What is a tax audit?
A tax audit is a comprehensive analysis of tax returns to ensure they comply with applicable regulations. It involves a detailed examination of financial and tax documentation (e.g. invoices, contracts, tax returns) and the company’s tax procedures, with the aim of verifying whether the taxpayer is correctly recording business transactions and settling the taxes due. As part of the audit, potential errors are identified, areas associated with increased tax risk are assessed, and solutions are proposed to rectify any shortcomings. The aim of the audit is to detect irregularities, mitigate tax risk and identify areas for lawful tax optimisation. A regularly conducted audit increases the company’s transparency and builds its reputation as a reliable taxpayer in the eyes of business partners and investors.
Benefits of conducting a tax audit
- Ensuring tax returns comply with the law
- Reducing tax risk and avoiding potential penalties (ideally before the tax authorities take action, e.g. the possibility of avoiding tax sanctions, the possibility of submitting a voluntary disclosure regarding criminal and fiscal liability);
- Cost savings and tax optimisation;
- Preparation for a tax inspection;
- Investor credibility and confidence (particularly if the sale of a company or business is planned).
Tax audit versus tax inspection
A tax inspection is carried out by the tax office and may result in penalties for the taxpayer, whereas a tax audit is voluntary and internal – it serves only an advisory purpose and does not directly entail any penalties. In other words, an audit is a safe form of verification for a company, as if any shortcomings are detected, the business owner does not face criminal or tax penalties, but receives guidance from a tax adviser on how to rectify them. An audit therefore serves a preventive function – it allows you to prepare for a potential inspection, complete missing documents, correct tax returns and thus avoid tax penalties or accruing interest.
When should you opt for a tax audit?
Although a tax audit is not mandatory, there are situations in which it is recommended. These include, in particular:
- Before the sale/purchase of a company or a merger;
- Where there are doubts regarding the accuracy of tax returns (particularly in the event of a change in management);
- Verification of the correctness of claimed tax reliefs (technological reliefs such as R&D, IP-BOX).
The scope of a tax audit can be freely determined by the business owner, i.e. it may cover a comprehensive review of tax returns (CIT, PIT, ZUS, VAT, PCC, property tax, etc.), but also focus exclusively on specific areas (e.g. an audit of the correctness of withholding tax or tax reliefs).
Who conducts a tax audit?
A tax audit should be carried out by independent and experienced specialists: tax advisers or lawyers specialising in tax law.
Tax Audit – Summary
In an era of frequent changes to tax law and an increasing number of inspections, regular audits are becoming part of good business practice – they provide insight into weaknesses that can be addressed in good time and foster a culture of transparency within the organisation. Thanks to audits, the taxpayer gains peace of mind, and the company – a reputation for reliability and trustworthiness.
I specialize in Polish tax law, particularly income taxes, as well as international tax law. My experience includes, among others. providing ongoing tax advisory services, preparing legal and tax opinions, drafting requests for individual interpretations, conducting tax reviews. I gained professional experience in Warsaw law firms.
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