Local inquiry

What it means

A local inquiry is an act under the Tax Procedure Code by which evidence is sought and secured on the spot: at the premises, in the warehouse or at the registered address. It needs no advance notice and may be carried out at a party other than the one the matter eventually concerns.

It is not a tax audit. It does not start the clock for completing one, it does not end in an audit report and it does not bar a later audit of the same period; what it produces is a record of the inquiry.

A local inquiry does not by itself assess tax or order any additional payment. It is a preparatory step: its findings are the material on which the tax administrator builds an audit or assessment proceedings, and the tax is decided only there. That later procedure is therefore where a company should mainly raise its objections.

How it works in practice

The tax administrator shows an official card, may call for documents and may take them away against a list. The taxpayer has to cooperate, and refusing cooperation risks a procedural fine under the Tax Procedure Code.

In practice this is how the eKasa till is checked, how real activity at the registered address is verified before VAT registration, and how stock is counted before an excess deduction is paid out. The findings are then used as evidence in later proceedings.

We advise clients with shops or workshops to keep a short procedure in an internal policy: whom to call, who may sign the record, which documents are kept where. The employee should ask for a copy of the record and the list of documents taken, which we then go through with the client the same day.

What to watch out for

The record gets signed by whoever happens to be on the premises, and nobody reads it. One sentence about where the goods physically sit is later enough to refuse the deduction, and rebutting it in assessment proceedings costs many times more than calling the accountant to the site.

If the tax administrator finds nobody at the registered address and the virtual office knows nothing about the company, the record will say so. A refusal of VAT registration or doubts about genuine business activity can later rest on that finding, and they are hard to rebut afterwards.