Legal aspects of challenging the results of a tax audit

The decline in business activity and the protracted economic crisis did not affect the reduction of the tax in any way the burden on small and medium-sized businesses, moreover, the need to fill the budget in a crisis and undeclared war has led to increased attention from regulatory and fiscal authorities to entrepreneurs.

Despite the government's declared ease of doing business, according to The EY Middle Market survey, 76% of surveyed Ukrainian companies report an increase in the total number of tax audits or their aggressiveness. Moreover, inspectors have become more inventive and picky, often using imaginary pretexts & nbsp; to inspections and far-fetched claims against enterprises.

Lawyer, partner of JSC "Interregional Bar Association" Vladimir Musienko.

How to sign a tax audit report

It is not uncommon for controllers to agree to turn a blind eye to some (often far-fetched) violations, to reduce the amount of additional tax liabilities and fines, in exchange for receiving improper benefits; there is also still an extremely negative practice of opening criminal cases as a means of coercion and blackmail.

On the legal aspects of preparing for a possible tax audit and the behavior of management and employees directly during its conduct, read the material estet-portal.com at another time, in connection with which, I would like to dwell on some legal aspects of challenging the results check already done.

So, according to the results of the audit (as a general rule, within 5 working days from the date of its completion), the tax authorities draw up an act on the results verification, for the signing of which, as a rule, the director and chief accountant of the enterprise are called.

It makes no sense to refuse to sign the act of inspection, since the taxpayer's refusal to sign the act or receive a copy of it does not relieve the taxpayer from the obligation to pay the monetary obligations determined by the controlling body based on the results of the inspection. It would be correct to sign an act with objections, perhaps with the following wording: "The act is signed with objections, which will be submitted within the time period prescribed by law." – this will allow already at the stage of filing written objections to the act to give their written comments and documents that, for one reason or another, have not been verified.

It is important to remember that objections to the act must be submitted no later than 5 working days from the date of receipt / signing of the Act.

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In the vast majority of cases (with the exception of obvious absurdities and typos), objections to the act are not accepted by the tax authorities (whose structural unit carried out the audit) and the taxpayer receives a tax decision notice with an additional tax liability and a fine.

What to do after receiving a tax notice

The tax decision notice is handed over personally against receipt to the representative of the taxpayer, or sent by registered mail with acknowledgment of receipt to the legal address of the enterprise. At the same time, it is important to take into account that if the postal service cannot deliver a tax decision notice to the taxpayer due to his absence from the official address, refusal to accept the tax decision notice, or for other similar reasons, the tax decision decision is considered to be delivered to the taxpayer on the day indicated by the postal address. service in the acknowledgment of receipt!

After receiving a tax decision notice, the company has three options:

Pay reasonable amount to the budget.
Appeal against the tax notice-decision in court (judicial appeal).
Or appeal to a higher tax authority (the so-called administrative appeal).

Which way to choose, of course, is up to the manager / owner, however, it must be borne in mind that an administrative appeal does not block the way to court, and in some cases, it may be advisable to initially go through the entire administrative appeal procedure (which, given the time it takes for the passage of correspondence, can take more than 6 months), and only then apply for judicial protection.

Today, as a general rule, there is a "two-level" an administrative appeal system, although the draft amendments to the Tax Code assume that taxpayer complaints will be considered only in one instance – in a special body under the Ministry of Finance (which seems more fair, since complaints will be examined by a structure outside the "system"). An initial complaint & nbsp; about the cancellation of a tax decision notice is submitted to a higher tax authority (in the case of Kyiv, the Main Department of the State Fiscal Service in Kyiv) & nbsp; within 10 calendar days from the date of receipt of the tax decision notice. & nbsp; The complaint shall be accompanied by duly certified copies of documents, calculations, as well as evidence,

Simultaneously with filing a complaint, the taxpayer is obliged to notify in writing the tax authority that issued the notice-decision (district tax authority) of its appeal to a higher authority.

Based on the results of consideration of the complaint, the head of the higher tax authority must make a reasoned decision & nbsp; and send it to the taxpayer (in person against receipt or by registered mail with acknowledgment of receipt) & nbsp; within 20 calendar days from the date of receipt of the complaint. Also, the head of the tax authority may decide to extend the period for considering the complaint (but not more than 60 calendar days), of which the taxpayer shall be notified in writing within 20 calendar days from the receipt of the complaint.

In the event of a complete or partial refusal to satisfy the initial complaint, which most often happens, the taxpayer has the right to file repeated complaint already to the State Fiscal Service of Ukraine within 10 calendar days from the receipt of a response to the initial complaint. Simultaneously with the filing of the complaint, the taxpayer is also obliged to notify all lower tax authorities in writing about the further appeal of the tax notice decision. Based on the results of the consideration of the complaint, the head of the chief The tax authority must also make a reasoned decision and send it to the taxpayer (in person against receipt or by registered mail with acknowledgment of receipt) within 20 calendar days from the receipt of the complaint.

The head of the tax authority may decide to extend the period for considering a complaint (similarly, by no more than 60 calendar days), and notify the tax payer in writing within 20 calendar days from the date of receipt of the complaint.

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What does an administrative appeal do

In practice, administrative appeals often do not bring results (especially with regard to tax authorities’ claims to the “fictitious counterparty”, etc., points), with the exception of obvious shortcomings that higher authorities can no longer turn a blind eye to, which leaves the taxpayer the right to appeal the tax notice-decision already in court.

Claims to challenge tax notices-decisions are filed with specialized – administrative courts (at the location of the taxpayer), due to certain legal conflicts, it is important not to delay filing them, while not forgetting to pay the state duty (court fee).

I would like to note that, despite the widely held opinion that suing the state is futile, according to my data, more than 70% of cases on claims against the tax authorities are resolved in favor of taxpayers, but this is the subject of another article.

Summarizing, we can say that timely seeking help from a competent lawyer specializing in tax matters will save the accountant's time, the director's nerves and the owner's money.

Legal aspects of challenging the results of a tax audit

How to sign a tax audit report

What to do after receiving a tax notice

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