Tax audit report

What it means

The report is the written outcome of a tax audit: a list of the documents examined, the tax administrator’s findings, the evidence they rest on and the legal view taken of it. The audit ends on the day the report is delivered, even where the taxpayer disagrees with every finding.

The report is not a decision: it assesses nothing and cannot be appealed. Tax changes only through the later assessment decision, for which the report is the groundwork. A request to comment on the findings is delivered together with the report.

A protocol belongs only to a tax inspection. A local investigation, in which the tax office checks, say, that a registered office or premises exist, does not end with one; its outcome goes into a written record. On its own it changes no tax, but it can lead to a later inspection.

How it works in practice

The period for comments is set in that request, with a floor fixed by the Tax Code, and missing it cannot be excused. The comments are the last unhurried moment for evidence, because the assessment proceedings open the very day after the report is delivered.

Where the audit found no difference in the amount the taxpayer should have paid, no request is sent and the matter ends with the report. Otherwise the administrator has to deal with the objections in the decision, against which the company may lodge an appeal. The audit itself is to be completed within a year of its start.

Once the protocol arrives, we go through each finding with the client and sort them into undisputed ones and those we can counter with documents or a legal argument. For the disputed ones we write a response with specific evidence, and for the rest we prepare the client for the amount the decision will bring, including the penalty.

What to watch out for

Silence is the costly option. Evidence that could have been produced during the audit or in the comments on the report may be disregarded by the appeal body later, and the company pays the assessed tax with interest over a document that sat in a drawer the whole time.

Another mistake is not reading which periods and taxes the protocol covers. Whatever the inspection did not include stays open and can be examined later, until the time limit for assessing the tax runs out. A company unaware of those limits wrongly assumes its past is closed.