What happens during a tax audit in France? Part 2: the recovery of adjusted taxes as seen by a French tax lawyer.

At the end of the tax audit phase, after presenting its observations to the auditing department and, where applicable, exercising hierarchical appeals and examining the case by the relevant tax commission, the administration will decide whether to maintain all or part of the adjustments initially envisaged, or to abandon them.

If all or part of the tax is maintained, tax notices for income tax and/or notices of assessment (AMR) for corporation tax and VAT will be issued, making the sums payable.

You need to be very attentive and responsive as soon as these notices are received, because the sums are in principle due immediately and the French tax authorities, in the absence of a rapid response, can very quickly take steps to enforce tax collection (seizure of bank accounts, wages, etc.).

It is therefore essential not to wait and to take the appropriate steps to avoid finding yourself in a very delicate situation.

At this stage, the file is transferred from the auditing department to the department responsible for collection, within the Individual Income Tax Department (SIP), the Corporate Income Tax Department (SIE) or the Specialised Collection Unit for debts considered to be "at risk" for the Treasury's interests or for which the amounts are significant (PRS)
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During this phase, your contacts will no longer be the same as those who carried out the audit.

If you have preferred to manage the audit on your own up to this point, you can contact a French tax lawyer, a professional qualified in tax law, to help you analyse and manage the situation, the impact of which can be particularly significant.

This analysis must be objective.

Either the tax authorities have made justified and reasoned adjustments in accordance with the correct procedure, and a request for a settlement relating to the penalties, or a request for a tax rebate, may be considered.

The legal consequences of each of these approaches are not identical, as a settlement necessarily implies that the taxpayer waives any right to challenge the tax resulting from the tax audit.

Where appropriate, a settlement plan may be negotiated to spread the payment of the tax debt.

If, following advice from your tax lawyer, it appears that the tax assessments are partly exaggerated, or even completely questionable, and that there are legal arguments against the tax authorities' approach, it is then possible to move on to the litigation phase, which consists of requesting a total or partial discharge of the tax claimed following the tax audit.

CM-Tax, a firm of French tax lawyers set up in 2007, based in Lyon and Marseille and operating throughout France, can help you through this delicate phase.