Administrative obligations not fulfilled

Entrepreneurs have administrative obligations. This basically means that they must keep sufficient records of their and their company’s financial situation, from which their rights, obligations and other details important for the purposes of the levying of taxation can at any time be established. Records must be kept for seven years. Supporting documentation also pertains to the records. Administrative details may be saved on a data carrier that is not the original, provided that complete details remain during the retention period and that they can be read within a reasonable period of time. The nature, extent and complexity of a company all determine the requirements imposed on records.

The inspector can, if a decision is open to appeal, establish that an entrepreneur has not fulfilled his administrative obligations. During an audit of an entrepreneur in the catering industry, the Tax Authorities concluded that there were shortcomings in the paperwork. The Tax Authorities established these deficiencies in an information decision. Later, it was found in court that this decision had been justified: the entrepreneur had indeed not fulfilled his administrative obligations. Although a large part of his turnover was received in cash, his cash accounting was not auditable. The entrepreneur had not kept such details as till and debit card receipts and rough drafts.

Such primary documents form an essential part of the records of a company. By not keeping these, it could not be verified if the details had been transferred correctly and fully to the ledger. Thus, the required connection between turnover in cash and goods could not be made. The Tax Authorities found themselves in the position where they were simply unable to verify the accuracy and comprehensiveness of the turnover.

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