A letter from IRAS announcing a GST audit is stressful, but it is not an accusation. IRAS selects businesses using a risk-based approach, and being chosen does not necessarily mean a mistake was made. What matters is that you respond promptly and have organised records.

This article summarises how IRAS describes its GST audit process, what the auditors will ask for, and what a business should do before and during the review.

What a GST audit checks

An audit verifies that GST has been properly accounted for in your transactions and that the information in your GST returns is correct. IRAS looks at whether supplies are classified correctly, whether GST was properly charged, whether input tax was claimed correctly, and whether the values of supplies, purchases and taxes reported are complete.

The programme has three stated purposes: to ensure returns comply with the tax laws, to educate businesses and help them comply, and to identify rules and processes IRAS can simplify or clarify.

How the audit is conducted

An audit can be run by email, letter and telephone interview. IRAS may also visit your premises or ask to meet key personnel. For a field visit, the officer carries an authority pass issued by IRAS. If you need to confirm the officer’s identity, call IRAS on the numbers published on its website before allowing access.

Under section 84 of the Goods and Services Tax Act 1993, the Comptroller can require information, documents, computers, programmes and software. IRAS may also seek confirmation from your customers, suppliers or banks that the transactions you reported are genuine, and may ask you to demonstrate how you record transactions in your system.

What IRAS will ask you to provide

  • Information on your business, including arrangements and how it runs.
  • Sales and purchases listings to verify the figures in your returns.
  • Supporting documents such as invoices and export documents.
  • Completed self-review checklists, for example for pre-registration input tax claims or bad debt relief.

Listings must be supplied in an accepted file format such as a delimited text file. Sales listings should show invoice amounts excluding GST and, where relevant, the destination of goods. Purchases listings should include the supplier’s GST registration number and the invoice amount excluding GST. If you use accounting software that can export these listings, test the export before an audit is announced. Our note on InvoiceNow and e-invoicing explains how structured invoice data helps.

Your obligations during the audit

IRAS expects you to give full access to premises, records and documents, provide a working space for the auditors, allow interviews with operational staff, allow copies or extracts of records, give timely, complete and accurate replies, and be truthful. Full disclosure of irregularities should be made as early as possible.

Section 66 of the GST Act makes it an offence to obstruct or hinder the Comptroller or any officer. IRAS states that the penalty is a fine of up to S$10,000 and/or imprisonment.

How long it takes

Most GST audits are completed within 12 months. The timeline depends on the complexity of your affairs and on the cooperation of your business and your tax representatives. IRAS notifies you of the outcome in writing.

Outcomes and penalties

An audit can lead to assessments that adjust reported values, and penalties may be imposed on additional tax payable. IRAS says the letter will explain the reasons for any penalty and the issues to watch. Businesses may be penalised up to 200% of the tax undercharged or over-claimed for submitting incorrect returns, and may face a fine and imprisonment. Fraud is dealt with more severely. A 10% surcharge applies to input tax claimed on supplies that formed part of a missing trader fraud arrangement where the business should have known. If you disagree with the assessment, you may file an objection.

Before an audit: reduce the risk

  1. Reconcile GST returns to the general ledger every period.
  2. Keep tax invoices, import permits and export evidence in an organised file.
  3. Review input tax claims on entertainment, motor vehicles and pre-registration purchases.
  4. Use the GST Assisted Self-Help Kit to self-review, and correct errors voluntarily under the Voluntary Disclosure Programme.
  5. Consider whether a governance scheme such as ACAP suits your business.
  6. Keep records for the required period, as explained in our guide to record retention.

Frequently asked questions

Does being audited mean we did something wrong?

No. IRAS says that audits are conducted on a risk-based approach and that being selected does not necessarily mean a mistake was made. It also says it does not assume a selected business has made errors.

Can we disclose an error during the audit?

IRAS asks for full disclosure of irregularities at the earliest possible time. Voluntary disclosure rules affect penalty treatment, so take advice on timing and on what is directly related to the audit scope.

What records will IRAS ask for first?

Expect sales and purchases listings, tax invoices, export documents and any self-review checklists, together with explanations of your accounting process. Keep these reconciled to the returns.

Can IRAS contact our customers and suppliers?

Yes. IRAS may seek confirmation from customers, suppliers or banks to check that reported transactions are genuine, so tell your key contacts if you expect a request.

What if we disagree with the outcome?

You can file an objection against the assessment. Use the written explanation of the adjustments and penalty to decide whether an objection is worth pursuing, and take advice before the deadline in the notice.

How can we prepare quarter by quarter?

At each GST period end, reconcile the return to the ledger, review unusual input tax claims, confirm zero-rating evidence for exports, and file the supporting listings in a dated folder. A short monthly review costs far less than rebuilding records after an audit letter arrives.

If a letter arrives

Note the response date, identify one person to coordinate replies, collect the requested listings and documents, and review them for errors before sending. If you discover an error, take advice on disclosure before you reply. If you need legal advice on an assessment or objection, we can point you in the right direction. Raffles Corporate Services can help prepare listings and reconcile returns. The official page is on the IRAS website.

To speak with the team at Raffles Corporate Services, you can email [email protected] or call, SMS, or WhatsApp +65 8501 7133. We are happy to assist with any queries.

The Editorial Team, Raffles Corporate Services