Quick answer: After receiving an LHDN tax-audit notice, verify that it is genuine, record the response deadline, identify the years and issues covered, appoint one response coordinator and preserve all relevant records. Do not send an incomplete bundle before reconciling it to the tax return, audited accounts and tax computation.
First 24 hours: secure the process
- Verify the notice. Check the taxpayer name, tax number, assessment years, LHDN office and officer contact details.
- Record every deadline. Use the date and submission channel stated in the notice.
- Appoint one coordinator. Route communications through a finance or tax lead.
- Preserve records. Retain emails, invoices, contracts, ledgers and working papers connected to the scope.
- Notify the right people. Involve management, finance, payroll and advisers only as needed.
Understand the type and scope of review
The current Tax Audit Framework on Income Tax and Employer uses the terms general review and comprehensive review. A general review normally targets selected items in the income tax return or employer records. It may expand to a comprehensive review, which can examine the full business records and may include interviews at the taxpayer’s premises, an LHDN office, online or another agreed place.
Do not assume a request is limited to the first document list. If the records are incomplete or inconsistent, LHDN may issue further enquiries or arrange an audit visit.
Build a controlled response file
| Workstream | Immediate action |
|---|---|
| Notice tracker | List each question, requested item, owner, deadline and status |
| Financial reconciliation | Tie the return and tax computation to audited accounts and the trial balance |
| Supporting records | Collect contracts, invoices, receipts, schedules and calculations |
| Issue analysis | Identify errors, judgement areas, incentives, related parties and unusual movements |
| Submission pack | Index, label and review every file before sending it through the official channel |
How should you communicate with LHDN?
Respond accurately, professionally and within the stated deadline. If a requested item does not exist or requires clarification, explain the position promptly rather than ignoring it. Keep a written record of calls, meetings, files submitted and acknowledgements received.
Avoid speculation. The response should distinguish facts, accounting treatment and the company’s legal or technical position. Where a correction may be required, quantify it carefully and obtain advice before making a voluntary disclosure.
Common mistakes after receiving a notice
- Sending documents that do not reconcile with the filed return;
- Allowing different employees to give inconsistent explanations;
- Creating backdated agreements or unsupported schedules;
- Missing a deadline while waiting for a perfect response;
- Assuming an audit selection means LHDN has already found wrongdoing; and
- Failing to protect the separate deadline for an appeal against an assessment.
When should professional help be involved?
Seek support early where the notice covers multiple years, tax incentives, transfer pricing, major deductions, employer obligations or a possible assessment. HTL’s LHDN tax-audit support can help control the response, while the corporate tax-audit document checklist identifies the usual records to prepare.
This article provides general information and is not a substitute for advice on a specific LHDN notice or assessment.
