur is required to present the company's registration documents. These must be documents that confirm the entry in CEIDG, the assignment of the NIP number and the assignment of the REGON number. The presentation of other documents depends on the scope of the inspection.

The general rule says that tax documentation must be archived for a period of 5 years from the end of the year in which the due date of the liability falls. Entrepreneurs who keep accounting records on their own should store all archived documents at the place of business or at the company's registered office. The same applies to current tax books.

The entrepreneur (or the accounting office responsible for the company's accounting) may be asked to present tax books during a tax audit. Tax books are various types of documents, records and registers kept for tax purposes. The form of taxation determines what exactly is meant by this concept.

Documents to be presented for a specific form of taxation:

Tax card

Lump sum on recorded revenues

Settlement on general terms

  • bills and invoices issued at the request of customers,
  • employment records,
  • register of VAT sales and purchases, along with invoices (if the company is a VAT payer)
  • revenue record,
  • list of fixed assets and intangible assets,
  • equipment list,
  • VAT sales and purchase register (when the company is a VAT taxpayer),
  • proofs of purchase of goods - bills and invoices
  • printouts from the book of revenues and expenses (made every month),
  • records of fixed assets and intangible assets,
  • vehicle mileage records,
  • records of employees,
  • records of foreign exchange values,
  • records of loans and pledged things

Tax inspection checks VAT, cash register and tax declarations

Both active taxpayers, i.e. those paying VAT, and those exempt from this tax, are required to keep sales records documenting the turnover on a given day.

During the inspection, the entrepreneur may be required to present daily and monthly reports from the cash register and it does not matter what form of taxation he applies. According to the regulations, documents from the cash register should be archived for 5 years. In addition, entrepreneurs who are required to register sales with a cash register, can expect an inspection that checks the integrity of the cash register, i.e. seals, and whether each sale is accompanied by a receipt.

The entrepreneur should be prepared to present tax declarations, if it was specified in the authorization of the inspectors. For example, VAT-payers should prepare VAT-7 or VAT-K declarations, attaching appropriate confirmations of submitting them to the tax office. Tax declarations, like other company documents, should be stored up to 5 years back. It is not the taxpayer's obligation to present the PIT-5 declaration, because in 2007 the need to fill it in and submit it to the tax office was abolished. Despite this, the preparation of the PIT-5 form may prove useful when the auditor asks for the justification of the amount of the advance payment for income tax in a given period. Such information will be included in PIT-5.

Inspection book

The entrepreneur is obliged to keep the documentation of the inspections carried out in the company. In addition to the authorizations and protocols, you must have a properly completed inspection book (in paper or electronic form). Such records take into account the previous inspections issued by the tax authority.

If the book is kept in paper form, the entries are made by the inspector, if in electronic form - the entrepreneur.

Completion of the tax audit

The inspection should be completed without undue delay, but not later than on the date specified in the authorization. The inspector is obliged to notify the inspected company in writing about the extension of the inspection, stating the reasons for the extension of the inspection completion date and indicating the new completion date.

Documents concerning control activities performed after the end of the control period do not constitute evidence in tax proceedings, unless a new control completion date has been indicated.

Entrepreneur-friendly control rules

The rules that reduce the nuisance for the entrepreneur and which the tax authorities are obliged to apply are:

  • The principle of one control in one case - the office cannot control the entrepreneur of the company several times in the same case.
  • Inspection bodies are required to provide detailed information on inspection procedures on their websites.
  • If the inspection is prolonged, the entrepreneur will be able to file a complaint to the court against the decision of the inspection authority extending the duration of the inspection.
  • With the consent of the entrepreneur, joint inspections of various authorities are possible - if they relate to the same matter.

In addition, the business constitution regulates control in this way:

  • With the consent or at the request of the entrepreneur, the inspection is carried out at the place where the documentation, including tax books, is stored, other than the seat or place of business activity, if this may improve the conduct of the inspection - i.e. not at the request of the inspector.
  • The inspection authority publishes in the Public Information Bulletin on the website of a given office a general scheme of inspection procedures resulting from the provisions of generally applicable law.