As a form of remote audit, the remote examination of accounts (examen de comptabilité) has been used by the tax authorities for only a few years. It is based on the possibility of relying on electronic documents and supporting evidence to clarify a particular situation. As soon as a company’s accounts are computerised, which has in principle become mandatory, they may be subject to this type of audit.

What does the remote examination of accounts involve?

This method is an alternative to the desk audit (contrôle sur pièces) carried out by post. By relying on electronic records, the authorities are seeking to modernise their practices. This procedure is carried out remotely and therefore does not require a tax officer to visit a company’s premises. Practical and easy to implement, it is expected to become more widespread in the future.

For a company, the remote examination of accounts is less extensive than an on-site audit of accounts (vérification de comptabilité). It is quicker and saves time, since nothing takes place on the company’s premises. For both the tax officer and the company, this procedure is considerably simplified and is, in principle, less stressful.

Even though it operates differently from the other procedures of the tax authorities, the taxpayer’s rights are preserved. Adversarial debate, the possibility of being assisted by a tax lawyer, and the right to submit observations and to obtain a reply from the tax authorities will all form part of the various stages of this procedure.

Which companies are targeted?

The remote examination of accounts may concern all forms of business, whether sole proprietorships, very small businesses (TPE) or large companies. The remote examination of accounts makes it possible to find out more about a particular accounting item and to receive the corresponding supporting documents within a very short time. All companies are therefore liable to be subject to such a procedure by the tax authorities.

As soon as accounting entries do not match the tax returns, this type of procedure may be triggered. The remote examination of accounts makes it possible to verify certain items or to find out more about the good faith and accuracy of the returns. Gathering a number of supporting documents is a good opportunity to shed light on anomalies detected following a desk audit.

The procedure for the remote examination of accounts

For this type of procedure, the targeted company is notified of the tax procedure by registered letter with acknowledgement of receipt.

This notice states that the formalities must be completed electronically. The details of the website and of the space in which to upload supporting documents are clearly indicated. This document also reminds the company of the possibility of being assisted by an adviser throughout the procedure.

The company is required to send the accounting entries file (fichier des écritures comptables, FEC) within a maximum time limit of, in principle, 15 days. The remote examination of accounts also shortens response times. As long as the accounts are computerised, this response can be provided without delay. However, care must be taken, as this time limit passes quickly. Even the slightest delay will be treated as a failure to respond.

After receiving these documents, the tax authorities have, in principle, six months to analyse the accounts and give a concrete response. The aim is to verify that there is perfect consistency between the accounting entries and the returns filed. Any errors will also be identified. They will then be listed in the reassessment procedure.

At the latest by the end of the six-month period, the tax officer in charge of the remote examination of accounts will send an official tax reassessment proposal (proposition de rectification). It will state the amount considered to be owed to the tax authorities as a result of errors or anomalies in the returns. Where everything is in order, the procedure ends with a notice of no reassessment (avis d’absence de rectification), rather than a reassessment proposal. In all cases, a response is sent to the company so that it knows the conclusions of the procedure.

The safeguards afforded to the company

The notice of remote examination of accounts, when received, states that the Charter of the Audited Taxpayer (charte du contribuable vérifié) can be consulted online (and is provided on simple request). As it sets out the company’s rights and obligations, the company can rely on it throughout the procedure.

At any time, the company subject to the remote examination of accounts may respond as follows:
• Appeal to the hierarchical superior to raise any points of misunderstanding or any complaints
• Refer the matter to the Direct Taxes and Turnover Taxes Commission (commission des impôts directs et des taxes sur le chiffre d’affaires) in the event of disagreement with the reassessment proposal submitted
• Assert its right to the voluntary regularisation procedure. This request must, in principle, be made within 30 days of receipt of the reassessment proposal. If the request is accepted, it entitles the company to a reduction in late-payment interest relative to the date of assessment.

Penalties in the event of refusal

It is essential that the company acts promptly to respond within the 15-day time limit. Failure to provide the accounting documents may result in a fine and in ex officio assessment (taxation d’office).

The tax authorities may also decide to carry out a full on-site audit of accounts in order to examine all the accounting entries in depth.

More frequent tax audits

Very simple to implement, the remote examination of accounts is one of the weapons the government intends to use more frequently to track down tax fraudsters. This ability to quickly check accounting entries files makes it possible to find out very quickly whether an on-site audit of accounts should be triggered.

For companies, the arrival of the remote examination of accounts heralds more systematic tax audits as soon as an anomaly is detected in the returns. To avoid being among the companies targeted, it will therefore be necessary to be vigilant when filing the annual return. It will also be necessary to keep all relevant supporting documents so that they can be produced immediately.

Our tax law firm can assist you.