Few things are more scary for a self-employed worker or an entrepreneur than to receive a surprise inspection from the Treasury. In that there are hardly any differences: a hotelier, an industrial entrepreneur, a plumber or a hairdresser … The fear that inspires the Tax Agency is similar in all of them. But panicking won’t make things easier.

Once hacienda contacts you for an inspection, the best thing you can do is be collaborative. Submit all the documentation they ask you, be polite and respond in time to each notification. Do you want to do things right? In this post we help you to be prepared before an inspection of the Treasury. Because being cautious is worth two.

Treasury inspections

are a more common practice than we normally tend to think. In fact, in recent years they have increased significantly.

The objective is to uncover (and collect) the figures of the underground economy associated with certain activities and sectors.

The Treasury sets off its alarms about some results when it analyzes the quarterly and annual declarations of freelancers and companies. But it also schedules random inspections.

So, if you have dropped one, it may well be because they have observed something irregular in your activity or because, simply, you have been unlucky.

Reasons to carry out a Tax inspection in your company

The most common causes for which a Tax inspection is usually carried out on freelancers and companies are the following:

Irregular or excessive deduction of expenses

It’s not that you don’t deduct everything that is actually deductible. But if your expense items are excessive, even if they are legal, rest assured that, over time, the Treasury will require you to make an inspection. Especially if your activity is continuously giving losses.

A continuing loss situation is considered normal during the first or, at most, the second year of the business’s life. From the third, not anymore.

Mismatching of data between quarterly returns and annual summary

When the results of the annual summaries do not coincide with the intermediate declarations presented throughout the year, the alarms go off again.

Therefore, it is essential that the results match exactly. The annual declarations are merely informative, but you have to pay close attention when completing them.

When in doubt, it is better to leave everything in the hands of your tax advisor.

VAT refund request

Treasury may ask you to present all annual invoicing if you have repeatedly been submitting VAT refund requests. Especially, when these returns begin to be large.

Try to keep everything up to date and keep all the bills so that the lords of the gray suit do not catch you in a resignation.

By chance

As we have already said, many inspections respond to routine checks and are not motivated by a specific suspicion.

In addition, sometimes, a tax inspection of companies belonging to a certain sector is done in order to know a specific behavior of that sector.

For example, what are the most common expenses associated with the activity. Once the results have been analyzed, the inspectors extract comparative criteria that allow them to subsequently detect possible irregular or unusual behaviors.

Operation of a Tax Inspection

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How to prepare for a Tax inspection?

Before an inspection of the Treasury, we recommend that you remain calm and that you keep in mind, above all, that it does not have to lead to a sanction if you have fulfilled all your obligations in each year.

For everything to go well, it is essential that you have all the documentation: declarations, invoices and proof of expenses, payroll, etc. The more orderly, the better.

Send the inspectors all the documentation they request (only the one they request) and ask your advisor for help so as not to be overwhelmed by the technical language of the officials.

How to act before an inspection of the Treasury without prior notice?


Receiving an inspection from the Treasury without prior notice
is not a common practice of the Tax Agency.

However, if you find yourself in that situation, the inspectors will only be able to enter your business if they carry a court order with them. If they don’t show it to you, demand it.

Because, if you allow them entry without a court order, it will be understoused that you give your consent, so all the actions they perform once inside will be considered valid.

Without a court order, it’s best to stand firm and not allow them entry.

But, if the inspectors show up with a court order, you will have no choice but to be collaborative. They have been instructed to have a correct and polite deal with the inspected, so it is advisable that you have it with them as well.

Conclusions

Receiving a notification announcing a Treasury inspection should not make you panic. If you have done everything correctly, you have nothing to fear. Just try to have all the documentation that proves it.

If you made a mistake when submitting a declaration, surely with the documentation saved you can clarify everything and, at most, assume the costs of some small penalty.

But above all, stay calm and show yourself at all times willing to collaborate in the inspection.

Good luck!