Case Study 4

Field Audit

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Understanding Field Audit

A field audit is an extensive tax examination led by the Inland Revenue Board (IRB). It involves IRB officers either visiting taxpayers' premises or collecting their records for thorough review.

IRB officers concentrate on inspecting taxpayers' records on-site, sometimes with prior notice, following the Tax Audit Framework (Amendment 1/2017).

Before a field audit, the taxpayer usually receives a letter (CP800) about a desk audit. However, this doesn't always conclude matters, as IRB might escalate to a field audit if they remain unsatisfied with documents or question the reasonableness of records.

Challenges Faced by Taxpayers

Taxpayers might face sudden field audits, which can be time-consuming and pressure-filled. Managing the audit while handling business operations can be demanding. Negotiating with IRB officers and addressing their concerns can also be challenging. Non-satisfactory explanations can lead to hefty penalties.

KTP's Insights and Approach

KTP believes in prevention over remedy. We educate clients on tax compliance, appropriate record-keeping, and documentation for better understanding.

KTP's Comprehensive Support

  1. Pre-Audit: We help identify potential tax risks and recommend precautionary strategies. Adequate record-keeping is crucial for tax return preparation. We guide clients on keeping proper documentation, minimizing costs and hassles. Preparedness is key.

  2. During Field Audit: Upon IRB notification, KTP takes swift action to assist in audit preparation. We assess IRB findings, liaise with officers, and respond effectively.

  3. After Audit: We review records, provide proactive advice, and help prepare appeal letters to minimize tax exposure and penalties.

Positive Impact

By submitting an appeal letter and providing detailed explanations, the company successfully reduced their tax liability by approximately RM 36,000.

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