We write to remind you about the captioned audit.
Please note that when the Inland Revenue Department (the “IRD”) issues the Profits Tax Return form to your company, you would be required to submit the completed Profits Tax Return to them together with a set of audited financial statements, and the relevant tax computation with supporting schedules, before a stipulated deadline. Failure to receive the Return form would not be an acceptable reason for not filing the Return on time.
Section 71(1) of the Inland Revenue Ordinance (Cap. 112) provides that tax charged under the provisions of this Ordinance shall be paid in the manner directed in the notice of assessment on or before a date specified in such notice. Any tax not so paid shall be deemed to be in default.
The Commissioner of Inland Revenue will initiate recovery actions [including imposition of 5% surcharge on the entire balance of the demand notice, issue of recovery notice to third party and initiation of legal action, etc] as authorized by Part XII of the Inland Revenue Ordinance for recovering the total outstanding amount.
In the unlikely event that the “IRD” has not issued the Profit Tax Return form to your company and you have indeed earned assessable profits, you are still required to inform the “IRD” within 4 months after the end of accounting period. Failure to meet this deadline would be subject to a fine of up to HK$10,000 or an additional tax not exceeding treble of the final tax liability that may be levied.
Apart from the IRD Ordinance, the directors of the company are further required, under the Company Ordinance Section 429, to lay before the company a set of audited financial statements at its annual general meeting which should be hold within 9 months after financial year ended date. If the director against the ordinance, he can be face penalties up to HK$300,000.
Due to above reasons, our company would like to suggest that your company would provide the require documents for the accounting and audit to us as soon as the year ended audit date. The year ended audit date is refer to the date which your company has submitted first time for the tax declaration. It would be best if your company would provide the require documents to us 2 months after the year ended audit date. (Eg: If the year ended date for the first time tax declaration is 2016-12-31, please provide the require documents to us in 2017 February or March).
Last but not least, we would like to remind you that according to the Company Ordinance Section 373, Every Company in Hong Kong shall keep sufficient in the English or Chinese language of his income and expenditure to enable the assessable profits of such trade, profession or business to be readily ascertained, and you should keep such records for a period of not less than 7 years after the completion of the transactions, acts or operations. If the director of Company couldn’t ensure the above ordinance is obeyed, the director will face penalties up to HK$300,000.