"NEWS of the June 21, 2016-assessment: sector studies the importance of the field further notes"

Posted by on Jun 21, 2016


In the process of building the model of communication of relevant data for the purpose of applying sector studies, special attention should be devoted to the "additional notes" field. In this space the taxpayer indicates the reasons why it considers that the specific industry study does not take into account the particularities of the activities carried out and which could lead to situations of non-consistency, inconsistency, or lead to the non-application of the study of the field. It should be noted that the compilation of the "additional notes" tab is mandatory in certain cases, while in other cases it is optional and is essentially a preview of the arguments that the taxpayer could spend in any subsequent adversarial stage pre-litigation with the IRS.

For example, taxpayers who are in a "period of non-ordinary course of business", it should be noted that this situation causes the non-application of the study of industry for the purpose of establishing albeit with obligation to build the model studies; Moreover, the instructions are "general part" to provide for compiling the "additional notes" tab in order to indicate the reasons which prevented the conduct of economic activity on a regular basis (Please note the novelty introduced for fiscal year 2015 for businesses in voluntary liquidation which, like most cases of cessation of business must not present the model sector studies).

Conversely, in cases where the compilation of the "additional notes" field represents the tool that the taxpayer uses to justify failure to comply with the findings of the study of industry or, more rarely, the inconsistency of a given index of economic normality, this build appears (albeit appropriate) a Faculty of the taxpayer, which may well defer these arguments the next time contradictory and assessment (if any). Finally, it should be noted that circulars that annually (usually in the months of June and July) are issued by the Inland Revenue in commenting on studies approved for each year provides guidance about the possible application in critical studies and that can be used to implement the "additional notes" field.  With reference to the corrective invoked for seizures, although aim to capture maximum detail (sector, individuality and territory), they have inevitably a generalized Valence and consequently there may be situations in which the taxpayer does not recognize itself in the analysis and resulting corrective actions have been applied. All, in fact, stressed that the trends are averages representing, even more than in previous years, business groups with a highly significant variability (so-called "turbulence"). Therefore, even more than in the past, report any anomalies, including with respect to the crisis situation in the "additional notes" field of the study model of which the tax authorities will have to take into account already when selecting the subjects that you want to audit.

The table below shows, in the form of schematic and without claiming to be exhaustive, some "justification" that were recognized by the same tax authority and of which certainly should be taken into account when compiling the "additional notes" field (these highlights, of course, are necessary only where the taxpayer will come up with a different situation from the fairness and consistency at least to believe, that it can be verified possible errors in the imputation of data that could lead to a different outcome of calculation; in that case it is considered advisable to highlight in the notes the specific situation of the taxpayer).

Practice Situation Arguments for "additional notes" tab
Paragraph 4

Circular 5/E of January 23, 2008

Positioning of the confidence interval

Taxpayers who are "naturally" inside the c.d. "confidence interval", must, taking into account the predicted probabilities, considered broadly in line with the results of field studies, as it is believed that the values falling within the predicted "range" have a high statistical probability to establish the revenue/fee founded attributable to an organisation acting in an activity with the characteristics required by the industry.

Press release of June 28, 2007 Malfunction Indicator

Availability of capital equipment costs

-Sale of capital assets during the year

-Relevance of accelerated depreciation

-Relevance of costs for leased assets

-Other (describe in free size)

Press release of June 28, 2007


Malfunction Indicator

Stock rotation or duration of stocks

-Consistent supply "properly documented" of items of inventory, run on occasion and/or in more advantageous market conditions (forecast of price increases of materials and/or discount campaigns promoted by suppliers etc.)

-Significant reduction of reference clientele

Press release of June 28, 2007


Malfunction Indicator

Value added per employee


·         Annual production cycle (ex: the enterprise did not realize the sale of the property under construction)

·         No structural or minimal presence of labour (eg: small property management)

·         Tax year of less than 12 months for which there is no information on the weight of the holder

·         Significant presence of apprentices

·         Compensation paid to managing partners and non-partners and detected in area studies framework model F staves than rigo F19 (expenses for employees)

·         Significant presence of commercial loan losses or capital losses not extraordinary

·         Number of days of paid leave and exposed under in the model industry studies (from the mod. DM10) mismatch with actual working days (ex: verifiable existence of days of maternity, sickness etc. with allowances paid by the employer)

Press release of June 28, 2007


Malfunction Indicator

Profitability of capital goods

-Annual production cycle (for example, an enterprise that has made the sale of its building under construction)

-Investments in start-up phase of activity which did not give rise to revenue

-Partial use in the production process of goods already fully depreciated

Press release of June 28, 2007


Economic marginality


Subjective conditions related to situations of holder:

-Age of the taxpayer in connection with the type of activity

-Health status of the holder

-Residual Activity justifiable in the presence of other income, purchases, employment or pension

Press release of June 28, 2007



Economic marginality


Situations related to their business:

-Small size of structure

-Absence of investments even if in the presence of minimal equipment and/or obsolete

-Absence of employees and collaborators

-Absence of expenses for vocational training

-Absence of expenses for promotion of activities (advertising, publicity, etc.)

-Inability to pay fees for acquisition of services

-Weak competitiveness of products/services provided

Press release of June 28, 2007 Economic marginality

Situations relating to the market:

-Private clients economically weak end

-Little bargaining power against business clients (eg subcontractors)

-Inability/impossibility to diversify the clientele

-Reduced articulation of production process

-Economic industry downturn, with inability to operate a conversion

Press release of June 28, 2007 Economic marginality Business location:

-Market Area with low welfare and poor potential for economic development

-Low level of infrastructure etc.

-Situation of impediment to the ordinary course of business (reduced accessibility to the place of business or other)

Press release of June 28, 2007


General conditions of unreliability of studies

Description, in free format, special conditions or the specific situations that have characterized the exercise of enterprise (i.e., not normal downward revision of sales prices set by competition, public works that have reduced the accessibility of the place of business, relocation of productive activity by the customer, etc.)

In this context includes all special conditions and specifications supporting the results of the individual variances situations industry study, required by administrative practice

Luke Cambell