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Typical mistakes of business owners during tax inspections. How to low risks

Tax inspection is a difficult test for the manager and the office accountant of the company, no matter of it’s size, organizational and legal form and size of activities.

         Even after an interview of the head of the Federal Tax Service, Michael Mishustin: “The Federal Tax Service changed the way of control activities organization, concentrated on the quality but not only on the quantity of inspections” (“Russian business newspaper”, #824 from 22.11.2011)”, weakening of attention from the country in the area of a tax inspection will not be very soon.

         That’s why, earlier or later every tax payer has to face with a tax inspection. Reasonable desire is to low risks, which appear during tax inspections, but not always brings to positive results.  Very often tax payers made mistakes, trying to low negative consequences in the form of tax recharges.


         Why tax payers are making mistakes?

         First of all, it is because of an absence of experience. Employees from a business accounting department and also juridical have an experience only from their highly specialized area. Not every person knows how to force with illegal requirements and doings of inspectors, how to make correct doings in time, which will help to protect company’s interests.

         Secondly, tax inspections are going with a psychological pressure from employees of tax services. There is an opinion that all requirements of tax inspectors are legal and it is better to make them.


         Most widespread mistakes of tax payers

1. Disuse of the legal right of documents delay

         Most of tax payers don’t use the right of a delay and are in a hurry to deliver documents in time.

         According to an issue no. 3 of an article no. 93 of the Tax Code of the Russian Federation, all documents are delivered to the tax service during 10 working days from the moment of getting such request.

         At the same time a tax payer can use the legal right of documents’ delay according to the same issue of an article no. 93 of the Tax Code of the Russian Federation. For such delay it is necessary to write an application during 1 day from the moment of getting a request on the name of the head of the tax service and to show the appropriate reason. Such reason can be a big amount of source documents, an illness of the manager or the office accountant, annual holidays of managers. It is advisably to attach a reference about amount of documents, table of the working time or an order about holidays.

         Practically in 90% of all causes, tax services satisfy an application of the tax payer. Thereby the company gets a precious resource – time. It is possible to prepare all necessary documents leisurely, carefully analyze them, correct them or change some of them (if it is legal).


2. Delivering documents directly to the tax inspector. Making explanations by phone or by a personal talk  

         Tax inspectors very often abuse their official position, making phone calls on working and mobile phones of managers and office accountants. Because of a huge workload and unwillingness of creation additional documents, tax inspectors ask to explain interest fact and give explanations directly in a personal talk.

         Tax payer doesn’t obliged to do that, because doings of tax services are regulated by the Tax Code, specifically issues no. 1,2 of an article no. 93 of the Tax Code of the Russian Federation in questions of documents provision and by an article no. 90 of the Tax Code in questions of explanations provision as a witness. 

         If the call was nevertheless done, it is necessary to ask the purpose of the call in a quiet tone, referring to above articles, and to ask an inspector to make a request in a writing way. Such operations will help the company to proof it’s position.

         It’s important to remember that delivering of documents should be made only after a request – a request about documents’ showing or message about explanations’ showing. In that case tax payer excludes risks of a non-reflection of some facts or documents in an inspection act or during decision after tax results.

         The fact of documents delivering should be fixated documentary – by the use of the Register of documents transmission. It is better to show detailed which documents are delivered, their quantity and the number of pages. That will low risks of documents losses, and the possibility from the side of tax services in duplicative requests of this information will be excluded (issue no. 5 of an article no. 93 of the Tax Code of the Russian Federation).

         It’s important to execute registers in 2 copies. Delivering documents directly to the tax inspection, ask them to put a stamp about getting of documents on the second copy, putting on it the date of documents getting and the signature of the employee of the tax service. Delivering documents by mail, execute it as a registered letter with an inventory and notification.


3. Showing of documents and information which are not concerned to the inspection.

         Employees from financial services and office accountants wrongly think that tax services during tax inspections have boundless authorities in requests of any information about financial activities of the inspected person.

         Thereby all documents, mentioned in the request, are delivered for the inspection. For example, for the inspection of the company’s losses, mentioned in a calculation of the profit tax, tax inspectors very often require not only source documents and contracts but also other documents which are not concerned to the inspected tax. Such documents can be transports bills for the goods delivery,  reports-decryptions for acts of made services, turnover balance sheets for different accounts of the business accounting.    

         The tax payer is not obliged to deliver such information because the tax legislation does not include an accurate list of other documents for the tax inspection.

         Moreover, additional information can be a reason for the more detailed analysis of an activity of an inspected person, what can cause more complaints from the side of the tax service.

         Answering the request it is necessary to give writing explanations about documents which are required illegally by a tax inspection. All explanations should contain information about the fact that a requirement of these documents is illegal, show the link on the current legislation, which will prove the right not to shown such documents for an inspection. For example, during requirements about reports-decryptions of act of made works, it is necessary to refer to an article no. 252 of the Tax Code of the Russian Federation and to an issue no. 2 of the article no. 9 of the Federal Law #129-FZ from 21.11.1996 “About business accounting” in accordance to which losses are proved by acts of made works, which are created in a necessary form with necessary requisites. The Tax Code does not include an essential condition about delivering of other documents. 


         4. Absence of a responsible person for delivering documents and information to the tax inspectors. Absence of an algorithm of activities during communication of employees of the company with tax inspectors.

         Usually communication with inspectors is made by an office accountant. He shows all required documents, gives explanations for inspectors. Also the head of the company is involved in questioning. Looking at the practice of tax inspections, such explanations can be not enough, that’s why inspectors ask other employees of the company – heads of departments, managers, employees from the business accounting department, storekeepers, etc.

         As a result the situation appears, when employees can give different information about the same economic deal, what can cause more losses in the form of tax charges or penalties.

         It is possible to prevent such development by the previous explanatory work with employees. It is better to create and to give an instruction, in which detailed communication with tax inspectors is described. Every employee has to know which information he can give and which information he cannot. In giving of explanations employees have to refer to an absence of a possibility to deliver documents or information because of the limitation of authorities or assumptions. 

         The manager has to determine earlier an employee, who will be a responsible person for the document and information delivering. An office accountant, a lawyer or another person can be such person. This will help to avoid problems with “unauthentic” statements of witnesses and to bereave the tax inspection of additional trumps for an institution of the tax liability.

         As you see, observing some rules and not making mistakes, it is possible to low negative risks after tax inspections.


Yana Kurochkina

                                               Managerial partner