The Tax Agency’s Requirements and How to Deal with Them if You Are Self-Employed
Self-employed workers in Spain are subject to a series of tax obligations that they must comply with rigorously.
One of these obligations is the possibility of receiving a request from the Tax Authorities, and these requests can generate a great deal of uncertainty if they are not understood correctly.
In this post, we will analyse what a tax request is and how to act when faced with one.
What is a Revenue Summons?
A requirement from the tax authorities is an official notification that the tax office sends to a self-employed person to request additional information on a tax return or to clarify certain aspects of the economic activity.
It may be due to possible discrepancies found in the declarations submitted, errors in the documentation, or even random tax control inspections.
This type of communication does not always mean that you have committed an infringement, however, it requires seriousness and attention in order to avoid legal problems and fines.
The requirements may concern aspects such as the justification of expenses, undeclared income, deductions applied or even the request for accounting records.
Types of Requirements
The Inland Revenue can issue several types of requests, and each has a specific purpose.
- Requests for information: The tax authorities request additional documentation to verify certain declared data. For example, invoices for purchases or sales, contracts or proof of expenditure may be requested.
- Payment Demand: This refers to a notice to pay back taxes or settle penalties for non-payment.
- Limited Verification Notices: This type of notice aims to carry out an inspection limited to a specific part of the self-employed person’s activity, e.g. VAT deductions or declared income.
- Requests for Incorrect Data: Occurs when discrepancies are detected in the data submitted, e.g. when information from third parties (customers or suppliers) does not match yours.
How to deal with a tax demand?
Review and Understand the Notice
The first step is to read the document you receive carefully. Each request clearly specifies what information is requested, the deadline for providing it and the possible consequences of not complying with the instructions. It is essential to understand the reason for the request and the documents you need to provide.
Gather All the Necessary Documentation
Once you understand what the tax authorities are asking for, you will need to gather all the relevant information and documents. This may include invoices, proof of payments, accounting records, contracts, etc. The submission of documentation must be accurate and complete, in order to avoid subsequent communications or penalties.
Consultation with a Tax Advisor
It is highly recommended that you consult a tax advisor to ensure that all documentation is correct and in order. An expert will be able to help you better interpret the requirement and present the information in the right way, which can avoid additional problems.
Submit the documentation on time
The tax authorities usually set a deadline for responding to the request, and it is essential to comply with it. Deadlines may vary, but are usually in the range of 10 to 20 working days. It is important not to leave it to the last minute, as unforeseen circumstances may arise that delay delivery.
Keep a Copy of Everything Delivered
It is always a good idea to have copies of all documents submitted. This way, if there are future problems, you will have the information you submitted to back you up and avoid confusion.
Consequences of failing to respond to a requirement
- Fines and Penalties: The tax authorities may impose penalties if you do not provide the requested information or if you do so after the deadline.
- Surcharges: If the request is related to a payment and you do not make the payment, surcharges may be applied.
- Tax inspection: Failure to respond may trigger a more thorough tax inspection.
What to do if you consider that the Invitation is not fair?
In some cases, you may receive an injunction that you think is unfair or based on a mistake. If you find yourself in this situation, you have the right to:
- Make a claim: You can file a claim if you believe that the tax authorities have made a mistake. You will have to justify this with documentation to back up your position.
- Appeal: If the allegations do not solve the problem, you could initiate an administrative appeal process. For this, it is highly advisable to have an advisor who is well acquainted with the procedure.
Receiving a tax demand can be a stressful experience, but dealing with it in the right way is essential to avoid major problems. Keeping clear accounts, complying with tax obligations and having expert advice are the best tools to reduce the chances of receiving a requirement and to handle it effectively if it arrives.
At Asesoría Orihuela Costa we have the best team of advisors at your disposal. If you have received a requirement from the tax authorities and you are self-employed, contact us, we will evaluate your case and help you to resolve the case, protecting your personal and professional interests.