GST or Goods & Service Tax is an integral part of the business and consumer sector. Singapore persists to grow and evolve. In the same way, regulations associated with GST rates, paperwork, and filings are updated and enhanced consistently.
Business owners find this challenging because they need to survive the tough competition and stay compliant with the consistently changing GST regulations. Therefore, businesses need to consider hiring a GST specialist for an audit to avoid risks and penalties.
What’s a GST audit?
It is a process, where government officials check your daily business transactions. The IRAS officers conduct the audits to make sure that your business complies with GST regulations. They check for accuracy of every information, computation, and assumption.
GST audit occurs randomly for GST-registered businesses in Singapore. It is wise to a company that specializes in this area for GST audits. There are GST audit specialists and help you identify any errors in input tax claims or see if GST is charged properly or supplies are accurately classified.
GRB [GST-registered businesses] can self-assess their compliance regulations before filing returns with IRAS. The IRAS has published a checklist called ASK or Assisted Self-test Kit. For certain GRBs, self-check is mandatory to take part in the Government schemes like –
- AMCS or Approved Marine Customer Scheme
- IGDS or Import GST Deferment Scheme
- MES or major Exporter Schemes
- ARCS or Approved refiner and Consolidator Scheme
- AISS or Approved Import GST Suspension Scheme
- ACMT or Approved Contract Manufacturer & Trader Scheme
Many GRBs find it challenging to handle GST problems, so when they are notified from IRAS about GST audit there is a situation of anxiety and concerns for business owners. Even if the business has taken preventive measures to ensure compliance, some unintentional errors can raise a red flag.
Based on the scope, circumstance, and nature of non-compliance, the ramification of such discoveries can impact the business in terms of more investigations, penalties, or jail.
Preparation for potential audit
When you get the first audit notice, get supporting documentation and records compiled and updated. It will need plenty of double-checking and cross-checking to ensure that there is no missing documentation or gaps in accounting.
GST audit preparation is a stressful and monotonous process, so it is recommended to engage GST specialists. The experienced professionals will detect the areas of concern and navigate you. Even prepare you on how to answer the IRAS officer’s queries with confidence.
What to anticipate during the GST audit?
The IRAS investigators check if supplies are correctly classified, GST properly accounted for, input tax claims are right and the values of purchases, supplies, and taxes are completely reported in the GST returns. The audit interview is conducted via letters, emails, faxes, and phones. The IRAS officer may even give your business premises a visit or request to meet the CEO. Currently, digital video interviews are conducted because of the COVID-19 situation.
The information you will need to supply to the officer will include –
- Details about the business arrangement, administration, and supply of goods or services.
- Purchase and sales listing to confirm the precision of the figures submitted in the GST returns.
- Completed self-review checklist documents.
- Business transactions supporting documents associated with export and invoices.
The IRAS officer may even seek information from banks, suppliers, and customers to confirm if the reported transaction is correct or not. Cooperate with the IRAS officers by offering them total access to your documents, records, and even premises.
The office may interview your staff or you and even make copies of documents and records. Supply truthful and prompt answers whenever asked for information. Causing hindrances and failing to cooperate is a punishable act and the fine is $5,000 or jail.
Post GST audit
Several aspects can delay the audit length ranging from cooperation to the nature of your industry. The audit outcome is received after the conclusion. As soon as the audit outcome is received the company has 30 days [if necessary] to challenge the audit assessments and anticipated adjustments.
The objections must be detailed and have solid grounds. Some objections with a reason that IRAS stipulates to be sufficient include –
- Registration or de-registration
- Claim for refund
- Security deposit needs
- Allowable input tax
If you disagree with the objection decision then you can file for a petition of appeal with the GST Board.
Submitting wrong GST returns and penalties
If there is incorrect information in the GST returns then you can get penalized up to 200% of over-claimed or undercharged tax and/or imprisonment. Businesses committing fraud are handled more strictly.
Voluntary disclosure of errors in GST returns
Taxpayers can voluntarily report errors in their filed GST returns to correct. However, it should be in a self-initiated and timely manner. It means before receiving an IRAS query regarding the returns or audit notification.