Reduced by 85% the tax authority's claims in the framework of a field tax audit

The team represented the client in a project that involved challenging the field tax audit report. The tax authority had claims regarding the deduction of expenses for profit tax purposes and the deduction of VAT in transactions with the client's contracting parties. The company was accused of intentionally devising an unlawful tax scheme and charged with a 40% fine.

While preparing objections to the audit report, our lawyers went to great lengths to obtain the audit materials and to become acquainted with them. Our experts were compelled to prepare a range of written petitions connected with unlawful obstruction of becoming familiarised with evidence and of participation in the client’s meeting with a representative of the tax authority. Owing to our team's efforts, all documents which the tax authority had were not only made available for lawyers to become acquainted with, but were recorded on disks, which gave us an opportunity to prepare well-grounded objections to the audit report. After additional tax control measures were carried out, the analysis of the audit materials and of the objections was performed by the head of the tax authority, and in our presence he personally checked using the ASK-VAT-2 system whether the claims of his subordinates were justified.

As a result, the claims against the taxpayer under the field tax audit were reduced by 85% and the accusation of intentionally having organised a tax scheme was fully withdrawn. The fine for the remaining arrears was applied as for an unintentional tax offence and was additionally reduced in view of mitigating circumstances.

This project was extremely important for the client because the amount of initial claims was insurmountable for it and should they have been confirmed, it would have had to close the business. For the legal system, this case has set a precedent because in most cases, the tax authority is willing to engage in a legal dialogue concerning the amount of the arrears only before the tax audit is scheduled. Following that, the amount of claims cannot be discussed. In this case, we have been able to defeat this practice.