Support During Tax Audits

Support during tax audits is legal assistance for a business before, during and after an audit by the tax authority.

For a company or an individual entrepreneur, a tax audit is often not only communication with inspectors, but also the risk of additional tax assessments, penalties, further disputes with the tax authority and court proceedings.

A VINCO’S lawyer helps assess the legality of the audit, review the order and inspection referrals, prepare documents, organize communication with the tax authority, control the scope of the audit, record procedural violations and develop a position for objections or appeal of a tax notice-decision.

The purpose of legal support is not merely to be present during the audit. The purpose is to protect the business from unnecessary risks, prevent disclosure of excessive or inaccurate information, properly prepare explanations and preserve the ability to defend the company after the audit report is issued.

Tax audit support includes a set of actions before the audit starts, during the audit and after the audit report or certificate is issued. Depending on the case, this may involve support during a scheduled documentary audit, an unscheduled documentary audit, an on-site or off-site audit, a factual audit, a desk audit or separate actions of the tax authority based on tax reporting and tax information.

A tax lawyer analyzes whether the tax authority had the right to start the audit, whether the grounds, period, subject matter, inspectors, time limits and service of documents were properly determined. It is also important to check whether the tax authority stays within the audit order and does not request documents unrelated to the audit subject.

In practice, such support helps the business avoid being left alone with the tax authority, especially in audits related to VAT, corporate income tax, single tax, cash registers, excise tax, employment matters, licences, foreign trade transactions or counterparties considered risky by the tax authority.

• the company received a notice or an order for a scheduled or unscheduled documentary audit;
• inspectors came to the business premises for a factual audit;
• the tax authority sent a request for explanations and copies of documents;
• the business has risks related to VAT, tax credit, reality of transactions or counterparties;
• the audit concerns cash registers, cash transactions, excise tax, fuel, alcohol or tobacco;
• there are questions regarding employment, income payments or social security contributions;
• the audit is related to VAT refund or amended tax returns;
• inspectors request documents unrelated to the audit subject;
• there is a risk of an audit report with additional assessments, penalties or conclusions about fictitious transactions;
• the business needs objections to the audit report or appeal of a tax notice-decision.

• scheduled documentary audits;
• unscheduled documentary audits;
• on-site and off-site documentary audits;
• factual audits of retail locations, offices, warehouses, fuel stations, restaurants and other business premises;
• desk audits of tax reporting and timely registration of tax invoices;
• audits concerning VAT, corporate income tax, single tax, personal income tax, military levy and social security contributions;
• audits concerning cash registers, cash transactions, licences, excise tax and excisable goods;
• audits of individual entrepreneurs, LLCs, charities, NGOs, special regime taxpayers and groups of companies;
• audits related to liquidation, reorganization, change of ownership or tax risks in a transaction.

• type of audit, legal grounds, subject matter and period;
• audit order, inspection referrals and inspectors’ IDs;
• proper service of documents on the taxpayer;
• compliance with notice periods and audit time limits;
• whether the audit has a proper legal basis for this taxpayer;
• whether the requested documents correspond to the audit subject;
• whether there are grounds for refusing admission or recording violations by the tax authority;
• which documents should be provided and which require additional review;
• which explanations may be used against the taxpayer;
• which risks should be eliminated or minimized before the active audit phase.

1. Initial consultation and analysis of the situation: tax request, order, notice, referral or ongoing audit.
2. Determination of the audit type, legal basis, subject matter, period and potential risks for the business.
3. Preliminary review of the taxpayer’s documents: agreements, acts, invoices, tax invoices, bank statements, reporting and primary documents.
4. Preparation of the position on admission or refusal of admission if procedural violations exist.
5. Organization of internal communication with accounting, management, responsible employees and external advisers.
6. Support during the audit: communication with inspectors, control of demands, recording violations, preparation of explanations and responses.
7. Review of the audit report or certificate after completion of the audit.
8. Preparation of objections to the audit report, participation in their consideration and formation of the evidence base.
9. Support in administrative appeal of a tax notice-decision, if issued.
10. Preparation and conduct of court proceedings against the tax authority, if necessary.

During a tax audit, it is important not only to provide documents, but also to understand how the tax authority may interpret them. The same agreement, act or payment may support the reality of a transaction or become the basis for additional assessments if the documents contradict each other.

• agreements with counterparties, addenda, specifications, applications and invoices;
• acceptance acts, delivery notes, transport documents and warehouse documents;
• tax invoices, adjustment calculations, tax returns and amended returns;
• bank statements, payment orders, cash documents, Z-reports and cash register data;
• employment documents, orders, timesheets and payroll documents;
• licences, permits and documents for excisable goods, fuel, alcohol or tobacco;
• internal orders, policies, accounting policies and accounting registers;
• correspondence with counterparties and evidence of delivery, transportation, performance of works or provision of services;
• court decisions, previous tax consultations, previous audit reports and objections.

After the audit is completed, the key stage is the analysis of the audit report. At this stage, the taxpayer’s position is built around factual and legal errors of the tax authority. Objections to the audit report should not be a formal disagreement. They should contain arguments for each episode, references to documents, explanation of the real substance of transactions, legal analysis and relevant court practice.

Properly prepared objections may reduce the risk of a tax notice-decision, strengthen the taxpayer’s position in administrative appeal and create a strong evidence base for court proceedings.

• admission to the audit despite defects in the order or referrals;
• submission of excessive documents or explanations to the tax authority;
• failure to record violations by inspectors;
• incorrect signing of the audit report, explanations or document inventory;
• inability to effectively rebut the tax authority’s findings after the audit;
• additional tax assessments, penalties and interest;
• risk of the tax dispute moving into criminal or reputational dimensions;
• loss of time correcting mistakes that could have been avoided during the audit.

• tax authority order, referral, notice or request;
• taxpayer details, tax regime, business activities and business structure;
• tax and financial reporting for the audited period;
• agreements, acts, delivery notes, bank statements and primary documents;
• information about counterparties, transactions and actual performance of agreements;
• documents concerning employees, payroll, individual contractor arrangements or civil-law agreements;
• documents concerning cash registers, licences, excise tax, fuel or other special matters;
• previous correspondence with the tax authority, audit reports, objections, complaints or court documents;
• internal explanations of the accountant, director or responsible employees regarding disputed transactions.

VINCO’S Legal Company supports businesses during tax audits at all stages – from the first request or order of the tax authority to objections, administrative appeal and court protection.

We help assess the legality of the audit, prepare documents, organize communication with the tax authority, protect the director, accountant and owners from careless explanations, form the evidence base and minimize the risks of additional assessments.

VINCO’S support allows a business to go through a tax audit systematically: with a clear position, controlled communication, proper document flow and readiness for further protection of business interests.