The tax compliance review, a useful tool for SMEs

From January 2021, the tax compliance examination will enable all companies that so wish to carry out a tax pre-audit, via a service provider, to ensure that they are in order. This tool, which enables 10 tax points to be checked, is particularly useful for SMEs and VSEs.

Protecting companies from tax risk

The tax compliance review is a continuation of the measures relating to the right to error, put in place following the entry into force of the law for a State at the service of a trusting society, known as the ESSOC law.

Faced with the complexity of tax law, this new tool is a guarantee of peace of mind for companies. While the tool is available to all, regardless of sales, it is particularly useful for SMEs and VSEs, as it covers 10 control points, which are sufficient for companies of this size.

These 10 tax points, verified by a service provider (chartered accountant, approved body or lawyer, for example), are as follows:

1. Compliance with VAT liability rules ;
2. Qualification and deductibility of exceptional expenses ;
3. Rules for determining accrued expenses and their tax treatment ;
4. Rules for determining provisions and their tax treatment ;
5. Rules for determining depreciation and its tax treatment ;
6. Validation of compliance with rules relating to the tax system applied;
7. Compliance with rules on document retention periods and methods;
8. Cash register software certification ;
9. The accounting quality of the accounting entries file ;
10. Compliance of the accounting entries file.

These 10 points, set out inAppendix 1 of the Order of January 13, 2021, constitute the audit path. At the end of the audit, the service provider sends a report to the company and the tax authorities.

Protection against potential penalties

While the tax compliance examination does not protect against a tax audit, it could enable the tax authorities to make an initial selection, particularly among SMEs and VSEs. The latter, of which there are 3 million, are more difficult to audit than larger companies, which offer greater visibility.

By voluntarily submitting to a tax compliance review, companies indirectly signal to the authorities that they have nothing to hide, making a potential tax audit less relevant.

What's more, in the event of an audit leading to a tax reassessment or an adjustment on any of the points validated by the service provider, the company that has complied with the recommendations is not exposed to any financial penalties. In such cases, the company is entitled to ask the service provider to reimburse part of its fees.