Tax audit support

Well prepared, no problems or nasty surprises and achieving the best possible results – that's how a tax audit could be. PwC’s highly qualified and experienced consultants assist companies through all phases of a tax audit: preparation, development of an individual audit strategy, efficient handling, arranging and holding the final meeting and subsequent implementation of the audit findings. Models of various scenarios assist in establishing at an early date the resulting financial effects and provide the opportunity to react accordingly.

Who acts as contact person? Who gathers together the necessary documents and records and analyses them before they are handed over to the auditor? How should you deal with the preliminary audit findings? These and similar questions should be clarified before the audit begins; after all, a company that is able wherever possible to provide its tax-related documents quickly and completely creates an overall trustworthy image.

The following should also be carried out upon receiving the tax audit order from the respective tax authorities:

  • Weak point analysis in order to analyse the results of the last tax audit as well as material and critical circumstances.
  • Identification and compilation of relevant audit documents. In particular, the documentation of intra-group transfer pricing is one of the areas that has clearly become a focus of attention in recent years and is requested as standard by tax auditors.

Experience in negotiations with the tax authorities is decisive for a successful outcome of the tax audit. Together with you, we build up a position of defence and simulate procedures and methods for conducting negotiations. In the event of special tax audits, for example in the sector of transfer pricing or audits on value-added tax or wage tax, as well as in cases where aspects of the law on fiscal offences are involved, PwC calls in specialists with expertise in those areas.

Efficient management of the ongoing tax audit

Tax auditors regularly come to a differing opinion with regard to individual items even during the ongoing audit. Preliminary audit findings of this kind have to be examined carefully with regard to their technical correctness and financial effects. It is often necessary to record one’s own position again in the form of well-founded counter-statements so that any circumstances where the position of the tax auditors is incorrect can be removed from the agenda in the run-up to the final meeting.

The newly developed management-tool for tax audits (BP-Manager) is a platform for managing the exchange of any information between taxpayer and auditor electronically in a standardized and transparent manner.

BP-Manager allows you to integrate the planning and control of ongoing audit enquiries more comprehensively and manage tax risks effectively. This means that ongoing audits can be handled as efficiently as possible and tax risks can be responded to quickly and appropriately. By means of an internal company overview, BP-Manager can also be used to monitor the level of tax risk and the probabilities of occurrence and to check on the success of tax planning and defence measures.

In order to be able to stipulate the strategy for the final meeting, all outstanding items and findings of the tax audit should be analysed and the financial effects (payment of tax arrears, interest, loss of tax loss carry forwards etc.) established.

Modeling various scenarios helps to establish the financial effects of the individual audit findings and determine possible areas of compromise, and on this basis develop a strategy for the final meeting.

Follow-up on the tax audit

Once the effects of the findings of the tax audit for coming years have been identified and quantified, the next step is to ensure that the affected internal processes are adjusted accordingly so that the errors that have been uncovered are not repeated in following years. Often this also involves having to amend tax declarations for previous years that have already been submitted on the basis of the findings of the tax audit.

Preparing IT systems for digital tax audits

Data access by tax authorities as part of tax field audits has since become standard procedure. Nevertheless, it has been found in practice that the demands on the identification of relevant tax data as well as its technical preparation have not established themselves globally throughout companies so far. In order to ensure that you are fully prepared, PwC provides you with a team of experts to assist and advise you on:

  • the inventory and separation of your relevant tax data to ensure that only this data is placed at the disposal of the tax auditors,
  • analysis and rationalization of business processes in order to achieve an optimized structure of the document-based workflow,
  • inclusion in the existing IT system,
  • the development of suitable access concepts for the tax auditors,
  • simulation of the digital tax audit.
    PwC’s experts coordinate the scope of the analyses with your company’s management. The result of the analyses is initially to establish the extent to which the company is technically in a position to be able to provide the data in compliance with legal requirements. With more in-depth specialist analyses, it is possible to determine possible weak points at an early date and in this way reduce tax risks.

Contact us

Prof. Dr. Tobias Taetzner

Partner, PwC Germany

Tel: +49 69 9585-6156

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