Cleaning up years of neglected accounting records - where to start to avoid heavy penalties

The old accountant left, the outsourced bookkeeper only filed returns for the sake of it, and documents are scattered across email inboxes and paper boxes - after a few years, many companies no longer know their real numbers. The problem does not fade with time. It grows: late payment interest accrues every day and the risk of a tax assessment rises. The good news is that if you act before the tax authority audits, the consequences can usually be contained. The question is where to start.

Understand the risk before you start fixing

Since 1 July 2026, the Law on Tax Administration No. 108/2025/QH15 has been in force, replacing the 2019 Law on Tax Administration. Key reference points for owners:

The key point: most of the cost of neglected books is not the administrative fine but the underpaid tax plus late payment interest. At 0.03% per day, late interest is close to 11% a year on the outstanding tax, and no limitation period wipes out this obligation within the 10-year window.

Step 1 - Diagnose: rebuild the picture from external data

When internal records cannot be trusted, start from the sources the tax authority also sees:

• The list of returns filed and not filed on the e-tax system, plus the tax obligation status (amounts owed, amounts overpaid).
• All sales and purchase e-invoices retrieved from the tax authority's e-invoice system - the data the authority uses to cross-check revenue.
• Statements for every company bank account over the whole backlog period.
• Major customer and supplier contracts, labour contracts and social insurance data.

The output of this step is a reconciliation: revenue per invoices versus revenue declared, input VAT claimed versus valid invoices, and bank balances versus book balances.

Step 2 - Prioritise by risk, not by year

1. Stop the bleeding first: make sure current periods are filed and paid on time so no new violations arise.
2. Fix discrepancies that change the tax payable: understated revenue, input VAT claimed on invalid invoices, expenses without valid payment evidence.
3. Handle the years still open for amendment: taxpayers may file supplementary returns within 5 years of the filing deadline of the period in error (Article 12.5, Law on Tax Administration 2025).
4. Only then deal with classification and presentation adjustments that do not affect tax.

Step 3 - Rebuild the books properly

Under the Law on Accounting No. 88/2015/QH13 and Article 13 of Decree 174/2016/ND-CP, accounting documents used directly for bookkeeping and preparing financial statements, together with the ledgers and annual financial statements, must be kept for at least 10 years. Rebuilding should start from opening balances that can be evidenced (usually bank balances and confirmed receivables and payables), then re-record each year under the accounting regime applicable to that year; from the 2026 financial year, companies apply Circular 99/2025/TT-BTC or the regime appropriate to their size. Bookkeeping and documentation breaches can be fined separately under Decree 41/2018/ND-CP.

Step 4 - File amendments and pay late interest correctly

Once the figures are rebuilt, the company files supplementary returns for the periods in error and calculates and pays late payment interest under Article 16 of the 2025 Law. Article 44.2 of that Law lists cases of incorrect declaration that are not penalised; the exact conditions must be checked case by case, but the consistent principle is that finding and correcting errors yourself is always better than having the tax authority find them. For periods already audited, adjustments require an explanation dossier for the tax authority to review and accept. Also note that Decree 125/2020/ND-CP on tax and invoice penalties keeps being amended, most recently by Decree 291/2026/ND-CP, so penalty amounts must be checked against the text in force at the time.

How Kaizen can help

Kaizen handles backlog clean-ups following a clear sequence of diagnosis, risk prioritisation, rebuilding and amendment, helping companies quantify their exposure before deciding. Start with our free tax health check: we will show you the scope of the problem, the estimated exposure and a sensible order of work.