Tax audits are the main means of control by the State Tax Service. And if we take into account the Ukrainian realities, this is one of the least pleasant elements of the relationship between the business and the authorities.
The main types of tax audits
There are three types of tax audits: cameral, documentary, and factual. Also, inspections can be planned or unplanned, indoor, or off-premise.
The cameral inspections are carried out in the space belonging to State Tax Service only on the basis of the data contained in the tax returns. Such a verification does not require a special resolution or a mandatory presence of the taxpayer.
During the documentary inspection, control is carried out based on the analysis of tax declarations, accounting and financial statements, source documents, etc. During the documentary inspection the supervisory authority is faced with the task: to check the promptness and completeness of the calculation of all taxes and fees, the compliance with foreign exchange legislation, formalization of labour relations with employees.
The scheduled inspection can only take place on the basis of a schedule of inspections. This inspection can be carried out only after prior notification of the taxpayer.
Certain legal grounds are necessary for an unscheduled inspection to take place. The reasons include: the failure to submit a tax return within the time limit established by law, Facts about possible violations during the conduction of inspections of other tax payers, the data that was found to be unreliable in the declarations.
A decision and prior notification of the taxpayer is required for off-premise tax audits, but the taxpayer’s presence at the inspection is not required.
Whether the probability of verification can be reduced
Yes, it is possible. This requires (if appropriate and possible):
- Avoiding the submission of negative tax returns. This applies to both income tax and VAT (in the latter case, the critical is “minus” more than 100 thousand. UAH). It all depends on the ratio of “economic benefits/ verification risk”. A useful life hack can be given here: with small amounts of VAT refund or income tax it is better to make a positive declaration, even knowingly making a mistake (no one is fined). Then, with the filing of the next declaration, the error can be corrected in the current declaration (for profit tax, for example, there is an amended returns application) or by filing a reckoning calculation. This method works and allows you not to show the “minus”;
- Not to conduct transactions with dubious counterparties (liquidation, bankruptcy, offshore, change of location, etc.). You can check your counterparties for reliability Check the counterparty with «Expertus: Holovbuh»
- Avoid excessive transactions with single taxpayers and reducing the payment of ERUs and other wage taxes. Care should be taken to ensure that single taxpayers who are managers or other employees of the enterprise do not receive more than 5% of the total supply of the enterprise, and ERUs do not decrease by more than 20% per year. These figures are taken from the internal recommendations of the State Tax Service;
- Submit tax returns on time;
- Respond in a timely manner to written requests from the State Tax Service, if any. On time is 15 working days from the day of receipt of the request (p. 78.1.1 of the Ukrainian Tax Code);
- Register tax receipts in time so that there are no complaints from buyers;
- Use the registrars of settlement operations (RRO) if required, and issue fiscal checks to avoid complaints from buyers (valid from October 1, 2020);
- Avoid appeals to the Additional verification is possible, for example, when objecting to the tax inspection act.
Appealing individual tax advice
What to do to check:
- Checking the execution of documents for 1095 days from the date of submission of tax reports, in which they were included.
- Trying to guess what will be checked and why (hint: inspection schedule, past requests from the State Tax Service, negative declarations). It is possible to make a phone call.
- Paying attention to the signatures (both own and counterparties) – they can recognize the transaction as fictitious.
What to do during and after inspection
- Not to provide documents that are not requested;
- Refuse to provide documents that are not related to the subject of the inspection;
- Do not leave inspectors with originals one-on-one and prevent them from taking them – originals are not allowed to be withdrawn;
- Check availability according to the regulation, if asked to carry out an inventory.
Preparation for tax audit: practical recommendations
All tax audits can be divided into three groups.
The first group – scheduled tax audits. Business must be officially notified of such inspections in accordance with the procedure established by the Tax Code of Ukraine.
The second group – unscheduled inspections. Business can only guess at the timing of these inspections. Letters from the tax office that asking for information may be a signal that verification is to be expected, some of them may state that there are reasons to carry out unscheduled documentary checks.
The third group – sudden tax inspections, which are carried out without warning of the taxpayer.
Use the open data on the website of the State Tax Service of Ukraine to get information about the planned tax audits. Analyze the received requests of the tax on the demand of information and its documentary confirmation for the possibility of initiating unscheduled inspections in the future. This will allow you to buy time to thoroughly prepare for the verification.
So, the main condition for a successful ending of any tax inspection – planning and systematizing the preparation for it. And with our specialists doing this is even easier.