Mistake in tax return results in additional tax assessment being levied

The Tax and Customs Administration is authorised to raise additional income tax assessments where it had previously mistakenly charged taxpayers with too little income tax or no income tax at all, albeit that the taxpayer(s) in question should (be able to) appreciate that a mistake had previously been made, which statutorily is deemed to be the case where there is a 30% discrepancy or greater between the tax that was actually charged and the tax that should have been charged. There is no leeway for levying additional tax assessments where it was the inspector of taxes’ own erroneous interpretation of the facts or the law which caused too little tax being levied in the first place.

A taxpayer filed an incorrect income tax return owing to his tax consultant inadvertently mixing up its client’s fiscal and commercial balance sheets, resulting in the goodwill as per the commercial balance sheet being erroneously used for fiscal amortisation so that too little profit ended up being accounted for. The Tax and Customs Administration proceeded with the automatic finalisation of the tax assessments – without these undergoing substantial assessment by the inspector of taxes – in line with the underlying tax returns. As the assessment had thus turned out too low for reasons other than the inspector of taxes’ own erroneous interpretation of the facts or the law, this left the tax service at liberty to levy an additional tax assessment.

Dutch version: Navordering door fout in aangifte