What to do in the event of an injunction?

In recent years it has become increasingly common for the self-employed to be subject to checks on declared income and expenses. Find out what these procedures consist of and how to proceed.

Initial requirements

First request. If you are self-employed, you should be aware that these verifications usually begin with a request in which the Tax Authorities ask you to provide the income, expenditure and investment goods registers.

Second summons. Next, the tax authorities may ask you again to provide a copy of all or some of the invoices that appear in the record books. The most common is to request invoices for expenses, as the aim is to check that these correspond to expenses that are related to your activity and that are necessary to obtain the income, so that the Tax Authorities can determine whether they can be deducted for Personal Income Tax and VAT purposes.

Deadline for replying. The Inland Revenue will give you ten working days to reply to the requirements. And you have the option of requesting an extension of up to five days, which is granted automatically if requested before the last three days of the initial deadline.

Inland Revenue Settlement

Settlement proposal. The best thing that can happen after these two requests is that you will be notified that everything is fine and that it is not necessary to regularise your tax situation. However, if the tax authorities consider that there are any irregularities, they will send you a provisional settlement proposal, also known as a “parallel” proposal, recalculating the self-assessment of personal income tax or VAT and granting you a new period of between ten and fifteen days to make allegations and provide the documents you consider appropriate.

Arguments. Make sure that all documents and evidence are submitted within the time limit for pleadings. Courts have allowed them to be submitted later, but only under certain circumstances.

Example: when there is no bad faith on the part of the taxpayer or the new documents provided do not imply a new investigative activity for the tax authorities or the economic-administrative courts.

To avoid problems, it is better to present everything from the beginning.

Do not allow extensions. It may also happen that, when notifying you of the tax assessment proposal, the tax authorities take the opportunity to extend the scope of the verification.

For example, they may ask you for details of your vehicle to check whether it is really used for the activity.

If you find yourself in this situation, appeal against the subsequent provisional assessment and ask for it to be cancelled.

Provisional settlement

Finally, if the tax authorities do not accept your arguments and consider that the self-assessment submitted should be regularised, they will send you a provisional assessment. In this case, you will be obliged to make the payment required by the tax authorities or you can request a deferment and pay at a later date.

You may also suspend payment of this debt if you file an appeal for reconsideration with the Tax Authorities or an economic-administrative claim, in both cases you must provide guarantees of payment.

In any case, we recommend that you put yourself in the hands of professionals to establish these relations with the Tax Administration, given the complexity and interpretations that they represent. We are therefore at your disposal for the prior analysis of risks, and the proceedings before the Administration. To do so, please contact Carles Monfort Codina, Partner and Economist of the firm BtS Professional Services, by telephone or e-mail cmc@btsasociados.com, we will be delighted to help you.