As a reputable accounting firm in Nigeria, we understand that effective communication with tax auditors from the Federal Inland Revenue Service (FIRS) is vital during a tax audit. Clear and respectful communication can significantly influence the outcome of the audit and help businesses maintain a positive relationship with tax authorities. In this guide, we will highlight essential dos and don’ts for Nigerian businesses when managing communication with FIRS tax auditors during a tax audit.
- Be Cooperative and Responsive:
Cooperation is paramount during a tax audit. Respond promptly to the FIRS’s requests for information and documentation. Show willingness to provide all necessary details and be transparent in your communication. Cooperation demonstrates a commitment to tax compliance and can foster a productive audit process.
- Appoint a Communication Liaison:
Designate a specific individual or team to handle communication with the FIRS auditors. This appointed liaison should have a thorough understanding of the company’s financial affairs, be knowledgeable about tax laws, and communicate effectively with the auditors. Having a designated liaison streamlines communication and ensures consistency in responses.
- Seek Clarification and Ask Questions:
If you encounter any uncertainty or ambiguity regarding the audit process or requests, do not hesitate to seek clarification from the auditors. Asking relevant questions can help you better understand the scope of the audit and provide accurate and relevant information.
- Be Professional and Respectful:
Maintain a professional and respectful demeanor during all interactions with FIRS tax auditors. Avoid confrontations or arguments, even if there are disagreements regarding tax matters. Professionalism and courtesy go a long way in establishing a positive rapport with the auditors.
- Have Proper Documentation Ready:
Ensure that all financial records, tax returns, invoices, receipts, and relevant documentation are well-organized and readily available. Proper documentation supports the accuracy of reported information and makes it easier to comply with the audit requests.
- Provide Incomplete or Inaccurate Information:
Avoid submitting incomplete or inaccurate information to the tax auditors. Inaccurate or misleading information can lead to severe consequences, including penalties and potential legal ramifications. Take the time to verify the accuracy of provided data before submitting it.
- Volunteer Additional Information Unprompted:
While it is essential to cooperate and respond to the auditors’ requests, avoid volunteering unnecessary or unsolicited information. Providing more information than requested may inadvertently lead to additional scrutiny and potential expansion of the audit scope.
- Make Assumptions:
Never assume or guess the answer to an auditor’s question if you are unsure. Guesswork can lead to errors and miscommunications, which can be detrimental to the audit process. If you do not know the answer to a question, it is better to admit it and offer to provide the information later.
- Discuss Confidential Matters with Auditors:
Avoid discussing confidential or sensitive matters unrelated to the audit with the tax auditors. Maintain a focus on the audit process and the specific information required for tax compliance. Confidential discussions should be limited to the appropriate authorities or legal counsel.
Effective communication with FIRS tax auditors is essential for Nigerian businesses undergoing tax audits. By following the dos and don’ts outlined in this guide, companies can navigate the audit process smoothly, establish a positive relationship with tax authorities, and demonstrate their commitment to tax compliance. As a reputable accounting firm, we are here to assist businesses in effectively managing communication during tax audits and ensuring compliance with tax laws in Nigeria.
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.