With the Digitisation of tax audits Many things are changing for everyone involved. Ultimately, however, the digital innovations are intended to achieve one thing: simplifying the audit process for everyone. In this context, tax auditors, tax advisers and clients are pursuing different objectives. How can these be reconciled – is this even possible? A panel of experts with a wealth of specialist knowledge and extensive experience will discuss this on „hsp live at 11“.
In the hsp Talk Arena, Paul welcomes four fascinating guests. First of all, there is Eugen Müller, a tax adviser and lecturer at the hsp Academy. Also joining us is Martin Weidemann, who is also a tax adviser and head of the tax department at Treuhand Hannover GmbH, and who was previously a tax inspector himself. He is joined by Viktor Rebant, a qualified tax clerk and lecturer in internal control systems at the hsp Academy. The panel is rounded off by Gregor Danielmeyer. The experienced tax inspector is once again appearing as a private individual and is expressing solely his personal views.
First question: Can a business owner do everything right so that a tax inspector can’t find anything – or is that impossible by its very nature? Eugen recalls an example where it actually worked out, and in the end there was nothing to criticise. But that’s not the norm. Eugen would like to pass on the question of why there are hardly any ‘perfect’ audits to the tax authorities. Martin considers it virtually impossible to get everything right. He adds that the 14-day notice period before an audit is far too short.
Exemplary cases and latecomers
How does Martin prepare his clients? Firstly, he highlights the fear that remains one of the key drivers behind preparing for a tax audit. In addition, he offers not only to map out the processes but also to optimise them. He also highlights added value, such as aspects of the internal control system (ICS) like the detection of theft by employees. Viktor adds that technical documentation and information on software selection make the tax audit easier.
Eugen tells the story of a client who absolutely refused to prepare for a tax audit – and then an audit took place. During the audit, it emerged that the business owner wasn’t simply disinterested. He had, in fact, already prepared some data and documents that could have been provided in advance. During the audit, however, he did come to realise that thorough preparation for audits makes sense.
Recommend preparing for the tax audit
Gregor recommends that tax advisers should make a point of documenting that they have advised their clients to prepare. In his experience, many tax advisers have no idea what processes are taking place at their clients’ firms. In response to the initial question of whether companies can get everything right, he answers quite clearly: yes. He has already come across a number of cases where the final figure was zero.
Martin likes to tell reluctant clients: ‘If you prepare properly, you’ll save time.’ Those who don’t prepare can expect to have to grapple with the issue for the next four years. Viktor goes on to mention that it is not uncommon for complete data sets to be handed over to the tax authorities, yet these still cause difficulties because the tax authorities and tax advisers work differently. He cites pharmacies as an example, where, to put it simply, rather unusual processes take place. In such cases, the tax office occasionally lacks the background knowledge needed to understand these processes. It is not uncommon for Viktor to wish for an independent third party in such situations.
Gregor comments that data quality in pharmacies has now improved significantly and is among the best. So a lot has changed over the years. Viktor says that his experience dates back several years and that a great deal has also changed on the software side. He emphasises once again how important it is to choose good software. Viktor and his colleagues now also advise many software companies to help them move forward. He also advises companies on choosing the right software. Eugen points out, however, that the final decision must rest with the company, which Viktor confirms. Ultimately, choosing the right software not only makes the audit easier, but also simplifies day-to-day operations and collaboration with tax advisers.
Prejudices in tax audits
Eugen raises a sensitive issue. He has repeatedly encountered tax inspectors who approach their work with a bias against certain sectors. Hence his question to Gregor Danielmeyer: Are there any tips or tricks on how to deal with biased tax inspectors? Gregor recommends addressing the concerns directly and pointing out that the client operates with integrity. Eugen asks whether, in the event of persistent difficulties, it would be advisable to take the matter to the head of the relevant department. Gregor advises against taking this step too hastily. However, in an extreme emergency, if repeated discussions prove fruitless, he sees this as a possibility.
Martin has found that, for the sake of a „cleansing storm“, it can sometimes be a good idea to change the person you’re liaising with on the counselling side. This is particularly the case when things aren’t going well on a personal level. That way, the person actually providing the counselling isn’t left in the lurch, and things can carry on in a more grounded way.
Next week on „hsp live at 11“: Tobias Polka discusses the new transfer pricing documentation guidelines, which were adopted in the middle of the month. What do they mean? What should we bear in mind in future?
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