More interesting is the case when the tax office decides to examine the documents of a company in depth, for which it appoints an on-site inspection (AOI). The task it has exactly the same - to make sure that the calculation and timely payment of taxes is correct. The result of the audit is the conclusion whether the taxpayer has debts to the state, and whether he uses illegal ways of reducing the tax burden.

Recall that the depth of the audit is 3 years . However, tax authorities increasingly add the periods of the current year to the specified period. Tax authorities proceed from the fact that the Tax Code of the RF does not contain a direct prohibition on the audit of current periods, as the Tax Code establishes a 3-year term for the "depth" of the audit.

If an audit is scheduled for current periods, we recommend that taxpayers check whether the deadline for filing returns and calculations for the audited period has arrived. Otherwise, the actions of the tax inspectorate will violate the explanations of the Federal Tax Service of the Russian Federation .

An inspectorate may not appoint more than two field audits for the same taxes during one tax reporting period. However, the head of the territorial body of the Federal Tax Service may decide to conduct an inspection in excess of this limit on the basis of paragraph 5 of Article 89 of the Tax Code.

In some cases, the tax inspection may be carried out repeatedly, if a higher tax authority intends to control the actions of the previous auditors, the tax authority is provided with a clarifying declaration with a smaller amount of tax or the company is subject to reorganization / liquidation.

According to the type CIT can be either thematic or complex. In the first case only one tax is checked for accuracy of calculation; in case of complex check all taxes and fees are checked. 

When to wait for the Field tax inspection

Federal Tax Service does not hide the criteria for the purpose of the tax inspections - they are set out in the document "The concept of planning system of field tax audits" and related annexes. The interest of the tax authority can be aroused if the activities of the company or individual entrepreneur contains at least one of the following signs:

- Taxes paid are markedly lower than the industry average in the area;

- The company or sole proprietorship has losses for more than two consecutive years;

- The VAT deduction is higher than 89% of the taxes paid;

- Expenses grow faster than profits, or profits fall faster than expenses;

- During the year, expenses are almost equal to income or personal income tax deductions are higher than 83% of income;

- Employees' salaries are below industry and regional averages (according to Rosstat);

- Profit fluctuates close to the mark (difference of less than 5%), at which the transition to less favorable tax rates is required;

- The company or individual entrepreneur uses a chain of counterparties instead of working directly with the supplier;

- The head of the company or sole proprietorship, for various reasons, refuses to provide documents on income or expenses;

- The company or individual entrepreneur changes the place of business, registering in another territorial tax office;

- The profitability of the business differs significantly (by more than 20%) from the industry average;

- The business is associated with high tax risks, usually caused by working with dubious suppliers or contractors.

How to prepare for an Field tax inspection

It is good practice for a company to regularly check the indicators of its own economic activity and timely eliminate deviations which the tax authorities could interpret as grounds for the appointment of an on-site inspection.

In doing so, it is possible to be guided by the approximate amount of tax which the inspectorate expects to receive from the company, based on industry indicators which are typical for the region. You can use the official calculator of the Federal Tax Service, available here.

If an inspection is likely or unavoidable for one reason or another, you should prepare for it carefully, using the following checklist:

- Instruct your employees on how to communicate with the auditors. Read our 14-page guide to briefing employees before a TPL. The document provides both general guidance and specific memos for human resources, warehouse and IT staff;

- Conduct a thorough check of the primary documents: cash, invoices, delivery notes, certificates, advance reports, etc. depending on the tax to be checked;

- Make sure that materials for internal use are not on the same computer as the management accounting documents. It is better to keep them in a separate storage or cloud that can be accessed through an encrypted channel;

- If any documents are lost, request duplicates in advance;

- Conduct an audit of staffing schedules, job descriptions, powers of attorney, and orders of appointment;

- Carry out an audit of contracts with counterparties and contractors. Be prepared to prove that before entering into a contract you have checked them for reliability (we have already written about this);

- Warn the counterparties, so that in the case of a counter audit, they can document all the facts of your business relationship;

- Prepare the workplace for the inspectors in such a way that the documents that are not relevant to the verification are not freely accessible to them. The best place for this is a room that excludes free communication with the company's employees.

In preparing for an on-site tax audit, in the course of which the inspector may request the necessary documents, it should be borne in mind that from 17 March 2021 the period of storage of accounting and tax records has been increased to five years. Inspectors have the right to request documents for a period of up to three years from the time of an audit. Thus, if an audit is scheduled on the basis of a decision from 2022, they must be provided with information for 2019, 2020 and 2021.

Procedure for conducting a TPL

The basis for the National Tax Inspectorate is a notification of the decision of the tax authority, necessarily signed by the Head of the fiscal service or his deputy (clause 1 of article 89 of the Tax Code). It may be provided in advance, but it often happens that the auditors deliver it just before the start of their work.

The maximum term of an audit is two months. However, it may be extended up to six months by decision of the head of the tax inspectorate and for good reasons. More often there is a suspension of the audit, which the tax authorities resort to when they need time to collect information from the counterparties of the inspected company.

Even if inspectors are given a separate room, they have the right to inspect a company's office, carry out an inventory of property and seize documents, and interview employees. The taxpayer has no right to obstruct the legitimate demands of the inspectors.

How to behave during Field tax inspection

- It is important to make sure that representatives of the IFTS are included in the inspection team specified in the decision on the appointment of the audit.

- Notify the inspectors of the working hours in force in the office. Neither managers nor ordinary employees should remain outside working hours to assist inspectors in their work. 

- To obtain any documents, representatives of the tax authority must issue a written request. The transfer of copies of requested documents must take place only on the basis of an appropriate request and an acceptance certificate. 

- A company does not submit original documents to the tax authorities. The tax authority may take the original documents only as part of the information seizure procedure on the basis of a written decision of the head or deputy head of the tax authority. 

The conclusion of an audit can be considered the drawing up of a certificate of the event with an indication of the objects inspected and the total time spent. After signing this document the auditing commission is deprived of the right to request documents and to be on the territory of the organization at all. Within two months after signing this certificate, the tax authority must provide an act on the results of the audit, even if no violations could be identified.