Is a tax audit on the horizon? Proper preparation can help you avoid unnecessary stress
June 2026 - Few business owners look forward to a tax audit. The prospect of someone coming to check your accounts often causes anxiety and uncertainty. However, a tax audit does not necessarily have to be cause for alarm.
For many SMEs, it is a routine check in which the tax authorities verify that tax returns have been completed correctly and that the records match reality.
Good preparation makes the difference between panic and a smooth process. But what exactly are the tax authorities allowed to check? When are you at greater risk of an audit? And how do you ensure your business is ready when the tax authorities come knocking?
What exactly does a tax audit involve?
During a tax audit, the tax authorities check whether a business has declared its income correctly and whether the taxes due have been calculated accurately. To do this, the auditor examines documents such as invoices, VAT returns, accounting records and other administrative data.
The tax authorities may request additional information where necessary to determine the taxable income correctly. As a business owner, you are obliged to make these documents available. However, this does not mean that you have to go to the tax office yourself with boxes full of paperwork. The law stipulates that the documents must be submitted ‘without the need for physical transfer’.
In practice, audits are now often conducted digitally. Accounting software and electronic invoices make it easier for the tax authorities to analyse data and detect discrepancies.
What can and cannot the tax authorities do?
The tax authorities have extensive powers of inspection, but there are clear limits.
Tax officials are permitted to enter business premises where economic activities take place, such as offices, warehouses or workshops. They may inspect documents, make copies and check stock to verify that the accounts are accurate.
However, this does not mean that the tax authorities have unlimited access to everything. A private residence may not be entered without the occupant’s consent or a warrant from the magistrate. Nor may personal belongings be searched without cause or a court order.
Furthermore, the tax authorities may not remove documents relating to a current financial year that has not yet been closed.
Why is a business subject to an audit?
Many audits are carried out on the basis of risk analysis. The tax authorities use automated systems to detect notable anomalies. Significant discrepancies between income and expenditure, unusual deductions or transactions that deviate from the normal pattern may give rise to further investigation.
Mixing private and business expenses also increases the risk of questions from the tax authorities. Business owners who pay business expenses via a private account, or vice versa, make their accounts less transparent.
That does not mean that every anomaly automatically leads to problems. Sometimes the tax authorities simply want further clarification or additional documents.
How far back can the tax authorities go?
Under normal circumstances, the tax authorities can go back up to three years to check tax returns. If fraud or fraudulent intent is suspected, this period can be extended to seven years.
That is why it is important to keep invoices, contracts and other relevant documents for a sufficiently long period. Digital archiving can help with this, provided the documents are stored correctly and are accessible.
Good record-keeping remains the best defence
As an entrepreneur, do you keep your records carefully organised? If so, you not only limit the risk of errors but also make a professional impression during an audit. Well-organised accounts ensure that questions can be answered more quickly and that disputes are kept to a minimum.
Therefore, work with clear procedures as much as possible, keep invoices and supporting documents systematically organised, and submit returns on time. An experienced accountant or bookkeeper plays an important role in this. They can not only help avoid errors but also provide advice when certain costs or transactions require further explanation.
