Every entrepreneur prepares various periodic returns, such as for payroll taxes, VAT and corporate tax. The Tax and Customs Administration checks whether these returns have been completed correctly and completely. Horizontal monitoring has been rising as a control mechanism for some years now.
What is Horizontal Supervision?
Horizontal supervision is a tool for the Tax and Customs Administration to carry out its control task. The key word is “cooperation”. The aim of the Tax and Customs Administration is to guarantee the quality of the returns by making good agreements with all parties involved in the tax return process, whereby the Tax and Customs Administration relies on the expertise and quality control of tax advisers and accountants. The idea is that entrepreneurs, their advisers and the tax authorities can make agreements in advance about work processes and tax issues on the basis of mutual trust, understanding and transparency. Horizontal monitoring also includes “agree to disagree”.
What are the benefits of Horizontal Supervision?
Quick clarity: a so-called ‘Fast Track’ applies to payroll tax, turnover tax, income tax and corporate tax returns. This means that the Tax and Customs Administration, in principle, will not ask questions about these filed tax returns.
Less checks: Depending on the level of supervision, the Tax and Customs Administration the risk of checks will reduce.
Quick response: Furthermore, queries relating to tax matters can be answered more quickly as we have a fixed point of contact at the Tax and Customs Administration.
Horizontal supervision was initially created through collaboration between listed companies and the tax authorities. Large companies like to control their risks and want certainty about their tax position. They do not want long-term uncertainty and a long wait for final tax returns. They are happy to make agreements with the tax authorities. The Tax and Customs Administration wants to carry out its control task effectively and efficiently. They noticed that good agreements could be made and that they could rely on the quality and expertise of tax advisers and accountants. This practice has been rolled out to small and medium company’s over the years. They can participate in horizontal monitoring by joining the agreements that fiscal service providers has made with the authorities. PKF Wallast also has such an agreement.
Participation in Horizontal Supervision is open for most of all companies. The large companies usually have individual agreements with the tax authorities. Small and medium companies can participate in the agreement that their tax adviser / accountant has concluded with the tax authorities
Horizontal Supervision for small and medium companies
Participation in Horizontal Supervision through the tax service providers covenant of PKF Wallast is possible for small and medium companies, whereby the payroll tax, turnover tax, income tax and corporate tax returns that PKF Wallast prepares and submits for you can be registered.
In addition of above, we also have a lot of experience in assisting companies that have an individual Horizontal Supervision agreements with the Tax and Customs Administration. This is only possible for businesses who do not qualify as medium or small. If you want to qualify for this, the Tax and Customs Administration expects, for example, that you record your tax processes in a ‘Tax Control Framework’. We have a lot of experience in implementing such Frameworks and monitoring them.
An important principle of Horizontal Supervision is transparecny and mutual trust. This means that the taxpayer who participates in the Horizontal Supervision is obliged to consult in advance about relevant tax positions that are included in the tax return and that may lead to a difference of opinion. Your PKF Wallast advisor will of course discuss this with you first, after which your PKF Wallast advisor will coordinate with the tax authorities before the tax return is submitted. The Tax and Customs Administration also has a number of obligations, see below under “Advantages of horizontal monitoring”.
Agreement PKF Wallast
Since 2010, PKF Wallast concluded an agreement with the Tax and Customs Administration to enable our clients to participate in Horizontal Supervision. This made us one of the first tax advisory firms who participate in this. We have thus more than ten years of experience. In November 2021, our agreement with the Tax and Customs Administrations is extended.
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