Relatively regularly from existing and potential clients – we receive questions, has the SRS not acted illegally when security funds have been imposed on the client at the beginning of the tax audit?
It follows from the provisions of the regulatory enactments of the Republic of Latvia, which regulate issues regarding the application of enforcement measures, that the tax administration primarily decides on the need for enforcement measures, awaiting the results of the control measure (for example, the decision on audit results).
Special circumstances when the tax administration establishes that the taxpayer performs illegal activities with the aim to avoid payment of overdue tax payments (for example, alienates, smuggles or hides his / her property) or activities as a result of which it may become impossible to execute the SRS final decision on recovery of overdue tax payments in an undisputed manner, the tax administration may also apply security measures before deciding on the results of the inspection. Judicial practice at the highest level of the Senate indicates that a decision of a SRS official on securing a claim before an audit decision can be made only if all interrelated preconditions exist at the same time, namely:
• The SRS has obtained relevant evidence for the above;
• This evidence testifies to the taxpayer’s deliberate, intentional actions that indicate dishonesty on the part of the management (board).
• These actions can lead to the impossibility of recovering tax debts.
We invite you to talk to your accountant if you find yourself in a situation where the SRS has initiated tax control measures against the company you manage! If you do not have your own accountant or need day-to-day support, or such advice and a full cycle of financial accounting, you have missed these or other accounting issues due to busy schedule, and it is important to you, feel free to contact us here on the website and receive favorable conditions for starting cooperation with our accounting office.
Our team will hurry to help you!