Field Audit and Tax Investigation
If you receive a letter from the Inland Revenue Department, the file number on the upper left corner is 4A, 4B, 4C, meaning that you are unfortunately being opened the file for investigation by the Tax Office . At this time, the appointment of a tax representative 展群CK ® to work with the Inland Revenue Department will normally take about three months to two years, depending on whether the taxpayer can provide the information required by the Inland Revenue Department to close the investigation case.
The Inland Revenue Department will issue judgment prosecutions on the Internet on a regular basis to alert other taxpayers to:
Tax Audit - Field Audit and Tax Investigation have 3 major categories:
Tax investigation – very serious case and taxpayer will be investigated on all years under concern and potentially sued for criminal prosecution
Field audit – most cases are field audits, using projection method based on one year results
Anti-avoidance – preventing taxpayers from using aggressive tax avoidance schemes
In fact, the file number will actually show a lot of important information, such as severity, investigation nature and so on
4B8 represents the taxpayer case as a criminal prosecution group and the general Revenue Department will require taxpayers and legal representative to attend the meetings
4C6 / 4C7 represents taxpayer cases as anti-tax avoidance groups, and the common case is that taxpayers use past aggressive tax avoidance practices
Second subdivision of A123456，
A represents Anti-avoidance、
B represents Tax investigation、
C represents Field audit
The last part (37) represents the Floor of Inland Revenue Tower:
37/F criminal prosecution case
10/F Field audit
35/F Tax investigation and Field audit
Common cases of Tax Audit - Field Audit and Tax Investigation:
1. Source of funds to purchase immovable or movable properties
2. Owners of sole proprietor
3. Cash transactions business
4. Commission business (insurance agents / properties agents
5. Insufficient business records
6. Significant private expenses
Common assessment methods for tax investigations:
1. Asset betterment method
2. Bank accounts analysis method
3. Income projection method
Penalty Provisions under Section 80 of the Inland Revenue Department:
Failure to notify the Commissioner of Inland Revenue of profits tax in writing within a specified period of time
The Commissioner of Inland Revenue was not informed of the information on employees ' cessation of employment and departure before leaving Hong Kong
Make an incorrect statement and claim the dependent parent allowance
Underreport of directors ' remuneration
Penalty Provisions under Section 82 of the Inland Revenue Department (Criminal cases):
Make a false statement in order to claim the deduction of "personal education expenses", "home loan Interest", "approved charitable donation", "Dependent parent allowance"
Underreport of rental income
Keep false books or accounting records to exaggerate the company's purchase amount or reduce the company's sales
Penalty Provisions under Section 82A of the Inland Revenue Department
Group (a) - cases where the taxpayers show intentional disregard to the law and adopt deliberate cover-up tactics involving the preparation of a false set of books, padded wage rolls and fictitious entries or multiple omissions over a long period of time.
Group (b) - cases with slightly less serious acts of omission resulting from recklessness including the "hand in the till" type of evasion, failure to bring to account sales of scrap, and sheer gross negligence.
Group (c) - cases where the taxpayers fail to exercise reasonable care and omit profits/ income such as lease premium, one-off commission, etc.
Penalty may be scaled upwards or downwards to a maximum of 25% in the generality of cases.
Aggravating and mitigating factors in determining the ultimate penalty
For further information, please contact 展群CK ®:
a. Phone at (852) 3502 7392
b. Whatsapp at (852) 5227 9242
c. Email at