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The Tax Service reminds that an on-site inspection is conducted without prior notice to the taxpayer. At the same time, according to the provisions of the Tax Code, during the inspection officials may carry out timing of business operations.
The Tax Service, in its clarification dated 25.10.2013, reports that pursuant to subparagraph 75.1.3 of paragraph 75.1 of Article 75 of the Tax Code an on-site inspection is considered an inspection carried out at the place where the taxpayer actually conducts its activities, at the location of the taxpayer’s business or other objects of ownership of such taxpayer. Such an inspection is conducted by the controlling authority with respect to compliance with the legislation governing cash circulation, the procedure for taxpayers to carry out settlement operations, keeping cash operations, the availability of licenses, patents, certificates, including those for the production and circulation of excisable goods, and the employer’s compliance with legislation regarding the conclusion of an employment contract and the formalization of employment relations with employees (hired persons).
In addition, it is reminded that according to paragraph 80.1 of Article 80 of the Tax Code an on-site inspection is conducted without prior notice to the taxpayer.
Before the start of an on-site inspection concerning compliance with the procedure for carrying out settlement operations and keeping cash operations, officials of the controlling authorities, on the basis of subparagraph 20.1.9 of paragraph 20.1 of Article 20 of the Tax Code, may carry out a control settlement operation (para. 80.4 of Article 80 of the Tax Code).
Admission of officials of the controlling authorities to conduct an on-site inspection is carried out in accordance with Article 81 of the Tax Code (para. 80.5 of Article 80 of the Tax Code).
When conducting an on-site inspection regarding the employer’s compliance with legislation on the conclusion of an employment contract and the formalization of employment relations with employees (hired persons), including those who are subject to a probationary period, the presence of proper documentation of employment relations is checked; questions are clarified regarding record-keeping of work performed by the employee, accounting of labor costs, and information about the employee’s remuneration is verified. To establish the fact of proper formalization of employment relations with an employee who performs labor activity, documents that identify the person or other documents that can identify them (staff identity card, driver’s license, sanitary book, etc.) may be used (para. 80.6 of Article 80 of the Tax Code).
An on-site inspection is conducted by two or more officials of the controlling authority in the presence of officials of the business entity or its representative and / or the person who actually carries out the settlement operations (para. 80.7 of Article 80 of the Tax Code).
During the inspection, officials may carry out timing of business operations. Based on the results of the timing, a report is compiled which is signed by officials of the controlling authority and by officials of the business entity or its representative and / or by the persons who actually carry out the business operations (para. 80.8 of Article 80 of the Tax Code).
The relevant clarification by the state authority is contained in the Unified Tax Knowledge Base.