As a reputable accounting firm in Nigeria, we understand that a tax audit by the Federal Inland Revenue Service (FIRS) can be a daunting experience for businesses. The FIRS conducts tax audits to ensure tax compliance and fairness in the tax system. Handling requests for information and documentation during a tax audit is a crucial aspect of the audit process. In this guide, we will provide a guide on how Nigerian businesses can navigate and effectively respond to requests for information during a FIRS tax audit.
- Be Proactive and Organized:
Upon receiving notice of a tax audit, it is essential for businesses to act promptly and organize their financial records. Ensure that all relevant documentation, such as financial statements, tax returns, invoices, receipts, and bank statements, are readily accessible and well-organized. Proactive organization demonstrates professionalism and cooperation during the audit process.
- Understand the Scope of the Audit:
Before responding to the FIRS’s requests, it is vital to clarify the scope and purpose of the tax audit. Engage with the auditors to gain a clear understanding of the specific areas they intend to examine. This understanding will help the business prepare the necessary information and documentation accordingly.
- Seek Professional Guidance:
Engaging the services of an experienced accounting firm or tax professionals can be invaluable during a tax audit. Tax experts can provide guidance on responding to audit requests, ensuring compliance with tax laws, and offering support during interactions with the FIRS auditors. Their expertise can help alleviate stress and enhance the company’s preparedness for the audit.
- Provide Accurate and Complete Information:
Honesty and accuracy are essential when responding to the FIRS’s requests for information. Ensure that all provided information is accurate and complete. If there are any uncertainties or discrepancies, communicate them transparently with the tax auditors and seek professional advice to resolve any issues.
- Timely Response:
Meeting deadlines for submitting requested information is crucial during a tax audit. Delays in providing information may be perceived as non-cooperation, which can escalate the audit process and potentially lead to penalties. Aim to respond to the FIRS’s requests promptly to maintain a positive rapport with the auditors.
- Communicate Professionally:
Maintain a professional and respectful tone during all interactions with the FIRS auditors. If there are disagreements or differing interpretations of tax laws, express them in a constructive and respectful manner. Clear and courteous communication fosters a positive working relationship during the audit.
- Keep Copies of Submitted Documents:
Always keep copies of all documents submitted to the FIRS during the audit process. These copies serve as a record of the information provided and can be useful in case of any future inquiries or disputes.
- Follow Up and Seek Closure:
After responding to the FIRS’s requests, follow up with the auditors to ensure they have received the information and have no further inquiries. Seek confirmation that the audit process is nearing completion and inquire about the timeline for the issuance of the audit report.
Navigating a tax audit by the FIRS can be a challenging experience for Nigerian businesses. By proactively organizing financial records, seeking professional guidance, providing accurate information, and maintaining a respectful demeanor, companies can handle requests for information and documentation during the audit effectively. Remember, cooperation, transparency, and compliance are key to achieving a successful tax audit outcome. As a trusted accounting firm, we stand ready to assist Nigerian businesses in every step of the tax audit process, ensuring compliance and a positive engagement with the FIRS.
For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.