Questions letter from the tax authorities: how to answer it

Why you receive this letter

The tax authorities check returns using risk profiles. If your return stands out, a written request for information often comes first, rather than a visit straight away. Common triggers are a VAT refund, a big difference from last year, high car costs, an investment with investment deduction or an hours criterion that only just seems to be met.

A questions letter is different from a tax audit. In an audit an inspector looks broadly at your records. A questions letter is about specific points, and with a good answer the matter is usually closed.

You are obliged to answer

Article 47 of the General Tax Act obliges you to provide data and information that may be relevant to your taxation. The inspector must stay reasonable: they may not ask for things clearly unrelated to it, and they must give you a reasonable period. That period is in the letter, often four to six weeks.

If you do not answer or answer incompletely, the inspector can issue an information decision. You can object and appeal against it, but if that decision stands, the burden of proof is reversed. You then have to prove later that an assessment is too high, instead of the tax authorities having to prove it is correct. That is a difficult position.

How to approach it

A good answer is complete, factual and short. Answer exactly what is asked and include evidence. Do not tell a story that raises more questions.

1. Note the deadline and the letter's reference.
2. Number the questions and answer them in the same order.
3. Add evidence for each question: invoices, bank statements, contracts, an hours overview or mileage log.
4. Send copies, never originals, and keep a copy of your entire answer.
5. Use the reference and send it in a way that lets you prove when it was sent.

If it turns out something was wrong

Sometimes you discover a mistake yourself while looking things up. Be open about it and provide the correct figures. A mistake you report yourself weighs differently for any penalty than one the inspector has to find. How corrections work is explained in correcting your income tax return and for VAT in filing a VAT supplementary return.

If you have a bookkeeper, have them draft the answer or at least review it. They know which documents the inspector expects and how to phrase an answer. With an authorisation they can also deal directly with the tax authorities.

Frequently asked questions