What should you do when a Tax Officer comes to your office?
In a general visit the Revenue Department officers will interview you about basic information of your company so that they can understand your business and make the necessary advice about business taxes, and at the same time they will assess if you have paid taxes correctly. If not they can order you to pay additional monies.
When a Tax Officer comes to your office, do not be apprehensive because at first they will only need general information. They will want to know when your company was registered? What type of business is it? What is your main income? How many staff do you have? Have you registered for VAT or not? And how much profit or loss did you make in the previous year?
1) A company should keep copies of tax forms that have been submitted every month such as Withholding Tax form: PND.1, PND.3, PND.53 and VAT form: P.P.30 because when the Tax Officer comes they will want to check if your company has submitted monthly tax forms in good order or not.
If they see your tax file kept ready for access in your office then it will make their job easier, quicker, and be less disruptive to your business.
2) After that the Tax Officer will ask for information about your major revenue and expenses so that they have more understanding about your business. Be very careful about recording every income for the business, especially for any deposits shown in your bank statement.
From my experience the Tax Officer will ask for your bank statement to compare the deposits with your sales report to check if you have reported and booked your income completely. For expenses, the Tax Officer will be interested in your major expenses to see if they were paid for by the business or if there are any private expense involved.
In some cases if you have a sub-contract agreement, please be sure that you have paid the stamp duty before showing the revenue department. Please also take care about personal expenses such as director's expenses that are not related with the business or are too high or unreasonable since Tax Officers are always interested in those items and they will check all of them.
3) In the General Visit the Tax officer will check monthly tax filing, the type of tax files that they will ask to view are:
Withholding Tax: They will check if you have deducted and submitted taxes correctly when you pay for any kind of services that are eligible for withholding tax, for example if you pay for Advertising expenses you have to withhold 2%.
VAT: The Tax Officer will check about 1 - 3 months of your VAT invoices according to your Purchase VAT report and Sales VAT report in order to see if they are completed original tax invoices and claimable under taxation conditions. If they find that your VAT claim has not complied with the law then they will ask you to pay the tax owed plus a stiff penalty.
This is a basic outline of the General Visit. If you or your information are not prepared on the date that they knock on your door then you can tell them that you will bring the documents to their office within one or two weeks. Before you bring them please remember to check all of the documents to see if they are completed and ready for the tax audit.