A tax or customs audit is not always just a matter of outstanding taxes.

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It sometimes happens that entrepreneurs treat initiated tax/customs inspections or ongoing tax proceedings with neglect.

Lack of time, procrastination on the basis of the “it’ll be done somehow” principle or the illusory thought “after all, everything is OK in the papers” lead to a reduction in initiative in tax matters.

The abandoned reins are taken over by tax officials.

What is the risk of this?

Tax audit vs. customs and tax inspection

It may seem that an audit is an audit, and the only difference is the authority conducting it.

And, in fact, audits from the US and UCS have some similarities and concern, among other things, checking an entity’s compliance with its tax obligations.

However, there are some differences.

It is only necessary to mention that customs and tax control may concern a wider range of matters, including compliance with the so-called Gambling Act and AML/CFT obligations.

The beginning is also different.

As a general rule, those conducting a tax audit will announce themselves at least 7 days in advance.

UCS officers, on the other hand, surprise taxpayers and start the audit without notice.

The surprise effect is not the only negative psychological stimulus – often, in the case of an audit from the UCS, it is carried out by uniformed officers with sharp weapons.

From the perspective of the inspected person, the differences in the powers of the inspectors are very important.

If the Customs and Fiscal Service knocks on our company, we can expect broader quasi-police actions .

Customs and Fiscal Service officers may, for example, search goods or search employees.

The end of the control is also different.

In the case of a tax audit, once the protocol has been served, the auditee may already at this stage submit explanations or objections.

Even if the audit has revealed irregularities, there is a chance that the interested party’s explanation may be taken into account.

As a result, the next stage of the dispute with the tax authorities – tax proceedings – will not occur or will be limited.

The situation is quite different in customs and tax control.

To paraphrase the saying, the audited and the fish have no voice, once the customs and tax control is completed and its results (or protocol) are received, there are two ways – waiting or filing/correcting the declaration.

If the auditee chooses the first option, the audit will turn into a tax proceeding by operation of law.

It should be noted that sometimes even a submitted correction may not end the problems with the tax authorities.

Findings of the tax authorities in criminal cases

In theory, criminal (criminal-tax) and administrative (tax) proceedings are two different worlds.

However, it is a discernible practice of law enforcement agencies to transplant into criminal cases, often number for number, word for word (!), the findings of audits or tax proceedings.

What does this mean for potential suspect-taxpayers?

First of all, leaving the initiative in the audit/tax investigation in the hands of the tax authorities may lead to unfavourable findings that will be difficult to challenge in criminal proceedings.

A frequent assumption of investigators and even criminal courts is the principle that , after all, the tax authorities know best whether irregularities in the settlement of dues have occurred.

Thus, such findings are pulled up by the prosecutor under the offence of the Criminal Code or the Code of Criminal Procedure respectively – and the recipe for conviction is ready.

Whether and how to defend yourself?

It is worth remembering that even tedious, perimeter-by-perimeter levelling of findings at the tax stage may bring notable benefits in the perspective of criminal liability.

An example is one of the cases of our Law Firm’s client, where thanks to the presented position of the taxpayer and supporting it with relevant documentation, the officials admitted that a part of the taxed activities worth several hundred thousand zlotys actually took place.

In the perspective of threatened criminal liability, each reduction of the value of questioned invoices may result in at least a lighter penalty.

For example, in the case of so-called ’empty invoices’, acute criminal liability starts from a threshold of PLN 200,000 in total receivables.

Thresholds of liability under art. 271a CC

Not to blindly submit to the findings of the tax authorities is to exercise one’s rights to challenge the findings.

Both in the course of an audit and in the course of tax (customs and fiscal) proceedings, a party has the right to participate in activities and demand that certain evidence be taken.

It is also worth taking advantage of the available legal remedies.

It is not uncommon that an argument to the disadvantage of a suspect in criminal proceedings is precisely the lack of appeal against decisions or, further, judgments of administrative courts.

Law enforcement authorities assume that the silence of the suspect-taxpayer means admitting that the fiscal authorities are right.

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As can be seen, combating incorrect findings of the fiscal authorities already at the tax stage may be necessary to take an appropriate line of defence in criminal (criminal-tax) proceedings.

Once adopted, findings, even if they are not entirely consistent with the legal and factual state, may be reproduced by law enforcement authorities and ultimately affect the non-criminalisation of the taxpayer, members of the management board, partners or other persons managing the organisation in question.

Author:

Michał Busz