VAT fraud causes France to lose nearly 20 billion euros every year. Knowing that each year, VAT accounts for nearly half of tax revenues, the State has made the fight against VAT fraud its banner call and has even created a new tax police service. Through these efforts, in 2019 alone, 9 billion euros were collected through tax audits.
One would have thought that in these difficult times due to the Coronavirus, tax audits would have been suspended. But on the contrary, they are increasing!
fiskaltrust highlights for you the different steps of the VAT control in order to help you to be better prepared.
Receipt of an audit notice
Sending an audit notice precedes any accounting audit. Although it is not a legal obligation, this notice is generally sent by registered mail with acknowledgement of receipt. Please note that it is only when a company is suspected of fraud that an unannounced intervention (without an audit notice) can take place.
Preparing for the tax audit
Generally, there is a minimum of two days between the receipt of the audit notice and the start of the audit operations.
This period of time should allow you to get in touch with your accountant or lawyer in order to benefit from the advice of a tax expert. To prepare for the audit, you must identify the tax risks and anticipate the responses to be given to the auditor for the period under audit. You will also need to gather all the documents and supporting evidence so that they are accessible to the auditor.
The tax auditor, for his part, will gather as much information as possible about your company.
Initial visit of the tax auditor
The auditor usually begins with a visit to the company with the manager or the person designated as the main contact for the entire duration of the tax audit (usually the director of the accounting department).
Following the visit, you will have to admit the auditor to the premises and introduce the means made available to him and describe to him the functioning of the accounting department and the tools used.
You will also have to explain your field of activity and present your company.
Usually a list of all the documents to be prepared as well as an agenda for the rest of the audit will be concluded at the end of this first stage.
Checking the certificate or attestation of the software publisher
French law requires all software and cash register systems to comply with the conditions of inalterability, security, conservation and archiving of data in order to prevent VAT fraud.
The obligation of certification concerns all merchants – and more broadly all professionals subject to VAT.
Thus, it is mandatory to prove the conformity of your collection system by a certificate issued by a government-accredited body or by an individual attestation from the software provider.
The tax inspector will therefore ask you for the attestation or certificate of conformity of your cash registers in order to verify that you meet the legal requirements.
If you have neither the certificate nor the self-certification, you will be fined 7500€ per cash register!
All original accounting documents must be made available to the tax auditor so that the auditor can verify them. In order to cross-check and verify the consistency of the information, the auditor can also check the stocks, the cash fund or price reports.
Please note that as in the preparation of the VAT audit, you can be accompanied throughout the audit by an “advisor” (chartered accountant or tax lawyer for example).
Once all the checks have been carried out by the auditor, a meeting between you, your advisor and the auditor is organized in order to summarize the tax audit.
The proposal for rectification or the notice of no rectification shall mean the closure of the control procedure.
Please note that the rectification proposal must be hand-delivered to you and you must provide a signature or sent to you by registered letter with acknowledgement of receipt in order to be valid. Also, the proposal must contain the following information:
- The name and signature of the competent official,
- Possible tax sanctions,
- The time limit (30 days) you have to send your comments or acceptance to the administration,
- The legal or factual grounds and the texts on which the proposals for rectification are based,
- A reminder of your faculty to have a counselor assist you to discuss the proposed corrections.
You therefore have 30 days to contest. The administration is then obliged to respond in a “Response to the taxpayer’s observations”. You will then be notified by a notice of collection of the additional amount due as tax.
Prevention is better than cure! fiskaltrust offers a whole range of tools necessary for your company to comply with tax regulations. Our fisktrust.Middleware allows you to fulfill legal obligations and to secure your checkout systems. Our team of experts is also there to advise you and accompany you in the certification process.