Benchmarking tools and database cross-checks are strengthening the tax authorities’ audit activity. The taxpayer’s safeguards remain in place, however: reasoned grounds, evidence and the right to be heard.
The development of risk analysis tools allows the tax administration to compare an individual taxpayer’s data with that of comparable taxpayers and with the information held in the tax databases. It is an aid to selecting cases, not evidence in itself.
The results of an automated cross-check are, as a rule, circumstantial evidence that must be turned into a reasoned challenge backed by supporting findings. Statistical divergences and sector averages cannot, on their own, sustain a tax claim without an analysis of the actual position.
The contraddittorio preventivo (the taxpayer’s right to be heard before assessment), the duty to state reasons and the right of access to the material relied upon all remain central. The defence is built early: by documenting what is specific about your own business and by demanding an account of the data used as the basis for the comparison.