Tax inspections: your public law lawyer will defend you!

Discover the central role of the lawyer in the complex legal landscape of taxation. Faced with the financial issues raised by tax audits, lawyers act for individuals and businesses alike. The technical nature of the subject, combining public law, private law and accounting, requires specialised expertise to defend your interests. Our lawyers will work with you throughout the tax audit, from the adversarial phase through to the contentious appeal phase.

What is a tax audit?

French taxation is based on a declaratory system. Taxpayers declare their income from various activities to the tax authorities. It is on this basis that the authorities calculate the tax. The tax return is presumed to be accurate and sincere. As a counterpart to this declaratory system, the tax authorities carry out a tax audit to ensure that the taxpayer’s declaration is sincere and complete. If thetaxpayer’s return contains errors in relation to his actual situation, the tax audit results in a correction of the amount of tax and any penalties.

A tax audit involves examining the tax situation of an individual or professional. The tax authorities compare the income declared with the taxpayer’s financial situation.

Why call in your tax lawyer in the event of a tax audit?

To avoid serious financial consequences! Call on your tax lawyer for comprehensive tax advice and support. His or her expertise will enable you to develop a tax optimisation strategy, while controlling the risks of an audit.

In the event of irregularities in your file, he will draw up a defence strategy. He will assist you from the outset of the tax audit and during discussions with the auditor. He will ensure that your rights are respected and defend you before the tax authorities. To do this, the tax lawyer examines the nature of and reasons for the reassessment requested by the tax inspector. He will then build your defence by negotiating a reduction in penalties, or even the cancellation of the tax arrears for which you are liable.

If you are the subject of a tax audit, contact your lawyer without delay, as the stakes are high.

Legal assistance in documentary tax audits

This audit is carried out by the tax authorities on all the tax returns filed by taxpayers, whether private individuals or professionals, without prior notification. The tax authorities check that the tax returns filed by the taxpayer are consistent with the information they have about the taxpayer’s assets, cash flow and lifestyle.

Where there are inconsistencies, the tax authorities may request information or clarification. This may result in a proposal for rectification (Proposition de rectification n°2120)being sent , with an increase in the amount of tax due. Your tax lawyer’s role is to check the points raised by the tax authorities in order to rule them out.

The role of the lawyer in auditing a company’s accounts

The accounting audit

Auditing a company’saccounts is the traditional way of carrying out a tax audit. The procedure begins with an audit notice (no. 3927-SD), giving the date and time of the inspector’s visit. It mentions the tax concerned by the audit and the years that the inspector wishes to investigate. The tax audit takes place at your company’s registered office, and accounting documents may not be taken away unless expressly authorised. The inspector then proposes an oral, adversarial discussion. If the tax audit results in an increase in tax, the company receives a proposed adjustment (Proposition de rectification) No. 3924-SD .

Article L. 52 of the Livre des procédures fiscales sets a 3-month limit on the duration of the audit, failing which any adjustments will be null and void. Similarly, failure to comply with the taxpayer’s guarantees may invalidate the procedure. It is therefore essential tobe accompanied by a lawyer in order to benefit from expert assistance throughout the audit and to assert your rights.

Examination of accounts

DGFIP officials also have the option of carrying out a remote tax audit of a company’s computerised accounts. This is open to all professionals subject to accounting obligations: retailers, craftsmen, the self-employed, SMEs and large companies. This is a major tax audit because of its restrictive and intrusive nature.

The procedure is initiated by the dispatch of an accounting examination notice (no. 3923-EC-SD). The tax authorities then inform the manager of the period to be audited and ask for the accounting records for the years under audit within 15 days of receiving the notice.

Within 6 months,the tax auditor sends a proposal for rectification (no. 3924-V-SD). Exchanges are exclusively conducted remotely. This is why the involvement of your lawyer is important, to ensure that the taxpayer understands the situation and to protect his defence.

The lawyer’s assistance in the contradictory examination of the personal tax situation (ESFP)

The ESFP is a tax audit for individuals. Individuals are informed by means of a tax audit notice (no. 3929-SD). The audit is based on an oral and adversarial debate, with several interviews proposed by the auditor to his or her office.

The tax authorities check the accuracy of the taxpayer’s tax returns, in particular by comparing assets and bank statements. If it finds any inconsistencies, it sends requests for explanations (no. 2172-SD).Article L. 69 of the French Tax Procedures Code states that unjustified sums are automatically subject to income tax. It is therefore vital to be able to provide proof that the sums referred to by the tax authorities are not taxable.

Tax audits last a maximum of 1 year from the date of receipt of the tax authorities’ notice. It is an exhausting procedure, and the presence of your lawyer specialising in public law can help you stay on course through the administrative maze.

Please note: If the taxpayer does not fulfil his tax declaration obligations on time, he cannot benefit from the adversarial procedure. Instead, they are subject to the automatic taxation procedure. It is up to the taxpayer to prove that the administration has made an error in calculating the tax base.

Your lawyer’s role in the dialogue with the tax authorities

Tax audits give rise to a dialogue with the tax authorities, in which the lawyer works alongside his client to defend his interests. If a tax adjustment is proposed, the taxpayer may accept the tax authorities’ proposal. The taxpayer then pays the tax calculated on the basis of the adjustments made by the tax authorities. The audit ends.

However, the taxpayer may also contest the proposed reassessment, by submitting to the tax authorities the observations raised by his or her lawyer’s research. It is then up to the tax authorities to provide a reasoned response to the arguments put forward by the taxpayer. If both parties remain adamant in their positions and the tax authorities maintain their assessment, the taxpayer has the option of lodging an administrative appeal with his specialist lawyer.

Managing tax disputes with your public law lawyer

First of all, the taxpayer files a contentious administrative claim with the tax authorities. Then, if the claim is rejected by the tax authorities, the taxpayer initiates a tax dispute before the administrative courts: the taxpayer’s administrative appeal. This procedure can be brought before the administrative court of appeal and the Conseil d’Etat.

In particular, the lawyer ensures that the tax statute of limitations is respected, i.e. the period during which the tax authorities can go back into the past to check your tax returns. The tax authorities have a time-limited right to go back over the returns filed by the taxpayer.

Put your trust in the expert lawyers at Goldwin in Paris 16th. Our multi-disciplinary team will validate the technical nature of your arrangements, guaranteeing the legal certainty of tax optimisation. And if you are subject to a tax audit, our lawyers will support and defend you in your dealings with the tax authorities to protect your assets, your business and your personal life.