Why preparation is important
If the tax office comes for an on-site audit, she already knows what and where to look.
Selection methods have long been known to everyone. How to understand that the situation is escalating, and your business is being developed by the tax authorities, I will prepare a separate article.
So, the tax office has already carried out a comprehensive analysis of your activities, identified problematic issues, and even calculated a forecast amount, for which an on-site tax audit is coming to you. And the inspector’s task is to go to the place, look around and collect evidence that you are breaking the law.
But! If the verification comes, it means nothing has been proven yet. Inspectors go to collect evidence using the weak links of any business - employees and documents.
Your task is to survive this test with minimal losses.
Don’t give away too much and know what evidence was collected and in what ways. Be careful and very attentive!
To prove the correctness of your actions in court or at the pre-trial stage.
Convincing and fearless.
There will be no special warning
The tax office is not required to warn you that an audit is planned against the company.
In practice, the Federal Tax Service Inspectorate warns by telephone and calls the head of the Federal Tax Service Inspectorate to hand over the decision to conduct an inspection. Or uses a quick and cheap method of informing via TKS - through the taxpayer’s personal account.
The decision is considered received the next day from the day it is posted in your personal account. But the audit period begins to count precisely from the date the tax office makes its decision, and not from the date you receive it.
But sometimes an inspector can come suddenly, out of the blue. Present your official ID, hand over the decision and familiarize yourself with it.
It is important that with the decision to conduct an inspection, the inspector presents a request for the submission of documents, which you must comply with within 10 days.
If a very large volume of documents is requested, you have the right, the next day after receiving the request, to apply in writing to the head of the tax office for an extension of the deadline, indicating the reasons and the realistically possible deadline for submitting the documents.
Within 2 days, the head of the Federal Tax Service has the right to decide whether to extend the deadline or not. Right. But you don't have to. Depends on the weight of the reasons and your persuasiveness.
But don't be upset if they refuse. We already have 10 days!
And we are urgently working on preparing for the inspection!
What the law says about tax audits of individual entrepreneurs
In Art. 88 and 89 of the Tax Code of the Russian Federation states that a tax audit must be carried out for each individual entrepreneur. It can be desk-based or on-site. Their difference lies in the principle of purpose of the check and the methods of its implementation.
Tax and individual entrepreneurs
Desk is a planned procedure, which is carried out in accordance with the rules of the inspection and is carried out directly in it. Here, specific declarations are subject to consideration, which the taxpayer submits on time. Employees check the compliance of the documentation with the real state of affairs and look for errors in the preparation of declarations. This procedure applies to all individual entrepreneurs without exception and does not require any special instructions for carrying out legal actions.
For your information! Only the organization’s reporting, its literacy and compliance with the requirements are checked. The entrepreneur is not notified about the start, no matter what tax system he is on.
On the contrary, an on-site inspection is considered a forced measure that became necessary during desk inspections. It can be either planned or unplanned. In any case, it provides for the direct arrival of tax office employees at the individual entrepreneur’s registration address. Already on site, the tax officer begins to check documentation, reports and compare physical indicators with those indicated in the declaration.
Getting ready for inspection
Reality is the main thing
Even if the Federal Tax Service recognizes your counterparty as a “fly-by-night”, you must prove that the transaction with this counterparty was real! It is very important!
It is worth thinking through and memorizing all the details of the legend with all employees involved in the transaction:
- how they found the supplier, who found him, why him, how the terms were discussed, where the contract was concluded, what the director looks like if they met in person, etc.
- delivery of goods: how they were delivered, what kind of transport, who owns it, what driver, who accepted the goods, who handed them over, etc.
- unloading to the warehouse: where is the warehouse, owned/rented, storage conditions, sufficiency of warehouse space, how it was unloaded, by what force, who received it, etc.
Pay attention to the logic of actions, time intervals, deadlines and dates indicated in the documents. The lack of “common” sense of the deal, discrepancies in dates and unrealistic deadlines are often “scorched” on this.
Keep all documents related to correspondence with counterparties. Save emails too. But be careful. Prepare fragments and scans. So that there is no unnecessary information for inspectors.
Even if the tax authorities have identified certain signs of a “fly-by-night” in relation to your counterparty, your convincing position can change the course of the case. Your diligence and non-involvement in illegal actions can be confirmed by documents and clear answers to questions during interrogation as a witness. This applies to all your employees. This is what my article “For interrogation? - No problem!"
