Tax Consultants in Dubai | UAE Tax Accounting Agents
Received an FTA Notice in the UAE? Here’s What Your Business Should Do Next
Receiving a notification from the Federal Tax Authority (FTA) can leave a business owner wondering what went wrong and what needs to happen next. You may need to check your VAT return, review your Corporate Tax records, or provide additional documents.
In such situations, it is easy to rush into preparing a reply. However, responding before understanding the issue can create more confusion, especially when the explanation is based on incomplete records
For businesses in the UAE, handling an FTA notice properly means understanding what is being requested, gathering the right documents, and following the applicable procedure. This guide explains how to approach the process in a practical and organised way
Why Might Your Business Receive an FTA Notice?
There is no single reason why a business receives an FTA notification. The next steps depend on the issue mentioned in the communication.
Here are a few situations that may require your attention.
1. Differences in VAT records
The figures reported in a VAT return may need to be checked against sales invoices, purchase records, credit notes, and accounting entries. A difference does not automatically establish that an error has occurred, but it should be investigated.
2. Corporate Tax compliance requirements
Your business may need to review its registration details, tax filings, or other applicable Corporate Tax obligations.
3. Missing information or supporting documents
The FTA may ask for additional details to understand a transaction or verify information submitted earlier.
4. Outstanding tax amounts
If an amount appears as payable in your tax account, review the relevant liability and payment records to understand the position.
5. Business or tax registration matters
A notification may concern registration information, changes to business details, or a related application.
These are possible situations rather than a complete list. The most important thing is to understand the reason stated in your own notice instead of assuming that the issue relates to a tax error.
What Should You Check Before Responding to an FTA Notice?
Before drafting your reply, take time to review the following points. A little preparation can help you avoid unnecessary back-and-forth and make your response clearer.
1. Make Sure the Notice Is Genuine
Start by checking whether the communication is authentic. Review your official EmaraTax account and use the FTA’s official website, tax.gov.ae, to verify relevant information.
Be careful with unexpected emails, payment links, and attachments. Do not share sensitive business information or make payments based solely on an unverified message.
2. Read the Notice Carefully
It may sound obvious, but businesses sometimes focus on the subject line and miss important details in the actual communication.
Check the reference number, business name, Tax Registration Number (TRN), relevant tax period, and date of issue, where applicable.
Then identify exactly what the FTA wants from you. Is it an explanation, supporting documents, clarification of reported figures, or action relating to a formal decision?
Understanding this distinction will help you decide what to review next.
3. Note the Applicable Deadline
Once you understand the request, identify the relevant deadline.
Do not assume that every FTA communication has the same response period. The applicable time limit depends on the type of matter and the relevant requirements.
It is also helpful to set an internal deadline a few days earlier. This gives your team time to collect missing documents, review calculations, and obtain approval before submission.
4. Check What Your Business Originally Submitted
Before preparing an explanation, retrieve the original tax return, registration application, or other relevant submission.
Use the records available through the appropriate official channels rather than relying on an old draft or someone’s memory.
For example, if the notice concerns a VAT return for a particular quarter, start with the return actually filed for that period. This gives you a reliable basis for comparing the reported figures with the accounting records.
5. Compare Your Tax Figures With Your Accounting Records
This is an important step, particularly when the notice concerns a difference in reported amounts.
Depending on the issue, you may need to review:
- Sales and purchase invoices.
- Credit notes and transaction records.
- General ledger entries.
- Trial balances and relevant accounting reports.
- Bank statements and tax payment confirmations.
- Reconciliation statements for the relevant period.
Consider a business that discovers a difference between its sales records and the figures reported in its VAT return. Instead of immediately preparing an explanation, the finance team should trace the relevant transactions, check the accounting entries, and establish the reason for the difference.
The aim is to understand what happened before deciding what needs to be communicated to the FTA.
6. Prepare an Explanation Supported by Evidence
Once you have reviewed the records, document your findings.
If a discrepancy exists, identify the amount involved, the relevant transactions, and the supporting evidence. If your figures agree, retain the calculations and records that demonstrate your review.
Avoid making assumptions or including statements that cannot be supported by the available information.
A clear explanation supported by relevant records is more useful than a lengthy reply that does not directly answer the questions raised.
7. Keep All Documents in One Place
Create a separate folder for the notice and save the relevant documents together.
Include the original communication, tax filings, accounting records, calculations, supporting evidence, final response, and submission confirmation.
