Death and taxes

As Ben Franklin said "In this world nothing is certain but death and taxes". Well I appear to have at least delayed the first so it's only fair that I should get pretty hard by the second.

As I've mentioned here before the French tax authorities decided to audit me at this rather inconvenient time in my life. I can't think of exactly when a tax audit would be convenient but this period of my life definitely qualifies as inconvenient and some may consider that a more than slight understatement.

They actually started the audit on the day of my second surgery back in September. I had sent all of my files to my accountant and she held the audit in her offices. They spent quite some time going over my accounts desperately looking for some way to make some money out of this. My accounts are actually ridiculously accurate. They laughed when they saw such things as a VAT declaration for 2 euros, along with the accompanying payment, when most companies would simply have adjusted one of their incoming cheques and applied it to the following month. They couldn't believe when I had maintained a 0.10 € balance from a client who had under paid me by that amount and never paid me since. But they still kept looking. They had to find something.

Then the international discrepancies kicked in. In France every business transaction requires an invoice. Every invoice in France must be contain a minimum of certain information (a unique number, the date, the name of the client and the name of the supplier, the business identification numbers, ...). In many other countries invoices are not obligatory. With the Internet and online business transactions this is becoming more and more the rule rather than the exception. I would say that about 80 to 85% of my business is conducted over the Internet. Most of my purchases, either for my company directly or for my clients indirectly, is carried out over the Internet. In many cases I do not ever receive an invoice or even an online version that I can print. The auditors found that for 2 of my suppliers from whom I purchase quite regularly (my Internet hosting company and my online fax supplier) I didn't have any invoices. They therefore took all of the amounts paid to those companies and declared them as personal expenses thereby reducing my company's profit and increasing my personal income. I therefore would end up paying slightly less in professional tax and quite a lot more in personal revenue taxes. Luckily when they sent the results of their audit I had a month to appeal. Luckily, again, the results came out when I was in a fit state to be able to do something about it. I contacted my suppliers and begged them to provide me with invoices. They sent me online versions for the years in question (2002 through 2004) and I printed them all out and sent them off to the auditors (about 300 pages). This greatly reduced the situation for 2002 and 2003. However there remains quite a lot of other suppliers for 2004 from whom I could not get invoices and they're hitting me with a whopping 5,600 € tax recall for just that one year by adding on the extra amount and then adding on an additional 40% in late charges. I filed late partly because I was in the hospital fighting cancer. This is apparently not taken in to consideration. Business is business.

All of this came to a head at the same time as the other tax authorities came after me for back professional taxes. I hadn't paid my 2004 professional tax partly out of laziness, partly out of a lack of funds and, only ever so slightly, partly because of my health problems which occurred way after the amounts were already overdue. The tax authorities therefore tried to get the money from my company bank account. That didn't work as it was overdrawn already. They therefore went after my personal account. That also was overdrawn (as usual). They then went to the last account that is (partially) in my name and which is never overdrawn. This last item is due to the fact that I do not manage that account and simply follow the instructions of she who does manage the account: "she who must be obeyed". They took the money out of our joint account. I therefore now was angry myself as they took the money long before actually sending out any notification. However I also therefore had to deal with a force much worse than the tax authorities... she was not pleased (and rightfully so).

I spent a good portion of Saturday yelling at my accountant for letting this happen. The tax papers and notification of the fact that they were going to take the money out of the accounts had been sent to her and she hadn't told me. She said that she didn't want to bother me with such matters at this time when my thoughts should be elsewhere. I then yelled back at her, to the best of my ability which is unfortunately rather embarrassingly weak, that it wasn't up to her to make that decision especially when it's costing me money. We went back and forth and finally we agreed that I would deduct all of the bank charges and tax charges from this transaction from her fees. I then went to our joint bank with a cheque from my company account and paid off the amount which had been deducted.

All of this may sound like I'm complaining about our tax system... I'm not. I am one of the rare French residents who actually quite approves of both the tax system and the social system and the ridiculous amount of money we pay in both taxes and social charges. I personally find what we get back from both of those systems is incomparable and invaluable. Although I've felt this way for almost 2 decades now I am living proof.

I'll be negotiating a payment plan to pay off my personal taxes. But belts will be worn tighter this spring, summer, fall, winter and for a while afterwards...

An interesting side remark: none of my clothes fit me any more. Everything is loose and baggy on me. I am on the last hole on all of my belts. On my "business belt" this still isn't enough and my "nice trousers" tend to actually slip down when I walk around. I didn't buy new clothes in the sales as I don't know if I'm actually going to be able to maintain this amazingly thin and light size. In many ways I would like to while in other ways I would prefer not to. For the moment I am no longer losing weight. But I'm not gaining much weight either.