French Tax Administration and Statute of Limitation : Part 1

The Tax Administration must meet deadlines when conducting audits.

When the tax authority decides to conduct an examination, it must follow a precise procedure, codified in the Book of Tax Procedures (LPF).

It is maintained by including timelines for action. These periods are called "recovery time" in tax law and "prescription" under common law.

It is during these times that the right tax Administration to conduct inspections and to repair the omissions, mistakes or shortcomings in the tax assessment is granted. At the end of these periods the Directors can, in principle, more action.

Warning: when the Tax Administration is to conduct a check or repair, make sure it works well within the deadlines that are imposed by law.

The recovery time is generally three years from 1 January following the tax year, this is the case (eg for income tax, tax on profits and tax corporation. However, there are specific deadlines in terms of direct local taxes, stamp duties, and ISF).

In terms of local taxes, the right of resumption of Directors exercised in principle until the end of the year following that in which the tax is due. Clearly, if the tax is due in 2008, the tax authorities may carry out checks until December 31, 2009.

Warning: when the taxable income that justified an exemption or relief from land tax or housing is subject to a correction, corresponding to the tax exemption or relief granted to harm is established and the assessment in the same period as the income tax corresponding to that adjustment.

There are two exceptions to the above rule. First, in the absence or inaccuracy of statements relating to new construction or change in consistency or allocation of developed land, the Authority may at any time fix the shortcomings of evaluation. Then, business tax, the Tax Administration sees its deadline extended until 31 December of the third year following the tax for any errors or omissions. Beware if the turnover is rectified, the contributions of the corresponding business tax adjustments can be established and assessed.

In terms of registration fee and ISF, the principles are identical. The right-back may be either subject to a period of three years when the chargeability of the tax has been sufficiently proved by the registration of an act or a statement or undergo a period of ten years all other cases.

There are some particular cases. In terms of TFR, for example, inadequate assessments regularly declared goods are subject to three years while the lack of reporting, the omission of taxable property and control of the qualification although professional lead to the application within ten years.

 

From this point of view, it is better then declares his property even if the assessment is approximate as not to declare all under the pretext of bad evaluation after leaving to make yourself a revaluation of the property.

We have seen that the tax administration should act within specific timeframes. However, these periods may be interrupted or suspended.

Recovery time can be interrupted, that is to say that the time stops but the administration has a new deadline for a period equal to that interrupted to establish the tax, effective January 1 Next.

The period may be interrupted in case of a notification procedure for rectification in the amounts covered by the proposed rectification. It may also be in cases of notifications of tax bases automatically and if statements or notices of minutes or other acts interrupting law.

It may also be suspended, that is to say that the time stops but the administration has only the length was left to run before the suspension to assess the tax.

It may be suspended under a mutual agreement to eliminate double taxation due to the implementation of several national tax laws.

Warning: taxes must be assessed before the expiration of the recovery to be valid. If the tax authorities made no was assessed before the end of the period of recovery or prescription, so she can not act.

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