Notification of Audit for both my co. & myself for 2008 to 2011. Is this normal?

[lukegriffen]

I'm self-employed and have just received notification of audit for both my company & myself as a paye for 2008 to 2011.
Is it normal for it to span such a long period ?

While company accounts are in fairly good shape, I would have thrown away a lot of my old personal bank statements under my own name, especially closed accounts, & some of the banks don't exist any more. Is the audit going to trace money going in to one personal account to see where it originated from or went to ?

What do I need to do for "cheques analysis", do i need to request details from my bank ?
I'll go to my accountant when he's back on Friday, but wouldn't mind some advice now to ease my mind

Thanks for any advice.

 

[Joe_90]

Are you an IT contractor? There is a special project ongoing checking the tax free expenses of companies in that sector.

It would be unusual to see an audit for 4 years.

 

[lukegriffen]

Thanks Joe, yes I'm an IT contractor.
I didn't claim much expenses, so hopefully that bit won't go too bad, but it's just personal bank a/cs are a bit all over the place. Chasing banks to reprint statements 5 years old and dirt statements , oh the hassle & stress !

 

[Joe_90]

I imagine it's part of the special project so. If you have not claimed large amounts of mileage and everything is in order with the company, VAT, PAYE on directors salary properly accounted for, BIK done properly if appropriate, no loans to directors, probably nothing to get worried about.

I would get bank statements for main personal bank account and personal credit card statement.

 

[Nige]

Revenue cannot go back to 2008 unless they have reasonable reason to believe there was fraud or neglect in the preparation of your tax return for that year. As you have been selected for audit as part of the contractor project - rather than anything particular about your returns - I don't believe they can go back to 2008.

My understanding is that the Revenue are aware of this and, if pushed, will not seek the 2008 information.

The list of information they are seeking in these cases is ridiculous. However, they are generally reasonable if you give them what you have. As Joe90 said, they are primarily interested in your expense claims from the company.

 

[mandelbrot]

Revenue cannot go back to 2008 unless they have reasonable reason to believe there was fraud or neglect in the preparation of your tax return for that year. As you have been selected for audit as part of the contractor project - rather than anything particular about your returns - I don't believe they can go back to 2008.

My understanding is that the Revenue are aware of this and, if pushed, will not seek the 2008 information.

The list of information they are seeking in these cases is ridiculous. However, they are generally reasonable if you give them what you have. As Joe90 said, they are primarily interested in your expense claims from the company.

Of course they can still audit 2008; the 4-year time limit under Sections 955 & 956 applies a period of 4 years from the end of the tax year in which the return is filed. So a 2008 return, filed in 2009, can be subject to an Inspector's right of enquiry up until the end of 2013.

Equally, by the way, a return for any earlier year which was only filed in 2009, is also still within the 4-year time limit.

 

[capnhand]

The 4 year rule refers to refunds of tax only.

The revenue cannot go back more then 6 years and amend assessments provided that the returns are true and accurate in a material way. Otherwise if the returns are not true and complete the inspector can go back as far as necessary.

However the revenue do not make a habit of going back more then 6 years as a rule unless it is clear cut case where the issues are not complex. If the issue are complicated it will require an inspector with an in depth knowledge of how the tax laws existed in the past and this knowledge may not be readily available.

Regards

capnhand

 

[mandelbrot]

The 4 year rule refers to refunds of tax only.

The revenue cannot go back more then 6 years and amend assessments provided that the returns are true and accurate in a material way. Otherwise if the returns are not true and complete the inspector can go back as far as necessary.

However the revenue do not make a habit of going back more then 6 years as a rule unless it is clear cut case where the issues are not complex. If the issue are complicated it will require an inspector with an in depth knowledge of how the tax laws existed in the past and this knowledge may not be readily available.

Regards

capnhand

While I agree with the points you make about the difficulties of going back beyone a few years, the legislative line in the sand is 4 years.

6 years is the period for retention of records.

4 years is also the period for claims to repayment - but that applies from the end of the year of assessment to which the claim relates (so when the return is filed is irrelevant).

As I already said above, the 4 years applicable here is in relation to the Inspector's right to make enquiries and the Inspector's right to raise / amend assessments, provided for in Sections 955-956. And this 4 year limit applies from the end of the year in which the return is filed (rather than the year of assessment the return is for).