Notify your counterparties about the inspection and compare the documents again
Especially constant, with high speeds, or suspicious, in your opinion. Find out if they have had any checks. Any. Desk, visiting, counter. Were there interrogations? Did they ask about you? What questions were asked, what answers were given. Think over the legend taking into account the information received. It is possible that they will come to them too.
The first and second copies of your documents with your counterparties must be absolutely identical. All details must match, including signatures, seals, numbering, and dates. Check again. Replace fax copies with originals.
Prepare explanations for the location of your objects
Where are the office, warehouse, branches, separate divisions, production facilities located? Rights of use, purpose of use. So that when leaving the site, the inspector can easily find it. There should be no extraneous property, documents or uninformed people there.
How to prepare for an on-site tax audit
In order for the meeting with the tax authorities to be successful, you need to prepare for it - put all the company’s affairs in order. What should you pay attention to first? We have compiled a small checklist:
- Refer to the Tax Code. Study the rights and obligations of the auditee (Article 21, 23 of the Tax Code of the Russian Federation) and the tax authority (Article 31, 32 of the Tax Code of the Russian Federation).
- Get your documentation in order. Make sure you have all the originals of constituent, registration, and permitting documents. Check whether the title documents for the company's property, documents on election and appointment to the position of general director and chief accountant are in place. Do not forget to make sure that there are agreements with counterparties. Also pay attention to the signatures of the primary documents - they must be signed by hand.
- Check your counterparties. Check on the website of the Federal Tax Service: the presence of registration in the Unified State Register of Legal Entities, the presence of tax debts and the submission of reports. In addition, you can request from the counterparty certified copies of the charter, certificates of registration and registration with the tax authority, a decision on the appointment of a manager, and the latest financial statements.
- Prepare evidence of due diligence in relation to counterparties, for example, this could be business correspondence. Also check for evidence that supports the economic benefits of the transaction.
- Prepare the room. It would be a good idea for inspectors to choose a separate place. Thus, limiting access to documents that are not relevant to this inspection, and to employees who can say a lot of “unnecessary things”. It would also be wise to have a conversation with employees. Assign communication with tax authorities to one or more employees. Remind them that their statements should be based only on facts. In this case, it is necessary to answer briefly and only to the point.
Where to get checked
Of course, like any audit, an inspection by the Federal Tax Service slows down the company’s work. Therefore, think about where it is better to survive it: in the office or bring documents to the inspection.
In my opinion, it’s better to go to the inspection: the inspector will not surprise you with the suddenness of his questions: there will be time to prepare documents for requests, not answer questions without preparation, transfer all communication to paper: demand - response with documents attached, another demand - another response with attachment of documents.
Submit the required documents, but slowly and very carefully. Please remember that the review period is limited.
During the audit, some of my partners brought volumes of documents to the tax office that did not raise any questions, but loaded the inspector’s office: loan agreements, acts of transfer of bills, bank statements. My head is spinning, there are mountains of papers, but no evidence of violations has been found.
The purpose of an on-site inspection is that the inspector comes to you. But you can contact the head of the tax office with a request to conduct it at the inspectorate due to the lack of possibility of conducting an audit in the office. The main thing is to motivate your request well. The arguments must be substantial, since your request may be rejected.
You can start renovations in the premises, refer to the quarantine of workers, or create crowded conditions - move everyone into one room. The inspector has the right to verify on site that this is not possible and come for an inspection. He also does not want inconvenience and, perhaps, he will justify to his management the advisability of conducting an inspection at his workplace in the inspection.
But if they don’t agree with you, don’t be upset either! Host inspectors at your place.
Who can a tax audit come to?
