Once a review of your client’s affairs is complete, an audit may be just around the corner. It is best to make clear the steps, timeframes and issues at hand as early in the process as possible.
What are you dealing with?
Although it is fair to assume that the ATO has a reasonable suspicion of the specific tax issues relating to your client – this is not always the case. For this reason, it often pays to have the ATO communicate to you the specific tax issue/s being investigated – and to get it in writing so you have documented correspondence to refer back to if the audit gets out of hand.
How long will the steps of the audit take?
An audit for an SME may span anywhere from 6 months up to 1.5 years. The ATO’s job is to ensure every i is dotted and every t is crossed before finalising an audit, which means it will likely use its allowed timeframes to the fullest. If the audit ‘goes the distance’, or worse, goes pear-shaped, having negotiated timeframes can be a great bargaining tool.
For example, if the ATO commits to issuing an information request by a specific date and they miss the mark by 3 weeks, you can assert that your client ought to only pay interest (if an amendment is raised) at the basic rate (2.01% at the time of writing) during the 3 week delay, as the fault rests with the ATO during those 3 weeks.
What do you need to do?
The message here is pretty straight forward: know the tax issues being tackled, set the details in stone, and use your negotiating power where necessary. Round one may be over with the review, but round two is where things can start to get really interesting. It’s best to have your ducks in a row before setting out.
For further discussion on ATO processes and procedures, please contact me at email@example.com or 07 3223 6100.