Successfully challenged the results of a tax audit out of court

Lawyers from the the tax practice represented a large machine building enterprise in a project involving an out-of-court appeal of the results of a field tax audit. Further to the field tax audit more than RUB 1.6 billion was additionally assessed to the enterprise, which put the plant under the threat of bankruptcy. The reason for the claims was that, in the tax authority's opinion, expenses on outsourcing labour resources from external providers, which were identified as showing signs of bad-faith conduct, were unjustified, as was the VAT attributable to them.

Our lawyers developed a position and prepared more than 170 pages of objections to the audit report, while also representing the company during multiple examinations of the audit materials and during additional measures of tax control. 

The project was complex owing to the negative practice in such cases that could be overcome only by scrupulous work with a large volume of information supported by calculations. As a consequence, this allowed for the tax authority to be convinced to withdraw its claims with respect to the “relatively good-faith” contracting parties in relation to which a justified position had been prepared. As a result, we achieved both objectives put before us and the ultimate amount additionally assessed was reduced seven-fold.