Before conducting an on-site audit of a taxpayer, the tax authority analyzes the company according to 12 criteria: 1. Low tax burden. The tax burden tells how much money an entrepreneur pays to the state. This is the main criterion by which the tax office selects entrepreneurs for inspection. All taxes include personal income tax. The amount of insurance premiums is not taken into account. The tax authority calculates the tax burden for each industry every year. If the indicator is lower, the company will most likely be included in the inspection plan. 2. Regular losses for 2 or more years. When reports constantly show losses, this is suspicious, according to the tax office. Perhaps the entrepreneur does this on purpose, in order to evade the tax authorities. 3. Tax deduction for VAT above 89%. The share of deductions must be equal to 89% or higher for a period of 12 months of the amount of tax accrued from the tax base. We wrote about VAT and tax deductions here. 4. The growth rate of expenses outpaces the growth rate of income. If a businessman reflects this trend, he may be trying to understate income or inflate expenses in order to avoid paying income taxes. 5. Low wages for employees. If an employer pays a salary to an employee that is lower than the average for the industry in the region, then the tax office begins to have doubts. Perhaps the employee receives some part of the salary in an envelope. This indicates evasion of payment of insurance premiums and personal income tax for employees. 6. Indicators in special modes are approaching the limit values. The limits were imposed by the state. If an entrepreneur approaches the limit by 1-5% several times a year, this causes distrust from the tax authorities. Maybe the businessman deliberately reduces the indicators. Limit indicators: For simplified tax system:
- annual income no more than 150 million rubles;
- number of employees no more than 150 people;
- the balance of fixed assets does not exceed 150 million rubles;
- the share of participation of other organizations is not more than 25%.
For UTII:
- the area of the sales area or customer service area is no more than 150 m²;
- the total area of sleeping quarters in a hotel or hotel is no more than 500 m²;
- the number of employees is no more than 100 people.
For Unified Agricultural Tax:
- income from agricultural activities must be at least 70% of total income.
7. The expenses of an individual entrepreneur for a calendar year are as close as possible to income. 8. Work through a chain of intermediaries. If a company operates through a chain of contracts with intermediaries and resellers, a large amount of money passes through the new organization, and all participants have some kind of connection with each other, this raises suspicion. Most likely, this is a shell company helping to evade taxes. 9. Ignoring requests from the tax authority. If an entrepreneur does not respond to the inspector’s requests or does not provide the documents required by the tax authorities, he will be visited for an inspection. 10. Migration between tax inspectorates. In the case where the company's address changes more than once, it raises suspicions with the tax authorities. 11. The company's profitability level is 10% below normal. Based on profitability indicators, we can talk about how effectively an entrepreneur uses resources: money, goods, fixed assets.
12. Activities with high tax risk. If a businessman worked with a shell company, he will come under suspicion.
Office preparation
Organize desks and safes
Take to your home other people's seals and stamps, flash drives, plastic cards, letterheads of other enterprises, including those already liquidated, and other incriminating items. Do not give the inspector a reason for unnecessary questions, unnecessary thoughts and additional research.
Take care of backups
Just in case. Inspectors use computer seizures in rare, acute cases. This may result in irreparable loss of valuable information. Therefore, it is better to transfer important work data to a remote server in advance.
Prepare your computer for the inspector
Delete all information in it except the accounting database for the audit period.
It is worth cleaning up the computers and other employees - removing unnecessary databases and dubious correspondence.
Be prepared to print tax registers or transcripts if required by the inspector.
You can also submit the requested information electronically.
Never place an inspector at your computer, do not enter your login and password, and exclude the slightest opportunity to “surf” your personal virtual world.
Prepare the inspector's workplace
Not exactly in the accounting department, where an emotional sales manager or a noisy driver can accidentally fly in. It's good if it's a separate room. Or a meeting room.
Prepare tea, coffee, sweets. Think about where and with whom the inspector will go for lunch. Offer a ride home after the end of the working day. There is no need to create an atmosphere of alienation. Attention and a kind joke will help defuse revision tension and constraint.
This may also be useful. It may happen that you invite an inspector fired from the tax office after an unsuccessful inspection to work as a tax consultant. Why escalate the situation in advance? You are confident in yourself. Be patient and endure the test with dignity. You don't need negativity. And a positive-minded inspector is capable of much. Exactly.
Unscheduled inspection
The procedure for conducting such an inspection does not differ much from the planned one. There is only one exception.
In order to visit your company suddenly, tax officials do not need to wait for permission from a higher authority. But the reasons for this kind of verification must be compelling.
For example:
- Your company’s activities harm people’s health;
- The company's activities are dangerous to the lives of others;
- Through its activities, the organization damages the cultural heritage of the state;
- You have not eliminated violations that were previously identified;
- There is a demand from the prosecutor's office to conduct an unscheduled inspection.
