The remote accounting review (examen de comptabilité) has the particular feature of being carried out remotely.

The tax authorities (administration fiscale) carry out checks on the basis of the computer files of accounting entries provided to them by the company.

Where taxpayers keep their accounts using computerised systems, tax officers may examine those accounts without visiting the premises.

How is this review conducted?

Before the audit begins, the company receives a notice of remote accounting review (form 3923-EC-SD), sent by registered letter, informing it of the period under review, of the possibility of being assisted by an adviser, and of the online availability of the Charter of the audited taxpayer (charte du contribuable vérifié), the content of which is binding on the tax authorities.

Above all, this notice requests the company to send, in electronic form (via the tax authorities’ secure “ESCALE” platform, by USB key, etc.), a copy of the accounting entries files (fichiers des écritures comptables, FEC) for the years concerned, within 15 days of its receipt.

Failing electronic transmission of its FEC, the company is liable to a fine of €5,000 for each financial year for which no FEC has been sent or where the FEC does not comply with the standards.

The tax authorities retain the option of initiating a more in-depth on-site audit of accounts (vérification de comptabilité).

The companies concerned by this audit are very small businesses and SMEs (TPE and PME) (although the DVNI (Direction des vérifications nationales et internationales) may, in theory, initiate such a procedure).

What checks are carried out?

The tax authorities perform sorting, classification and calculations to verify consistency between the copy of the FEC and the taxpayer’s returns. They may also perform computer processing on files other than the FEC provided by the taxpayer.

The remote accounting review aims to target simple issues (provisions, VAT, etc.), and cannot be initiated to audit a transfer pricing policy, for example.

The auditor may request all necessary information and justification for the entire period under audit.

The remote accounting review may not last longer than 6 months.

If adjustments are envisaged, the auditor issues a proposed tax adjustment (proposition de rectification). Our tax lawyer firm can handle this procedure in your name and on your behalf.

The auditor must destroy the copy of the FEC provided once the audit has been completed.

What safeguards does the taxpayer have?

The safeguards during this review are identical to those available to the taxpayer during an on-site audit of accounts.

The taxpayer thus benefits from the guarantee of an oral and adversarial dialogue, but in an adapted form: telephone calls, e-mails or, where appropriate, meetings in the auditor’s office.

If the company is reassessed, it may request, within 30 days of receipt of the proposed tax adjustment, to benefit from the regularisation procedure during the audit (Article L62 of the French Tax Procedure Code (Livre des procédures fiscales, LPF)) in order to correct errors made in good faith in its tax returns.

If the request is accepted, a supplementary return must be filed, together with payment of the additional tax due, plus late-payment interest reduced to 0.14% per month (instead of 0.20%).

The difficulties of the remote accounting review

The remote accounting review procedure raises two difficulties:

–  the auditor must be able to maintain an oral and adversarial dialogue even though they are not present on the company’s premises.

–  the accounting quality of the accounting entries file may be problematic. Unlike an audit of accounts, the remote accounting review does not allow paper accounts to be consulted on site where the files are of poor quality.

–  set up a procedure in advance to enable the FEC to be submitted within the legal time limit of 15 days, so as not to be caught off guard when the notice is received;

–  be able to open, read and understand the FEC in order to establish a constructive dialogue with the auditor;

–  play an active role during the audit in order to understand the auditor’s analyses.

To check the compliance of the FEC: https://www.fec-expert.fr/

Our tax lawyer firm can assist you.