If you are convicted for community service due not cooperating with the tax audit, we understand you think tax is not exciting.
A tax audit is simply an audit by the tax office to see if what you reported in VAT, turnover and costs was indeed correct. Certain articles in the general tax regulations determine what the tax office can expect from an entrepreneur.
The tax office can ask for information about the bookkeeping and then in a reasonable time the bookkeeping needs to be presented. A reasonable period of time is two weeks.
Tax audit – court case
In this court case a director and single shareholder of two BV companies was audited. This director deliberately frustrated the audit.
His tactic was to blame it on Covid19 that he could not cooperate with the audit. Then when a meeting could be made, he agreed on the meeting, to cancel the meeting and not reply to rescheduling the meeting. That trick he repeated over and over again.
The Dutch tax office also has its limits in understanding the situation of a tax payer and that limit was clearly reached. As this person was the active director and the only person involved in both BV companies accounts, he was convicted to 80 hours community service.
Tax audit – court case – una via
Una via implies that you can only be convicted one time for your crime. In this case the director shareholder had reported in the years 2012 and 2013 EUR 196.742 less VAT than he should have done. The court convicted this person for 2 months in jail and 240 hours community service.
The director shareholder challenged this verdict as he stated to have been punished already. He was charged by the tax office for EUR 196.742 plus interest. The court explained that he was not punished twice. The EUR 196.742 plus interest was the amount he paid in VAT too short. That is not a punishment, but a simple VAT obligation.
Here he made a thinking error or you could say the VAT department is very clever. He would have been right if on top of this EUR 196.742 a 50% or 100% penalty was put in place. Then he was convicted indeed twice. But that the VAT department does not do, as they are keen to go to court to demand jail time or community service.
Tax is exciting
Tax is exciting, an audit never is. Of course you do your best to comply with all the rules and regulation, but sometimes you miss something. If that is the case and that turns up during the audit, the tax office can act as a human being. They do understand you can make a small mistake and they will state in their audit report that these mistakes need to be addressed for the future.
However, not reporting EUR 196.742 VAT is serious VAT fraud that certainly is not a mistake. If the party to whom the invoices were send can reclaim this EUR 196.742 VAT from the tax office, it is a serious crime. That is also the reason why the tax office hits hard with legal actions in case of VAT fraud.