At Collins Barrow, we strive to bring extra value to our clients. To that end, we can provide an indirect sales tax overpayment and exposure analysis. This is a specialty tax service above and beyond the thorough general audit process typically provided.
Our Indirect sales tax practice has extensive experience with GST/HST and provincial sales taxes at the recovery and advisory level. We practice exclusively in identifying potential refunds and exposures for a number of market segments that process Canadian sales taxes, including public service bodies. Conducting this sales tax analysis provides the ability to dig well beyond the normal audit process and ensures our clients realize all refund opportunities and address any potential exposures.
Typically, federal and provincial sales taxes are often overlooked in the face of competing priorities and perceived simplicity in processing. The recent significant multijurisdictional changes to these taxes in Quebec, British Columbia, Prince Edward Island and Nova Scotia (to name a few) can escalate an initial small exposure or refund into a substantial dollar amount. The potential problems can include miscalculated systemic adjustments, erroneous vendor invoices, misinterpretation of legislation, and missed ITCs or RITCs.
Now is an opportune time to consider this analysis, in light of the recent increased audit activity in all sectors by the Canada Revenue Agency and PST authorities. As calendar/quarterly reporting and audits are quite often completed in early summer, July through September is an ideal time to consider this specialty service and implement an additional process of checks and balances.
A typical engagement outline would include these factors:
- Minimal time required by the finance staff during the engagement. Prior to arrival on site, we extract the raw data from your accounting ERP accounts payable system, enabling us to begin our in-depth electronic analysis off site, reducing the on-site time by 60%.
- Our Senior IT Manager assists in the extraction and has extensive experience in dealing with organizations ranging from multi-billion dollar public and private companies to mid-market clients to public sector bodies. We deal with systems ranging from SAP to QuickBooks to sector-specific systems.
- Once on site, we will need about an hour of the client’s time to discuss our preliminary findings and the location of the hardcopy accounts payable files. After that point, we work independently, interacting at structured intervals or at the end of each day. We pull and validate all files on our own.
- Within two weeks of completion of the engagement, we provide a complete Overpayment Report and separate Management Exposure Report outlining our findings.
- Post-engagement, we provide an ad hoc, no-fee indirect sales tax hotline for questions regarding GST/HST throughout the year.
Finally, we have implemented the contingency fee model to adapt to the market for this type of service, providing a win-win scenario to our clients; if no refunds are identified, there are no charges.
Contact your Collins Barrow advisor to discuss our indirect sales tax overpayment and exposure analysis services further.
Philip Tetlow is Senior Vice-President, Tax Services, practicing in the Toronto office of Collins Barrow.
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