A visit from the tax authorities when you are not at home

The STI (Special Tax Inspectorate) has extensive powers to control tax payers. The 'visitation' is one of these: unexpected and unsolicited ring at the door and then open up all cupboards and drawers. But can they do so when you are not there?

Stock taking in a bar in Leuven

During 2011, the STI made several visits to a bar in Leuven for stock taking as part of a VAT audit (more specific, they count the barrels of beer). All is well until 22 December 2011. The managers are absent and the employee refuses to let them in, since she cannot reach the managers. The STI notes this down in an official record.

Sometime later the tax authorities, the tax payer and his tax consultant agree that in case the same situation occurs, the tax officers can access the premises even when the managers are absent. Less than a month later this happens: the tax officers try to call the managers when they are at the door. Without success. Subsequently they enter the building but again receive refusal of the employee stating that she received explicit orders not to give them access to the stock room.

Refusal of free entry

The essential question is whether there is a case of refusal of the tax payer to comply with the tax audit. After all, as a tax payer you have the obligation to comply. If not, you risk fines, an ex officio assessment and in the worst case - when criminal facts are committed - referral to the prosecutor.

There is a limit: the tax officers cannot enter the professional premises manu militari. On the other hand, according to the Brussels Court, the tax payer does not have the possibility to deny access (Brussels, 12 May 2020, 2016/AF/13).

The court refers to the applicable article in the VAT Code (art. 63) stating that the tax payer (...) must allow tax officers, properly empowered, at any time and without prior notice, free access to the premises where the economic activity is carried out, in order to enable them to audit the correct application of the VAT legislation.

From this provision, they deduct that it is not specified that the tax payer should be present or has to give prior permission for the visitation. According to the court this (attendance of permission) would undermine this provision, since it would give the tax payer the possibility to 'arrange things' before the tax officers pass by.

Excuse for refusal

Is the fact that the managers were absent and that the employee was not properly empowered to allow the officers to enter the building no legitimation or at least an excuse for the refusal? The court doesn't think so.

In first instance, proper agreements were made. But even when this would not have been the case, the employee could have given access. The fact that she was not properly empowered, is put aside by the court. The court notes that apparently she was empowered to operate the bar during the absence of the managers and she could have given access to the said room (she could also change beer barrels). The fact that she was not properly empowered, is not credible. But this is of no importance, she should have cooperated.

Double fine

Above we did not tell the full story: the last visit was not only for VAT purposes, but also for income tax purposes. The tax payer has been convicted in the past for denying access to tax officers for an income tax audit, also by the court.
The question raised whether he was not sanctioned for these same facts twice.

But the court rejects this. This is not unique. Also, the Court of Cassation previously ruled that there is no 'non bis in idem' when a tax payer is fined for VAT purposes and again for income tax purposes, even when the underlying facts are the same.
However, the judge can examine whether the penalties are not disproportional, but he cannot delete the fines for mere opportunity reasons and against the legal provisions.

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