What To Do During Tax Investigations

It doesn’t matter if it is small or large business tax returns are filed by every organization. All the companies that are GST registered have to abide by the rules of filing for GST tax returns. Currently, the GST in Singapore is 7%. The GST regulation was implemented in April 1994, since then there have been many changes in the rules. 

Business owners often face problems while filing for GST tax returns, because of frequent amendments in the regulations. Often many business owners have paid penalties for not abiding by the rules. Most of the time companies are subject to tax audits by the IRAS when the government finds anything suspicious in the financial records or activities. 

Audits can make any taxpayer nervous. It is commenced by a government body where they raid the office or residential area. Tax audits are necessary to avoid tax evasion. Tax evasion is done when a taxpayer uses illegal methods to reduce his or her tax liability and tries to obtain unjustified returns. The IRAS initiates tax audits when they feel they are provided with incorrect information. 

We are not saying that everyone who undergoes a tax audit is cheating the government. Some may not be aware of changed rules and are obliged to the audit. Hence it is better to seek the help of financial advisors. Morrison Mortgage is a Financial Advisory that helps in all sorts of tax investigation services, GST audits, financial reporting, accounting, tax planning, etc. They have been in this field for 30 years under the name of Raffles Corporate Advisory Services. Their team in Singapore and the Philippines are trained and qualified which helps them serve companies around the world. 

Criteria for Tax Evasion 

Under the Income Tax Act, a taxpayer is said to be invading tax when –

  • Intentionally he or she reporting incorrect, or incomplete tax income. 
  • Files for tax returns for expenses that are ineligible for tax deductions. 
  • Creating fake expenses or false entries to get a refund. 

Process of Tax Investigation 

  • The IRAS will make a surprise visit to the office and residential area. They will ask for account details, financial documents, and all other relevant documents. 
  • The officers will provide their ID cards for identification to the staff and also provide a letter of authorization to start investigating. 
  • They will interview staff, employees, family members, suppliers, and third parties to find all relevant information. 
  • All evidence and data will be gathered and kept under their supervision. 

It doesn’t matter if you’re available or not, the investigation will still be initiated. 

Obligation as a Tax Payer

  • Instead of arguing or restricting the officers from entering premises, cooperate with them. Provide them all documents they’re looking for, your course of action will help to avoid the stern warning, imprisonment, and penalty. 
  • Give the officers full authority to access the office premise documents, records, and residential area. If you try to avoid or hide information, you may be charged a penalty and imprisonment of 12 months. 
  • Provide all relevant information and document required by IRAS within 21 days. Make sure that all information is true to your knowledge. 

Tax evasion can lead to high penalties and imprisonment. It is always wise to seek the help of a reputable audit firm to keep all records clean.