There are situations of such a nature when an inspection needs to be carried out urgently, without delay. To do this, tax officials send a notice to the prosecutor's office and within 24 hours an audit begins against your company.
Implementation stages
Any inspection begins with the decision to conduct it. A special document is drawn up that will be handed to you upon the arrival of the inspectors.
Be fully prepared for the fact that they may request documentation that has nothing to do with the main reason for the inspectors’ visit. Tax officials can also inspect the territory and conduct a full inventory.
If necessary, samples of documentation will be taken for examination. More radical decisions may be made, documents may be confiscated in full.
As for the timing, the minimum is 2 months. But the problem is that the legislator allows both its extension and suspension.
The inspector has every right to conduct an inspection for six months, and with a suspension generally up to 9 months. If we take into account all the provisions of the law, the inspection can take 15 months.
Next, we will consider how documentation is seized during an on-site inspection.
Staff briefing
All questions only through the coordinator
Designate your representative to interact with the inspector. This could be a tax lawyer, chief accountant or financial director. Understands the rules of conducting an audit and knows all the risks of the business. It is this person responsible for the inspection who will respond to requests for the production of documents, transfer them to the inspector, listen to questions and provide answers.
All additional actions of the inspector (inspections, seizures, inventories, interrogations) must also take place under his strict control.
Conduct training for the entire team
React to requests, persuasion, instructions of the inspector - only in one way - send to the coordinator. No answers without his consent. No amateur performances. This is right.
All employees without exception must immediately report any requests from the inspector, oral or written, for example, the delivery of a notice of summons for questioning, to the person responsible for the inspection.
Set yourself and your team on the right tone
Getting in the mood is very important. Consider communication with inspectors as a type of business negotiation.
There's no point in starting a little war with the inspector. But intimate conversations with inspectors in smoking rooms should also be excluded. This is one way of collecting information.
Consider allowing employees to temporarily work from home. Especially unreliable, fussy and talkative ones.
Any support is important
It is very useful to invite an auditor, or a tax consultant, or a lawyer. For legal, methodological and moral support. Such professional assistance is provided by various consulting firms. It is advisable, of course, to take care of this in advance and have it already verified. Among them there are many theorists who reason and verbally solve any problems, but in reality “haven’t smelled gunpowder”, and shrug their shoulders in the case of truly dangerous situations.
You should always remember about tax risks. It is worth preparing for this issue in advance. And some transactions from a security point of view, in a quiet operation mode, should be worked out in advance and discussed with consulting partners. Then, by the time of the inspection, you will have your own person, whose professionalism you trust, and he will not let you down. Such a fearless helper!
It’s just great if you have such a person on your staff!
Study the tax code
Questions regarding tax audits. Your rights. And responsibilities. Rights and responsibilities of the inspector. What he has the right to do and what not. What documents must the inspector present when performing control procedures and the procedure for carrying them out. What violations are allowed during inspection, interrogation, inventory, demand, seizure.
You have the right to list excesses and excesses and other violations on the part of the tax authorities in the complaint and, citing them, demand that the results of the audit be invalidated.
Content
- The purpose and essence of an on-site tax audit
- Restrictions for conducting
- Verification period
- Types of on-site inspections
- Which companies are at risk of being included in the inspection plan?
- What will inspectors check?
- How to find out about an on-site inspection for your company
- Inspection Notice
- Unscheduled inspection
- Implementation stages
- Procedure for obtaining documentation
- How to apply
- How to check a separate unit
- Conducting an audit upon liquidation of a company
- Reasons for verification
- Rules
- How to appeal a decision on an on-site tax audit
- How should an entrepreneur behave in the event of an inspection?
- Conclusion
It is impossible to avoid such a test, but today we will discuss how to survive it with a minimum of losses.
Uncover Your Hidden Tax Overpayments
Look for and involve auditors. Carry out in tax accounting transactions that you were afraid to declare as a reduction in the tax base. For three years . For example, due to the reporting of a loss or tax refund in a tax return.
Or because of discrepancies in the rules in letters from the Ministry of Finance and established judicial practice. Everyone definitely has such reserves.
Insist on their inclusion in the calculation. In objections to the inspection report, at the stage of pre-trial procedure, in a judicial dispute. There is a precedent when a tax audit ended not in arrears, but in a refund from the budget.
