Audit by Tax Investigations: Search of Premises by the Tax Investigator

The tax investigator is at your door and requests entry. Remain calm! Resistance against this measure is futile and rather damaging. A search of premises can no longer be prevented. In our experience, many mistakes are made, on both sides, during the first 30 minutes of a search. Prudent and calm behaviour will assist you in avoiding mistakes.

Request to see the search warrant and ask to be provided with a copy. The search warrant will specify, whether the search is in respect of the accused (you are accused) or in respect of a third person (someone else is the accused). Pay attention to the scope of the search of premises specified in the search warrant. Only documents pertaining to the specified tax types and periods may be seized, unless a situation of imminent danger has been claimed. If no search warrant has been issued, the search can only be justified by imminent danger. In such a case, request an explanation of the circumstances giving rise to imminent danger and write them down.

To maintain normal business operations: Prevent external effects! Resistance against this action is futile and rather damaging. Request the tax inspector to move out of the reception area, ideally into a separate room.

The tax inspector is not authorised to exert personal coercion. Confinement and refusal to use the telephone are never permissible. Inform your tax adviser or attorney, you are entitled to do so, no matter what. He will immediately come over. Request the tax investigator to wait until his arrival. The tax investigators are not obligated to comply.

Silence is golden! Regardless of what the tax investigator promises, do not provide any factual information. Criminal proceedings are not won but rather lost by making inconsiderate comments. It is too late for a voluntary self-disclosure. Instruct your employees to remain silent at all costs.

Do not release your tax adviser from his professional confidentiality! Tax investigators frequently turn up at your premises and your tax adviser’s office simultaneously to procure evidence. They frequently attempt to motivate the accused to release his tax adviser from professional confidentiality. They give the impression that cooperation is beneficial.

Being released from professional confidentiality creates a difficult situation for the tax adviser: If released, the tax adviser must furnish the tax inspector with all documents, including those which fall under professional confidentiality, such as correspondence with you. He is without any legal protection in the interrogation by the investigating authority and cannot call on his statutory right to remain silent.

Do not leave the tax inspectors unattended during a search of premises. Assign employees to observe each tax inspector. The tax inspectors must however not be inhibited in their work. Criminal prosecution for resistance against enforcement officers may otherwise be entailed. Safes and cabinets must be opened upon request and tax investigators may operate computers.

Do not voluntarily furnish the documents, insist on them being seized. This is a tactical necessity. Legal remedies are only available against a seizure, if the search of premises is unlawful. Request a comprehensive schedule of the seized documents. Details such as “box with documents” or “files” do not suffice. Make copies in order to maintain your business operations.

After the search is over, write up a protocol of the events as you remember them. Ask your employees to do the same. You assist your attorney in preparing the further course of action by making sufficient information available to him.