3 tips on how to proceed if inspectors develop doubts during a tax inspection

A tax inspection is a natural part of business life, which in many cases proceeds smoothly and ends relatively quickly, without any findings. This applies especially when the entrepreneur complies with all legal regulations, their documentation is kept correctly and the tax administrator does not raise any questions during the examination of individual business transactions – which is the ideal scenario. 

Sometimes, however, it happens that after the initial examination of the submitted documents the tax inspection takes a different direction, namely in the case where the tax administrator encounters ambiguities and develops doubts about the correctness, truthfulness or completeness of the documents submitted for the tax inspection. Such a situation does not necessarily mean that you, as an entrepreneur, made a mistake, however it is necessary to respond correctly to the request of the tax administrator, so that you address their doubts, supplement incomplete data, explain ambiguities and duly prove the truthfulness of the data stated in the documents.

In practice, we often encounter the fact that receiving a written request from the tax administrator, or a summons to an oral hearing, is stressful for many entrepreneurs and may bring several questions and challenges. In this article we will introduce three tips on how you can respond to the tax administrator's expression of doubts and thus contribute to a successful conclusion of the tax inspection.

1. Prepare convincing argumentation

Thorough and logical argumentation is the basis of a successful refutation of the tax administrator's doubts. Focus on the individual disputed areas that may be related to the emergence of the tax administrator's doubts, whether these are invoices, contracts, payment documents or other documents, and provide the tax administrator with a sufficient explanation of the context and their content. Try to respond to all expressed doubts of the tax administrator and focus on the facts that can refute these doubts of the tax administrator. The ideal solution is to express yourself on the tax administrator's doubts in writing, which will allow you to present your arguments in a structured, systematic and thoughtful way and thus avoid any stress from oral expression. With clear and precise formulation you increase the credibility of your defence.

2. Supplement evidence that will help refute the tax administrator's doubts

Another key step towards refuting the tax administrator's doubts is to provide relevant evidence proving your claims. Consider all the documents available to your company, such as contracts, invoices, account statements, correspondence or other internal documents that prove your claims. So, if possible, support your argumentation with specific evidence. Make sure that the evidence is logically organised and comprehensible. If some documents are missing, consider whether it is possible to obtain them from other sources, for example from business partners or third parties. The more precise, complete and high-quality evidence you provide to the tax administrator, the greater the chance of successfully refuting their doubts and shortening the time needed to conclude the tax inspection.

3. Propose to the tax administrator the taking of other evidence

If you feel that the evidence you are able to submit to the tax administrator yourself is not sufficient to clarify the situation and refute their doubts, use the option of proposing to the tax administrator that the tax administrator itself secure and take additional evidence. In such a case, this may, for example, be a proposal to examine witnesses, send a request for an international exchange of information, examine documents at your business partners or carry out a local investigation. Such a proposal will demonstrate your willingness to cooperate with the tax administrator and help direct it towards obtaining relevant information. However, always make sure that your proposals are specific and substantive, so as to increase the likelihood of their acceptance and execution. It is also advisable to state for what reason you are proposing the evidence be taken and in what way this evidence can contribute to clarifying the factual situation or explaining the disputed situation.

The process of removing the tax administrator's doubts is often time-consuming. During the tax inspection you may also be confronted with the tax administrator's requirements to submit supplementary documents or explanations to remove doubts several times, and in the case of failure to submit sufficient argumentation and evidence the risk of concluding the tax inspection with a finding significantly increases. If, therefore, you found yourself in a situation where during a tax inspection the tax administrator notifies you of doubts, do not hesitate to turn to the experts from the consulting company CLA Slovakia s. r. o., who have rich experience with tax inspections. Just like many other clients, they will help you achieve the best possible result of the tax inspection.

Source: APZD