IRAS tax investigation is usually carried out on a taxpayer who is suspected of tax evasion. The aim of the tax investigation is to gather sufficient evidence on the tax evasion scheme and then prosecute the tax evaders in court to send a strong deterrent message to the public. In order to preserve the documentary evidence for prosecution, a surprise visit is necessary for tax investigation cases.
On the other hand, IRAS tax audit is an inspection of the tax filing with an objective of rectifying errors and educating taxpayers. A taxpayer usually receives an advanced notification from the IRAS tax auditor prior to the auditor’s visit. Such visit by auditor is called a field audit. IRAS audit can also be in the form of desk audit where query letters are sent and the tax payer is required to bring the necessary documents to the IRAS for inspection. Tax Audit Process is less complicated than the Tax Investigation Process.
Tax Audit Process
Once you receive the notification of a tax audit either via a letter or a telephone call from IRAS, you would be informed on the date and time the IRAS auditors would visit your premises to examine the books. Alternatively, they may require you to bring the relevant documents to IRAS for review instead of visiting your premises. Tax auditors would usually examine the accounting and tax records including the source documents to determine if the tax declaration is accurate. Any mistakes will be rectified and additional tax and/or penalty will be imposed.
What to Do During a Tax Audit
When you receive a notification from IRAS regarding a tax audit, you usually have some time to prepare for it. You should consider engaging a tax agent to quickly review your accounts and tax filing to uncover any glaring or common mistakes/errors. When the tax auditors meet up with you, let them know that you are in the process of disclosing the errors you have just discovered. By creating an impression that you or your company conducts periodic review of tax filing for voluntary disclosure, IRAS tax auditors may reduce their scope/extent of audit as the risk of incorrect tax filing is perceived to be low. In other words, the auditors may check less and conclude the tax audit/checks earlier.
Why Engage A Tax Advisor Pte Ltd?
A Tax Adviser Pte Ltd has the expertise and resources to assist you in IRAS tax audit so that you can continue to focus on your business without being distracted by the tax audit. For a totally stress free tax audit, why don’t you consider our ‘tax health checks’ (i.e. a self-imposed/voluntary tax audit initiated by yourself) to immediately rectify any tax filing issues via voluntary disclosure exercise?