Virtual Office and Tax Office
The prospect of a Tax Office audit can stress many entrepreneurs, especially those using non-standard solutions like a virtual office. Questions arise: will officials treat a virtual address with suspicion? How does an audit actually proceed for a company without a physical office? The key is good preparation and understanding of procedures. Below, we explain how to prepare for a tax audit when running a company registered at a virtual office.
Does a virtual address increase the risk of an audit?
First, let's reassure you: using a virtual office alone doesn't make your company more frequently audited. The Tax Office selects entities for audit based on criteria unrelated to the address (e.g., unusual VAT settlements, large tax refunds, random selection of industries). A virtual address is an accepted practice today, and officials encounter it regularly – especially in large cities like Warsaw.
However, when an audit does occur, having a virtual office means you need to pay attention to several organizational issues.
Good preparation is the key to a smooth tax audit
Audit notification – be available
Usually, a tax audit doesn't come completely unexpectedly. Most often, the Tax Office:
- Sends an official notification of the intent to initiate an audit to the company's registered address (i.e., your address at the virtual office). From the moment of delivery of such notification, you have time to prepare (usually 7 days).
- Sometimes, an official may also call the taxpayer to agree on the audit date – although this doesn't always happen formally; it depends on the practices of the specific office.
Key tip
You must regularly collect correspondence from the virtual office or immediately respond to notifications about new letters. If VBiuro informs you by email about an incoming letter, don't delay in collecting it (or requesting a scan). An audit notification has a specific delivery date – the deadline counts from that date. Not collecting the letter won't stop the process, and it could cause the audit to begin without your knowledge.
Prepare accounting and tax documents
A tax audit most often concerns the correctness of tax settlements. Therefore, the basis of preparations is collecting and organizing all documents:
- Books and records – e.g., Revenue and Expense Ledger for sole proprietorships or full accounting for companies. Make sure they are up-to-date and properly maintained.
- Tax returns and declarations – annual PIT/CIT, VAT declarations, JPK (Standard Audit File). Prepare confirmation of their submission and any corrections.
- Invoices and expense documents – should be sorted and available. Officials may ask for specific sales or purchase invoices from a given period.
- Contracts, confirmation of transfers – if you use exemptions or account for costs that require contracts (e.g., leasing, rental), have them ready. The same applies to proof of tax payments.
- VAT registers – for VAT payers, the sales and purchases register must match the declarations.
In practice, many entrepreneurs use the services of accounting offices or accountants who keep documentation. If this is the case, inform your accountant about the planned audit – often the audit takes place at the accounting office, where the books are kept, or officials ask the accountant to provide documents. However, as the company owner, you should know where everything is and possibly be present during the audit to explain substantive issues.
Audit location – will officers appear at the virtual office?
It depends on the type of audit:
Tax audit (official)
Most often takes place at the taxpayer's premises or where documents are stored, but in the case of a virtual office, you can arrange for it to take place e.g., at your home (if you have documents there) or at the accounting office.
Officials have the right to appear at the registered address (i.e., at VBiuro), but they won't find your documents there immediately. So it's often practiced to meet at an agreed location.
It's important not to avoid contact – call yourself after receiving the notification and ask where they prefer to conduct the audit, informing them that you use a virtual office.
Verification activities or address verification
Sometimes an official wants to simply confirm that the company exists at the declared address. This can be done by sending a letter (which we've already discussed – you need to collect it) or even by a brief field visit.
If an auditor comes to VBiuro without notice, they will encounter reception staff. It's good for the reception to know that your company is a client – they usually have a list of resident companies.
The office employee will confirm that your company uses their address, which essentially covers the physical presence topic. You may not even be on site at that time, unless they request you to appear.
Tip
Alert your virtual office provider that you expect an audit once you receive notification. VBiuro and other professional virtual offices have experience in such situations – they can provide you with a conference room for the duration of the audit, where you can sit quietly with the inspector to review documents.
Agreement with the virtual office – keep it handy
Officials may ask for proof that you have the right to use the address where the company is registered. The simplest such proof is the virtual office agreement (or confirmation of payment for services). Prepare a copy. This will demonstrate that the address is not fictitious, but formally provided. Usually, after showing such an agreement, the address issue is beyond the office's interest – they continue to check financial documents.
Prepare yourself substantively
An audit is not just about papers. Officials may ask questions about your activities:
- Familiarize yourself with your settlements – review your declarations again, especially if some time has passed. Make sure you remember where individual amounts came from (e.g., a large expense in March – oh yes, that's the laptop purchase; a decrease in revenue in July – because you were on vacation, etc.). This will make it easier for you to answer questions.
- Prepare explanations for unusual events – if you know that you had something non-standard in the audited period (e.g., a one-time large transaction, change in settlement methodology, purchase of a company car), think about how to explain it neatly and support it with documents.
- Be honest and specific – there's no point in hiding anything, because the tax office has broad powers to access documents. It's better to provide factual answers. If you don't know something (e.g., accounting details), ask for a moment and contact your accountant.
Organized documents are the foundation of a smooth tax audit
Cooperate with auditors
A good approach is to treat auditors as partners who need to do their job. Provide them with comfortable conditions:
- If the audit takes place at VBiuro's premises, make sure to organize a space (e.g., book a room in advance).
- Be punctual for meetings, have prepared what they asked for.
- Answer calls from the Tax Office or call back if they were in contact.
It's worth remembering that an audit has a specific duration (the notification usually specifies how long it may take, e.g., 7 working days). Good organization on your part can make it end faster and without complications.
Practical example
XYZ Company - tax audit
XYZ Company (a sole proprietorship) registered at VBiuro received notification of an audit for the last two years of settlements. The owner, Mr. Mark, immediately contacted his accountant and informed VBiuro of the possible visit by officials.
The accountant prepared complete accounting documentation, and Mark arranged with the officials to meet in the conference room at VBiuro on a scheduled date. On the day of the audit, Mark and his accountant showed up at the location with binders of invoices and a laptop with JPK files.
The auditors asked for several explanations (e.g., why there was a large VAT refund in a certain month – which Mark explained by purchasing equipment). The rental agreement with VBiuro was also shown, which completely satisfied the officials regarding the headquarters issue.
Thanks to good communication and preparation, the audit went smoothly and ended without any negative consequences.
Summary
A Tax Office audit when using a virtual office proceeds similarly to one in a traditional headquarters – the key is to be prepared for it and maintain contact with the office. Regular collection of correspondence, complete documentation, and cooperation with auditors are the foundations of success. Remember that a professional virtual office such as VBiuro can be your ally – providing not only an address but also logistical support during a potential audit.
Looking for a professional virtual office?
If you're still not sure whether a virtual office is a safe solution for your company, contact us. VBiuro will gladly dispel your doubts and show you how we support our clients even in situations such as a tax audit. This way, you can run your business with peace of mind, knowing you have professional backup.
