Legal audit of company activities prior tax audit

Every corporate manager or private entrepreneur knows: one sould always be ready for a tax audit. It is likely even if bookkeeping and tax accounting are set up transparently, and tax authorities show no interest in the company.

Legal audit of a company is a kind of “dress rehearsal” of tax audit, the purpose of which is to put in order the primary documentation and reports, prepare reasonable retorts to the tax authorities inquiries in order to prevent additional tax charges and avoid their judicial and administrative claims.

The legal audit of the company, which VigoLex conducts prior tax audit, is as follows:

  1. Checking the legality and validity of the impending tax audit:
    • verifying the legality of administering an unscheduled tax audit, analysis of the prospects of appealing its designation;
    • checking the legality of the company’s inclusion to the schedule of tax audits and analyzing the possibility of appealing such decision.
  2. Checking the primary documentation of the company regarding the main transactions:
    • checking the primary documents for the presence of obligatory details (compliance with formal requirements);
    • checking the primary documents for the degree of business transactions detailization (compliance with the content requirements);
    • removal of defects in the primary documentation.
  3. Legal assessment of the existing taxation mechanism of the company:
    • determination of the main factors affecting tax indicators;
    • assessment of the methods for tax payment accounting;
    • legal expertise of the existing tax payment accounting system;
    • preparing reasonable written answers to potential questions from tax authorities.
  4. Briefing by VigoLex lawyers for the director, chief accountant and other employees of the company regarding the tax audit.

VigoLex recommends that business owners do not neglect a legal audit of the company activities before a tax audit. This will help prevent additional tax charges and avoid significant costs of appealing the audit results in court.

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