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6 Things to Remember to Avoid a Business Tax Audit

Nobody wants a tax audit as it is believed to be draining. There are known ways to avoid this kind of audit without doing anything illegal. You can approach your tax agent in UAE to ensure that you are indeed taking the good steps in going under the radar of being audited.

Regardless if you are operating a small or a big business, you should be aware of all of these as it will help you in handling matters better and dealing with how to keep good records not just to simply avoid an audit but for the improvement of your company.

Things You Should Keep in Mind to Avoid Tax Audit

  1. Know the targets of an audit

Usually, there are cases that those businesses whose books are normally managed by one person (the owner himself because it’s a one-man show) have a good chance that they will be audited.

Since there’s only one person, which means that there is a high probability of erroneous records, the Federal Tax Authority (FTA) might keep an eye on you more than anyone else. You should always be meticulous and careful with the total purchases, total sales, input VAT, output VAT, and tax payable. You need to have everything documented to ensure that everything is spot on and is reflecting what should be recorded.

  1. Give explanations

If you yourself have noticed inconsistencies with your previous returns to what you are going to file this quarter, it is advisable to include additional receipts, worksheets, forms, etc. that can support why there are major changes to your returns before and now.

It may not be the main concern, such as a simple boom of your business, which is always a good thing. The important thing is you can be sure that the FTA knows what’s going on with your records and you can help them understand if you include more documents to support your filing.

  1. Always be sure

You can be the best in Mathematics but it will not hurt you to double to triple check every single transaction with the use of a calculator.

It is imperative that the numbers you have put in the forms that you are going to file match the ones that you have in your records.

Also, in addition, do not make it a habit to round off every single number that you have on your returns. It is actually better to state the exact amount that you have as frequently rounding them off to tens or even hundreds can come off as simply making up numbers instead of innocently ensuring that the amount can be read properly by the FTA.

  1. Do not file any form corrections

It is your goal to not be noticed at all by the FTA. But if you are going to keep on filing amended tax returns, you can expect that you will fly over their radar and a good chance of tax audit may be on its way.

Truth be told, it will not help anyone who continuously files amendments to their returns as it may be viewed as inconsistent and sloppy.

  1. Be informed of the filing dates

Always be aware of the date that you should file your tax returns. It is best to file your returns on or before the due date because you wouldn’t want to face any penalties.

Filing early when you are expecting a refund may mean that your filed tax return will be processed first, and you will then receive the refunds that you have claimed.

  1. Ensure that everything is filled out

You wouldn’t want to risk it by leaving a single space empty simply because you don’t know what to put in there. Do not let the FTA assume anything with regard to your business. Answer all the empty spaces even if it’s just a hyphen, zero, or something else entirely. If you do not know what to answer, contact your tax agent UAE to be sure.

The above precautions and tips do not necessarily guarantee that you will not have any tax audit as long as you live. Sometimes, no matter how careful you are, you might still be audited for some reason or other.

Using the above-mentioned advice will lessen your chances to be audited although it will not eradicate it altogether. As long as you have clean and correct records that fairly represent your business and what you have filed on your tax return, you do not need to worry at all.

Tax Agent UAE

FAR – Farahat & Co. is one of the leading firms that offer VAT consultancy services in UAE. We have a certified tax agent that can ensure your compliance with the law.

As a firm that guarantees you quality VAT consultancy services in UAE, we can provide you with the information that you ask for and any advice that you need.

Ervee is a CPA with international experience in Tax and Accounting. He has over 12 years of experience in accounting and bookkeeping and over a year in VAT implementation, registration, and accounting in UAE. He regularly drives out inefficiencies in company operations and loves the challenge of helping clients find additional ways for an easier and improved compliance and verification of transactions. Read more