Receiving this request for information indicates that the tax authorities wish to check one or more returns you have filed. This request may concern income or expenses, but also VAT or the territorial economic contribution (contribution économique territoriale, formerly known as the business tax, taxe professionnelle).
To avoid triggering a tax audit, you should therefore take the time to respond to this request as precisely as possible.
Understanding the importance of this step
Even though it is merely a request for additional information, it is advisable to respond promptly and with all the relevant details so that the file can be regularised.
Many people neglect this type of letter. The sentence "this request is not binding" can indeed be misleading. It may suggest that the request is a mere suggestion. However, what it really indicates is that you have not yet legally entered a tax audit phase, with all the procedural obligations that this entails. Nevertheless, in practice the tax audit has well and truly begun.
The desk audit (contrôle sur pièces)
When you receive this request for information, the tax authorities are seeking to clarify certain points that seem suspicious or unclear to them. When something does not seem understandable to them or they are unable to clarify certain situations, they will resort to this desk audit.
A prompt response will allow the tax authorities to better understand the situation. If the information provided meets expectations, it will clear up the grey areas. The officer who issued the request will then be able to close the file. The aim is to avoid a reassessment procedure. You must therefore make sure you answer the question asked precisely. Supporting documents will also often be required.
A lack of response does not mean that the tax authorities will leave it at that. It is likely that, as long as the file is not considered complete, the officer will send you reminders in order to obtain the information they consider useful.
If the file is incomplete, you risk receiving a formal request for justification. The officer may even go further and directly send a reassessment notice ("proposed adjustment (proposition de rectification) "). This bad news will put you in a different situation, since the tax audit machinery in the strict sense has then been set in motion.
It is therefore preferable to respond to the first request without delay.
Providing a clear and satisfactory response
This request for information shows that the tax authorities need to know more about a situation. Responding briefly, or only partially, is unlikely to satisfy the officer who sent the letter.
If the tax authorities have doubts about the information you declared, you risk a tax reassessment. You should therefore go beyond a simple answer and aim to satisfy the officer with relevant and useful evidence for a file that is fully in order.
Your response must therefore explain the situation clearly. Do not hesitate to write a comprehensive letter providing as much information as possible. The aim is to describe your situation as faithfully as possible so that the tax authorities understand where you stand. All documents that can prove that your return is correct should be enclosed with this letter. By proceeding in this way, you stand a chance of avoiding a tax reassessment. Of course, this exercise remains complex. You must not "shoot yourself in the foot " by communicating information or supporting documents that could, in one way or another, work against you and give rise to other reassessments. Using an experienced professional may therefore often seem advisable.
The risks of an unsatisfactory response
The greatest care must be taken with the response, because if it does not satisfy the tax officer, the situation may become more complicated. A reassessment notice could then be sent. An in-depth review of your personal tax situation (examen contradictoire de la situation fiscale personnelle) (tax audit) may even be triggered where the information provided shows too many inconsistencies.
The outcome of your response to the tax authorities
A satisfactory response
If your response is satisfactory, the officer who sent the letter will be able to understand your situation. When it appears consistent with your various returns, the officer is reassured that you are being transparent.
Your file can therefore be closed once the new information you have provided has been added.
A contradictory or incomplete response
If you provide information that indicates the opposite of what you previously declared, the situation will certainly alert the tax authorities. They will be entitled to wonder which version is ultimately correct. Their role is indeed to ensure that filers have not made false returns and are not seeking to conceal income.
An in-depth review of your personal tax situation (tax audit) may then be triggered in certain cases. The officer will look at the consistency between declared income and actual assets, the cash held... Your lifestyle will also be examined in an attempt to shed light on your actual situation.
On this occasion, all documents showing receipts and disbursements will be checked. Private bank accounts will be analysed, as will business accounts. This audit of mixed accounts may lead to a tax reassessment where an incomplete return has been filed. Undeclared activity will also lead to this type of procedure.
A totally unsatisfactory response or no response at all
When the response given does not meet expectations, a tax reassessment seems inevitable. Depending on the information in the officer's possession (banking information, Family Allowance Fund (CAF), social security contributions collection agency (URSSAF)...), a tax adjustment (reassessment) will be made.
Penalties (surcharges and late-payment interest) are also applied, as well as certain fines in the event of a false or incomplete return.
Our tax law firm can assist you.
