Discretionary assessment – when Skatteetaten sets the figures for you
A discretionary assessment means the authorities have set all or part of the tax base themselves because they lacked sufficient information. It does not mean Skatteetaten can freely pick a high figure – the assessment has to be set at what appears to be correct.
When can Skatteetaten use its discretion?
A discretionary assessment (skjønnsfastsetting) can arise where the tax return or VAT return has not been filed, where the accounts or the information filed are so seriously deficient that they give no sound basis, where the gross margin differs substantially from what would be expected without a satisfactory explanation, or where the income declared bears no reasonable relation to likely private consumption or to the growth in wealth. The last of those are indications, not automatic proof that the accounts are wrong. Skatteetaten has to make a specific assessment. A discretionary assessment can also cover only certain items, where the rest of the return still provides a sound basis.
How does Skatteetaten arrive at the amount?
The purpose is not to punish the business through the assessment itself. The Tax Administration Act says the assessment must be set at what appears to be correct. Skatteetaten therefore has to weigh information from earlier filings, the accounts and bank data, information from third parties, audit material, the business's own explanations, and comparative figures where relevant.
Was it the VAT return or the tax return that was missing?
If Skatteetaten has assessed VAT because the business did not file its VAT return, Skatteetaten says you should not start with an ordinary letter of appeal. You should file the missing VAT return with the correct figures instead. Skatteetaten then treats that return as an appeal against the assessment. If the business files its tax return after Skatteetaten has given notice of a discretionary assessment but before the decision is made, it can be treated as a late self-assessment. Where the decision has already been made, read the decision and its appeal guidance carefully.
What if Skatteetaten has set the accounts aside?
Then start by finding out why. It may be missing turnover, inadequate documentation, large differences between the bank and the accounts, missing stock counts, an implausible gross margin, or unexplained private deposits or withdrawals. The business should then document the specific points the assessment rests on. In some cases it may be necessary to reconstruct all or part of the accounts. In others, one documented error in Skatteetaten's assumptions can be enough to affect the assessment.
How long do you have to appeal?
The general rule is six weeks from the date the decision reached you. The appeal should make clear which decision you are appealing, which parts of the assessment you believe are wrong, what figures you say are correct, why Skatteetaten's assumptions or calculation are wrong, and what documentation supports that. If the appeal deadline has passed, Skatteetaten can in some cases still take the appeal. An appeal cannot, however, be handled as an ordinary appeal case once more than a year has passed since the decision was made.
How far back can Skatteetaten go?
The general rule is that a tax assessment can be reopened within five years of the end of the tax period. In certain more serious cases a ten-year limit applies – among others where aggravated additional tax is imposed or the case is reported for particular forms of tax fraud. The ten-year limit also applies to cases meeting the conditions for voluntary disclosure.
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This is general guidance, not advice on your specific case. Deadlines, rates and amounts change – always check the current rules, or get in touch with us.
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