All citizens are called to collaborate with the various tax administrations, in the terms regulated by law. The primary source of this obligation is article 31.1 CE. The constitutional precept demarcated two must citizens who pursue the purpose of covering public spending. For this purpose, article 31.1 CE establishes an ethical reason: to contribute to the financing of the expense. For this, it enables an instrumental reason: to collaborate with the Treasury in the collection of taxes although, for some taxpayers, “collaborating” has the perception of “atonement” for their faults.
The main obligation of the taxpayer is to pay the tax debt. The economic cost of such a duty is of a direct nature. But, as indicated above, the law also requires the taxpayer to collaborate with the tax administrations. And said subsidiary also entails economic expenses, on this occasion of an indirect nature. In turn, we can evaluate the indirect costs in a disaggregated way. One can speak of consequential damage and loss of profit.
The paradigm that best reflects indirect fiscal costs is the inspection procedure. Attending -without the risk of the corresponding imposition of sanctions for the lack of collaboration with the Public Treasury- inspection actions causes a negative impact on the pocket of individuals and on the income statement of companies. The fundamental chapters of consequential Damage are derived from the Transfer to the Inspection medicines, the hiring of Extended Professionals to the Domestic or Industrial Organization (tax advisors, experts…), and the legal reports that support the correct Legal interpretation Followed by the taxpayer. The range of lost profits -opportunity costs- has a broader landscape than the more valued items of consequential damage. From the temporary abandonment of the management of the company to the field of personal leisure of the taxpayer, such as being in the arms of a beautiful woman or man or watching the humiliating defeat of the rival club on TV.
The circumstances described justify that time is not an available and unrestricted factor for the Inspection, although many times the law is the doormat that the “Gorilla” brand boots worn by actuaries step on. Currently, the General Tax Law-LGT (article 150) limits (that is to say) the duration of verification actions, in general, to a period of 18 months. With two exceptions: (I) When the annual turnover of the taxpayer exceeds that required to audit his accounts. (II) When the taxpayer is part of a group subject to the tax consolidation regime or is subject to the special regime of group of entities. In my opinion, this regulation – in force since October 12, 2015 – alters, for the benefit of the Administration, the principle of proportionality that should color the tax relationship. The “long time” grants greater powers to the Inspection to the detriment of the legitimate interests of the taxpayer. But what do the Inspection and its friend the legislator care about the general principles of Law, such as proportionality and equality of legal arms?
Previously –from July 1, 2004 to October 11, 2015- there was a greater balance between the parties. The maximum period of duration of the tax investigation could not exceed, in general, 12 months. In two exceptional cases, the #Inspection could extend its actions up to the maximum limit of 12 additional months. The exceptions were: (I) When the inquiries were particularly complex. (II) When, in the course of the proceedings, the officials discovered that the taxpayer had hidden some of his economic activities from the Administration.
The original version of article 150 LGT – in force, as we have seen, from July 1, 2004 to October 11, 2015 – contained a safeguard clause for the interests of the Inspectorate. In such a way that, for the purposes of calculating the duration of the proceedings, the delay in the procedure for reasons not attributable to the Administration were not computed. Consequently, the only negative effects for the Administration would be the unjustified interruption of the inspection procedure for omitting any action for more than six months for reasons not attributable to the taxpayer.
The reform operated by Law 34/2015 (with effect until July 10, 2021) repealed the outstanding chapters. In its place, the new Law provided that the taxpayer could request, before the opening of the hearing process, one or several periods in which the Inspection would not be authorized to carry out actions. The sum of these additional periods could not exceed 60 calendar days for the entire procedure and would mean an extension of the maximum duration of the procedure. On the other hand, when the taxpayer states, in the development of the procedure, that he did not have or was not going to provide the information or documentation required, or did not provide it in its entirety within the period granted in the third requirement, his subsequent contribution would determine the extension of the maximum period of duration of the procedure for a period of three months (or six, when the contribution is made after the formalization of the minutes).
