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Should you fear a tax audit?

Written by Accountable Team
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Are you worried about a potential tax audit? Hassan Ayed, one of our partner accountants, explains it for you: a tax audit can happen to any taxpayer, especially to the self-employed. It is therefore important to know what to expect!

Hassan, how does a tax audit go?

I propose that we focus on the tax audit that would happen at your premises.

In this case, you will receive a letter telling you where (often at your business premises) and when the controller will come by. This mail also tells you the contents (taxes, VAT) and periods that this check will take into account.

You have the right to ask for a postponement of a few days or to arrange an appointment with your tax advisor: this gives you time to prepare the various documents and start the audit with complete peace of mind. It is indeed possible, and even recommended, to start a tax audit completely relaxed, I promise!

📌 Of course, the tax authorities can also make a surprise visit to your office during working hours. Should this happen to you, remember to ask the inspector to prove his or her identity and give the reason for the visit.

Does the controller ask you questions that are unrelated to the stated reason for his visit? It is then better to invite him/her to make an appointment again later for these questions.

Once control begins, the controller has three bullets:

✔️ Free access to your accounts and all the documents needed to determine your income,
✔️ The right to ask you for any information necessary for their research,
✔️ Access to your business premises.

If a tax controller comes knocking on your door, make sure he has the authorization of the police judge. This one is mandatory! If the controller does not have it, ask him to come back with the authorization in question or to make an appointment at your workplace, if your business premises are distinct from your home.

The tax audit itself is rather short. It lasts, usually, one day. In the following weeks, the controller may contact you if he has any further questions. These questions must not interfere with the exercise of your professional activity!

Let’s assume that the controller finds irregularities. What happens then?

In this case, at the end of the tax audit, you receive what is called a verification report, in the form of a “proposal for agreement”. Two possibilities are then open to you:

  • You agree and you sign the proposal. You then receive a warning. You will then have two months to pay for the eventual adjustment and… it is over.

📌 Did you sign? It is very difficult to go back and question this agreement. Before you sign, make sure you won’t change your mind!

  • You do not agree and you offer to provide additional information. If tax authorities disagree, the tax controller will send you a rectification notice for which you still have a right of reply within one month. This will be followed by a notification of the tax decision and a warning to pay your taxes … You can then lodge a complaint.

Does a small self-employed really risk a tax audit?

Considering oneself as a “small self-employed” does not protect from tax control! Specifically, in 2018, the tax authorities carried out 82,651 control missions. This figure is decreasing every year, as the number of staff in the ranks of the tax administration is decreasing too.

Also, the so-called “unproductive” files are discarded more quickly in favor of more “productive” files, thanks among other things to a systematic analysis of previous feedback.

In practice, certain habits, in particular, are likely to catch the eye of a wise controller: if you devote more than 5% of your turnover to “business restaurants”, be prepared to justify their professional use.

Are freelancers really at risk of being reported to the tax authorities?

So, denunciations are no myth: in 2016, the tax authorities received more than seven denunciations per day. These denunciations lead a priori to a routine check. As always, if everything is in order on your side, you have absolutely nothing to fear.

These denunciations are not always anonymous. It is sometimes said that if the tax authorities find that the person reported is innocent, they will look into the case of the…. snitch!

📌 It could happen, it seems, that the Administration hides a denunciation from you. If you suspect that this is the case for you, remember to request your tax file from the Administration. Apparently, if you can prove that a denunciation was hidden, you might avoid the tax. You can always check whether this is actually true!

How long am I at risk of a tax audit on my 2019 income?

Your 2019 income may be subject to a tax audit within three years: after December 31, 2023, you should no longer wait for an audit for your 2019 income. It is, in any case, the so-called “ordinary” deadline. On the other hand, in the case of an offense committed with fraudulent intent, i.e. in order to procure for oneself or a third party an unlawful benefit, this period may be extended to seven years!

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Accountable Team
Accountable Team

This article is presented to you by the Accountable Team, a diverse group of accountants and seasoned freelancers active in Belgium. Thanks to the real-life experience and expertise in topics such as self-employment, taxes, bookkeeping, VAT, and many more, the Accountable Team is able to share insights and practical advice to empower others on their freelance journey. We are dedicated to helping the self-employed thrive in today’s dynamic work environment and fostering a community of independent professionals.

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