Inspections of corporate tax (Impuesto de Sociedades) usually have underlying accounting issues. And it is here where the relevant question arises of whether an audit report could free a director or CEO from liability due to the accounting errors warned of therein.
Unfortunately the Spanish Tax Agency has not been accepting that these reports could avoid the imposition of penalties, and this despite the fact that it has been confirmed by an auditor that the annual accounts of a company reflect its true status. That is, if a company subjects itself to a regulated audit procedure, duly complying with its corporate obligations, this does not have any effect on a director’s tax liability due to accounting matters.
Nevertheless, court decisions are beginning to be seen which are favourable to the interested parties, in which the audit report is taken into account in order to weigh whether or not a director has acted negligently. Our opinion is that this criterion is more in line with the reality of the business, as the audit report, among other matters, is there to detect possible errors in the accounting and financial policy of the company, and the governing body, after all, places its trust in the correct content of the audit report.