The entrepreneur needs to keep good track of his or her accounts and then suddenly someone steels your bookkeeping. What to do during a tax audit?
The stolen bookkeeping
Seriously, bookkeeping stolen? Who steels a bookkeeping? I am not surprised as over the years this argument has been used multiple times.
In this court case the entrepreneur was not able to provide the Dutch tax office on first demand the bookkeeping as that was stolen from his car. I do not know how the brain of a thief operates, but I can only assume it is highly active when there is a laptop in a car, mobile phone or portable navigation system, but a bookkeeping? Really.
That the bookkeeping has been stolen is a statement that has been seen in court case many times over the past decades. “I was sitting on the bench in the park with my full bookkeeping next to me and suddenly it was stolen” Right. Or “the dog ate the books”.
More plausible is “the house burnt down with the books”.
Whatever is your excuse not to provide the bookkeeping, it does not stand in court. The court will find pity with the person who’s house burnt down, but the entrepreneur needs to keep a good backup especially for hazards as storm, fire and water.
The tax audit – while the books haven been stolen
In this court case the tax office were not able to get the books from the entrepreneur as that was stolen from the car, but the tax office themselves were able to make a good indication of how the bookkeeping should have looked like and imposed an ex officio assessment for the years 2013 to 2017 plus 50% fine. The court understood that the entrepreneur was not able to provide the books when the tax office asked for it, so deleted the 50% fine, but the 2013-2017 assessment remained in force. The entrepreneur was not able to counter the tax office findings by lack of proof.
The tax audit – what to do when books have been stolen
A stolen administration is often claimed, of course to mask that not enough tax was paid by this tax payer, that is clear to everybody. However, if you are genuinely in a situation where you have no longer access to your administration, you need to act.
You need to go back in your tracks and collect what you can find. Simply start with obtaining the bank statements. From those bank statements you can determine the turnover you made, maybe you have service providers you use often, that can send you copies of their invoices. Take the logical steps to recreate the bookkeeping. If you then are confronted with a tax audit, you have something to proof.
In this court case the tax payer had nothing he could show to make his point. It is better to have something, not only to proof your point, but also to show good faith. Both are important.
The most important aspect of this court case is of course that a backup of the administration is crucial. Make one often and store in the cloud.
Tax is exciting
Stolen bookkeepings are not. These days we use the fully digital Exact online accounting program where you make a picture of your purchase invoice and the program does the booking automatically. Very fancy, but having a binder with the original receipts is always a good thing to hold on to for at least seven years, as that is the minimum requirement to keep the books. In seven years someone can rob you, but of course not your books, but if they do, you can be relaxed as you now have a backup, haven’t you?