Keeping everything organised makes it easier to track the matter and respond if further clarification is requested.
Which Documents May Be Required?
The documents you need will depend on the issue raised in the notice. However, the following records may be relevant to your review.
| Document | Why It May Be Useful |
|---|---|
| VAT or Corporate Tax Return | To verify the information originally submitted. |
| Tax Registration Certificate | To confirm relevant registration details. |
| Sales and Purchase Invoices | To support the transactions under review. |
| Credit Notes and Receipts | To explain adjustments or recorded transactions. |
| General Ledger and Trial Balance | To examine the accounting entries. |
| Bank Statements and Payment Confirmations | To review relevant payments and balances. |
| Reconciliation Worksheets | To compare tax-return figures with accounting records. |
| Contracts or Shipping Documents | To provide context for specific business transactions. |
You do not necessarily need to submit every document listed above. Select the records that directly address the requirements in your notice and follow the applicable submission instructions.
Common Mistakes to Avoid
Even when a business has the right information, a poorly organised response can make the process more difficult.
Here are some mistakes worth avoiding.
Replying in a hurry: Sending an explanation before reviewing the original records may lead to incorrect or incomplete information.
Ignoring the deadline: Delaying the review can leave insufficient time to gather documents or obtain professional advice.
Sending unrelated documents: Attachments should support the explanation rather than make the issue harder to understand.
Overlooking accounting differences: If figures do not match, investigate the reason instead of assuming that the difference is insignificant.
Agreeing with an amount without checking it: Review the underlying calculation and records before accepting a disputed liability.
Treating every notice as the same type of matter: An information request may require a different response from a formal assessment or penalty decision.
Taking time to review these points can help your business approach the matter more carefully.
What If You Disagree With an FTA Decision?
Sometimes, a business may believe that a formal tax decision does not accurately reflect its circumstances or supporting records.
In such cases, it is important to understand the difference between replying to an inquiry and challenging an official decision.
The FTA provides a formal Reconsideration Request service for eligible decisions. Depending on the circumstances and applicable legal requirements, further proceedings may also be available through the Tax Disputes Resolution Committee (TDRC).
Before taking action, review the decision, identify the grounds for disagreement, collect relevant evidence, and confirm the applicable procedure and deadline.
You can consult the official FTA Reconsideration Request service and the UAE Government’s tax dispute resolution guidance.
If the matter involves a substantial amount, a formal penalty, or a complicated tax position, consider seeking advice from a qualified tax professional. The correct approach depends on the facts of the case and the rules that apply.
How IRHATAX Can Help Your Business
Managing an FTA notice can require more than preparing a written response. Businesses also need accurate accounting records, reliable tax calculations, and supporting documents that explain the transactions involved.
IRHATAX supports UAE businesses with accounting and tax-related services, including:
- VAT compliance and advisory: Reviewing relevant VAT records and transactions.
- Corporate Tax support: Assisting with applicable compliance requirements and tax-return preparation.
- Bookkeeping and accounting: Helping businesses maintain organised financial records.
- Historical record reviews: Examining previous filings and accounting entries for potential inconsistencies.
- Tax documentation support: Helping organise relevant documents and prepare supporting explanations.
The type of assistance required will depend on your business’s circumstances and the issue raised by the FTA.
If you need support with your accounting or tax compliance requirements, visit irhatax.com to learn more about IRHATAX’s services.
Frequently Asked Questions
What is the first thing I should do after receiving an FTA notice?
Read the notice carefully, verify its authenticity, and identify the issue and applicable deadline. Then retrieve the relevant tax filings and accounting records before preparing your response.
Does receiving an FTA notice mean my business has made a mistake?
Does receiving an FTA notice mean my business has made a mistake?
What should I do if my accounting records do not match my tax return?
Review the relevant transactions and accounting entries to identify the reason for the difference. Document your findings and seek professional advice if the discrepancy involves a complex tax issue.
Can I challenge an FTA assessment or penalty?
Certain official decisions may be challenged through the procedures provided under UAE tax legislation. Eligibility, required documents, and deadlines should be verified through the official FTA guidance.
Should I consult a tax professional?
Professional assistance can be particularly helpful when the notice involves a significant liability, a formal decision, complex transactions, or accounting records that do not reconcile.
How long do I have to respond to an FTA notice?
There is no single deadline that applies to every type of communication. Check the notice and the applicable official requirements promptly.