The Law currently in force (Law 34/2015) has not altered, in substance, the regulation of the duration periods of the inspection procedure.
As we have just seen, the maximum duration of the inspection actions is closely linked to the lack of timely contribution, by the inspected party, of the documentation required by the officials in charge of verifying and regularizing, where appropriate, their fiscal situation. The golden rule could be defined as follows: the longer the required documentary contribution is delayed, the longer the inspection procedure lasts. It’s not a bad definition. What does suffer from technical rigor is the mechanistic interpretation of the golden rule by the Inspection Department of the Tax Agency.
It was June 8, 2015 when the company “El Plátano Amarillo, SL” received a communication from the Canary Islands Regional Inspection Unit related to Corporation Tax (IS). It was the initial day of the inspection procedure for the years 2010 and 2011, the Inspection converted the agreement to extend the term from 12 to 24 months. It was June 2, 2016 and almost 11 months had passed since the beginning of the inspection procedure. Finally, and after the signing of a non-conformity certificate, the Inspection carried out, on January 18, 2017, settlement agreement for a global import of 217,186.93 euros (quota of 174,266.39 euros; surcharge of 2,951.86 euros ; and default interest for an amount of 39,968.68 euros). As if that were not enough, the Canary Islands tax inspection opened a procedure
penalty against “El Plátano Amarillo, SL”, which resulted, for the commission of very serious infractions, two sanctions of 125% whose imports amounted to 107,396.48 euros and 110,436 euros.
The replacement resources of “El Plátano Amarillo, SL”
Dissatisfied with the extension of the duration of the inspection procedure, “El Plátano Amarillo, SL” went to the Central Economic-Administrative Court (TEAC) on May 6, 2020. To do this, he had to wait until the settlements were completed and notified, since the agreement to extend the proceedings is not subject to review and can only be challenged together with the administrative settlements. According to the company, the extension agreement was a frivolity detrimental to its interests, because the Inspectorate already had all the necessary documentation to liquidate the IS. The Tax Administration had already carried out all the necessary actions. Proof of what was said was that, at the time the temporary extension agreement was changed, the hearing process and disclosure of the file was already underway.
The First Chamber of the TEAC, by resolution of December 19, 2022, has upheld the appeal of “El Platano Amarillo, SL”. Here is the dart at the heart of the Tax Inspection: “…this TEAC considers that the Inspection, although for each delay it will determine the correct documentation that was missing to be provided, however it did not reason the reasons why the non-contribution or delay in its contribution had an impact on the normal development of the inspection activity…”.
And also (on the cause-effect relationship): “There is no explanation at what point the lack of requested contribution spoiled, hindered or delayed the progress of the procedure.” The TEAC’s slap goes straight to the jaw of the Inspectorate: its officials are obliged to sufficiently motivate their agreements to temporarily extend the verification actions.
In the event of annulment of the agreement to extend the actions, the Inspectorate runs the risk of seeing its right “to determine the tax debt through timely liquidation” (article 66.a) LGT). This is what has happened in this case. As the inspection procedure began on June 8, 2015 and its declaration of nullity by the TEAC has enervated the interruptive nature of the prescription of the initial administrative communication, “El Plátano Amarillo, SL” is already out of the danger time of four years, computed (Article 67.1 LGT) “from the day following the day on which the regulatory period for submitting the corresponding return or self-assessment ends.” The term to self-assess the 2010 IS ended on July 25, 2011. Naturally, the fall from grace of the assessments drags the sanctions to nothing.
Failure to comply with the duration of the procedure does not determine its expiration (article 150.6 LGT). But, as the actions carried out by the Inspection in the procedure do not interrupt the prescription, the loss by the hunter-inspector of the piece that he wanted to shoot would lead him to a state of frustration with no possible leniency. Hunger. There is a lot of unsatisfied hunger among the Administration’s fangs.