Tax audit without travel
Tax audit without travel
January 2022 – A tax audit primarily involves the tax authorities coming to the taxpayer's home to look at the books. The tax authorities may take copies, but they must come to you. A new law now allows the tax authorities to carry out audits without having to come to you.
Small provision, big impact
A law of mid-2021 adds a new paragraph to Article 315bis of the Income Tax Code 1992: "Without prejudice to the taxpayer's right to request or provide verbal information, the communication of the books and documents referred to in Article 315, paragraph 1 applies, for natural persons and legal persons referred to in paragraph 1, also to the provision of these books and documents via a secure electronic platform of the FPS Finance". This paragraph - which has also been introduced into the VAT legislation - forms the basis for the control of remote books.
Until now, the communication of "books, invoices, documents, files and data necessary to determine the amount of taxable income" (or to ensure the correct collection of VAT) always took place without the taxpayer having to travel. It was therefore up to the tax authorities to mobilise (most of) the human and material resources to carry out the audit at the taxpayer's premises. The taxpayer, on the other hand, had to provide the necessary human and material resources to answer the tax official's questions and to provide the documents.
We could do better, the tax administration thought... and that is what this little provision is about.
Platform
The idea is that the taxpayer posts the books and documents in question on a platform to which the tax authorities also have access. Many taxpayers keep their accounts in digital format or have their accountant keep their accounts in digital format. This digital information can therefore easily be made accessible to the tax authorities.
The concrete modalities for making this information available have not yet been defined. The information may first have to be converted into a format that can be read by the tax authorities.
The obligation to make information available on the platform does not only concern the accounts. All other documents must also be made available in digital format via the platform.
What if you do not keep digital accounts?
Self-employed entrepreneurs who keep their accounts and other documents on paper need not worry. Entrepreneurs who do not keep their books and documents in electronic form are simply not affected by this obligation. In this case, the auditor will still have to visit the contractor or send a letter to the contractor inviting him to submit certain documents.
Companies, on the other hand, have no choice. In any case, they are already obliged to keep their accounts in digital format. In the unlikely event that a company does not have an Internet connection, it can instruct a chartered accountant to post the documents for it on the platform.
For 'your' convenience
During the preparation of this law, the Minister repeatedly emphasised the advantages of this measure for the taxpayer: the taxpayer no longer has to free up time to receive the auditor and answer his questions. What is more, the administrative burden is reduced to a minimum: information can be posted on the platform with a simple click.
But needless to say, the benefits for the tax administration are probably even greater. Officials will now be able to carry out checks from their office headquarters, wherever it may be.
Another advantage is that the tax authorities will be able to use the information obtained much more easily for data mining purposes. In this case, the computer searches the huge amount of information available to the tax authorities for patterns that indicate fraudulent transactions. The minister has promised Parliament that his administration will "not go fishing", but the question is whether the tax authorities will let these mountains of information go unused.
One can only hope that the tax administration has good contacts with its Dutch colleagues. There, data mining was at the root of the 'benefit affair'.
The coronavirus crisis has encouraged digitalisation, but we must nevertheless remain critical of everything that computers can do for us.