You have received a letter from FBR or SRB requiring you to present any record or information. What’s your plan? Thinking how FBR or SRB got to know about me, as I never dealt with them in any way. One thought may come to your mind that ‘mistake’, that the notice is addressed to you in mistake and you were not the intended recipient. Mind you if the notice / letter states your name / CNIC number or NTN then it’s surely not ‘mistake’ and you are the intended recipient of the letter.
So what’s your plan?
Once it is established that you are intended recipient and FBR / SRB actually wants you to give certain documents /information then it’s not advisable to ignore this letter.
Never ignore any correspondence from tax authority it may result in irreparable losses
Types of notices you may have received.
- Non-filling of income tax return (that’s very common)
- Penalty notice for late filling of income tax return. (This would always mention the amount of penalty, always check whether it is correctly calculated)
- Get yourself enrolled or registered with FBR or SRB
- Selection of your case in Tax Audit (this can be immediately verified from list published by FBR of cases selected for audit. The list can be accessed from FBR official website fbr.gov.pk )
Step 1 : Do not Ignore the issue
Ignoring the issue / notice will not make any good to the situation rather add more problems. Every notice mentions following mandatory information on its face.
- Name of person to whom notice is issued ( please thoroughly check the details whether it is you or the letter is for someone else)
- Date of issuance of notice (receipt of notice may be delayed due to courier services therefore it is always advisable to keep record of envelop having bar code to verify the date on which notice is actually received by you. The notice may be dated 10 days back however this bar code will help you to prove the date on which it is actually received by you).
- Name of person issuing notice (There is a legal issue involved in this; whether a person issuing notice has such power to do so, as law has empowered only certain officers who can issue notices to taxpayers; therefore it is advisable to consult professional regarding powers of person who issued such notice).
- Date of hearing or date before which your response should reach to the tax authorities.
- Repercussions of non-compliance; what will be / can be done in case of non-compliance or ignorance.
Step 2: Need representation of tax professionals or you can deal it by your own?
It is commonly observed that most people try to ignore these correspondence and at first place, if for some good reason they decide to respond / reply the notice they do it by themselves without considering the severity of the issue.
You may be very good at management, business dealings or even interpersonal communication but may not comprehend the tax laws better than professionals do.
Do you think tax officials can’t evaluate person’s know-how of tax matters in very first meeting? or you think they would deal as fairly as fairly as possible even if they know that you lack knowledge of taxation law.
So why people prefer to attend by themselves?
There couldn’t be any reason except COST or FEE to tax professionals. This is right, by attending the case by themselves they surely saves tax practioner’s fee for handing the case. However following monetary / non-monetary costs inevitably incurred by them subconsciously
- Their precious time spent in attending the hearing
- Extra tax or unlawful tax threats which results bribe or speed money to tax officials for no good reasons.
- Giving tax officials a clear authority to blackmail themselves to pick more issues that are similar in past or future tax years.
Therefore it is always advisable to evaluate the nature of issue for which notice / letter is issued. If you are confident that you know each and every thing identified in the notice and can defend, there is no such thing which can replace your personal attendance.
However, if you’re not sure about the matter for which information is asked or you attend just to take a chance to see if you can handle the issue or not, then there are more than none chances that you end up paying more tax than what is lawfully required for the reasons mentioned above.
Step 3: Homework or preparation / records gathering
It is always advisable to estimate the time required to gather the records / information requested in the notice. If you are of the view that compliance date or date of hearing will insufficient for this, immediately apply for extension in compliance date mentioning the reasons why extension is required. (This is your legal right and tax officials are bound to entertain your request even if they don’t want to give extension they would intimate you)
Once you are ready to submit details / records it is advisable to review them properly to ensure relevancy of documents / information you are going to provide.
Step 4: Submit your response / reply against proper acknowledgement
It is advisable to always ask for acknowledgement of response you are submitting, this would help you defend your position in case tax officials passes unfavorable order in your case.
Being tax professionals we understand the importance of these notices. Therefore in case you face any difficulty in evaluating the intensity of the matter don’t hesitate to contact us.