Scenario 1 - Accounting, Statutory Compliance and Taxes
Scenario 1 - Accounting, Statutory Compliance and Taxes
The Summary
This is about our assistance to a client in recovering excessive taxes assessed by the Comptroller of Income Tax. The taxes were assessed based on the company’s last record of tax returns notwithstanding the company suffered losses and could not cope up with the filings of the tax returns for at least 3 years because its accounts were not kept up-to-date. The director was prosecuted several times by ACRA for repeated failures to hold annual general meetings and filings of the annual returns.
This case demonstrates the pivotal role of bookkeeping as the building block of the company’s financial statements which are among others, important elements in the company’s dealing with its stakeholders in the instance for reliable accounting records to be used in compiling proper tax computations and returns to the authorities. The statutory register of charges were, among our observations, outdated for years due to the lack of communications between the company and its precedent service providers.
The Backdrop
The client is in the business of sale and purchase of used heavy industrial equipment. For years, the client relied on a freelance bookkeeper in maintaining its books of accounts, acting as the company’s tax agent, and another corporate secretarial office to upkeep its statutory registers and records.
The client approached us to take over the matter on the basis that the director had been prosecuted by ACRA several times for repeated failures to hold the company’s annual general meetings and filings of its annual returns; the company had also been paying penalties and hefty estimated taxes to IRAS for non-submissions of few years of tax returns.
When asked, the client explained that the company had few years of backlog accounting records because the freelancer was unable to cope with her multiple work commitments, barely managed to extract monthly transactions to get-by the filings of the company’s GST returns. The company had also been paying taxes assessed based on estimates. The client acknowledged the company’s incomplete records, its messiness likely caused errors in the returns submitted to the statutory agencies and the excessive tax assessments the company paid.
As we embarked on this engagement, we recorded our observations and had several discussions with the company director explaining the milestone findings, proposed approach to resolving the issues and sought approvals of the same.
We were appreciative of the client’s reciprocate co-operations, openness in discussing the observations and retrievals of numerous historical records to facilitate our work for the eventual resolutions of the impasse.
As the saying goes - it takes two to tango, we managed to progressively assist the company in recovering the excessive taxes, the director no longer faces the prosecution pressures from ACRA and in the course, the tax authories also abated certain penalties.
The company director / manager remarked our tenacity, diligence and professionalism as commendable. The manager asked if there is any meaning underlined our logo, we said - a professional hands-on approach in fitting the pieces together, and with tenacity.
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