Russian legislation imposes on tax authorities the obligation to monitor taxpayers' compliance with the legislation on taxes and levies, including in the form of tax audits [1].

In addition to the risks associated with possible additional tax assessments resulting from audits, taxpayers or their officials may also face criminal liability in the event that a person commits a tax offence containing elements of a crime.

Thus, within the framework of co-operation between state authorities, the tax authority is obliged, in accordance with para. 3 of Article 32 of the Tax Code of the Russian Federation to send the materials collected in the course of a tax audit, which revealed signs of a tax offence, to the investigative authorities to decide whether to initiate criminal proceedings.

Materials on an audit are subject to referral if the following conditions are met at the same time:

• there is a decision on bringing to responsibility that has entered into force;
• 75 working days have passed since the decision on bringing to liability came into force, but the taxpayer has not repaid the arisen debt;
• the amount of the unfulfilled obligation indicates that the person has committed an offence in the field of taxation.

At the same time, the interaction of state bodies among themselves is also possible in accordance with the procedure stipulated by clause 3 of Article 82 of the Tax Code of the RF. 3 of Article 82 of the Tax Code of the RF, according to which controlling authorities, among other things, inform each other about the materials they have on violations of legislation on taxes and fees and tax offences.

This procedure provides for the possibility of sending to the investigative authorities materials containing information that allows to assume the commission of tax crimes by taxpayers, including in cases of making a decision on the results of the audit to refuse to bring to responsibility for a tax offence [2].

Both described cases of transfer of materials by the tax authorities to the investigative authorities, in any case, presuppose a tax audit in respect of a taxpayer, when the representatives of the inspectorate have established factual circumstances indicating the commission by a person of a tax offence containing signs of a crime.

At the same time, recent law enforcement practice shows that a person may be held criminally liable for committing a tax offence, including on the basis of materials collected by the inspectors as part of the pre-tax audit analysis and transferred to the investigating authority in accordance with cl. 3 of Article 82 of the Tax Code of the Russian Federation.

Thus, the Appeal Ruling of the Stavropol Regional Court of 10.07.2023 No. 22-2867/2023 in case No. 1-17/2023 is an example of a judicial act in which a person was held criminally liable for tax evasion (Art. 199 of the Criminal Code of the Russian Federation) on the basis of materials collected by the tax authority outside the framework of tax audits and transferred to the investigative authority in accordance with the procedure established by para. 3 of Article 82 of the Tax Code of the Russian Federation.

According to the facts of the case, in the course of the analysis of the financial and economic activities of the organisation outside the framework of tax audits, the tax authority found the existence of fictitious transactions between the taxpayer and a one-day firm, which resulted in the organisation receiving an unjustified tax benefit. In the opinion of the tax authority, the materials collected in the course of the pre-inspection analysis contained information suggesting that the taxpayer had committed an offence under the Criminal Code of the Russian Federation. In the absence of a tax audit, these materials were sent to the investigative body in accordance with cl. 3 of Article 82 of the Tax Code of the Russian Federation.

The peculiarity of this case was the fact that «...in the materials of the criminal case there is no act of tax audit, there is no decision of the tax authority on the results of the tax audit (Article 101 of the Tax Code of the Russian Federation), which would have stated that the tax authority has established and proved the fact that the taxpayer committed a tax offence».

In the criminal case in question, no tax audit was carried out by the inspectors, and the information passed to the investigating authority was gathered on the basis of data available at the inspectorate, namely:

• bank statements;
• cash flow by banks;
• data from tax declarations;
• witness statements;
• other information.

Since no tax audit was conducted in respect of the taxpayer, the amount of unpaid tax by the organisation was presumptive.

In order to determine the amount of unpaid tax, the investigative body appointed and conducted appropriate expertise. The experts determined the amount of unpaid tax on the basis of data in the organisation's purchase and sales books and invoices issued by a one-day firm to the taxpayer.

In addition to the above-mentioned expert examinations, in determining whether the guilt of the organisation's official was proven, the court of first instance was also guided by the following factual circumstances:

• witness testimony confirming the fictitious nature of the transactions between the parties;
• an expert's report, according to which in the transaction documents the signatures on behalf of the head of the one-day firm were made by another person;
• protocols of investigative actions.

The above case is undoubtedly negative news for taxpayers, as it may create a negative tendency for businesses to initiate criminal proceedings based on materials collected by the tax authorities outside of tax audits, which is formally possible due to the current provisions of the criminal procedure legislation.

Thus, according to the provisions of the Criminal Procedural Code of the RF, the reason for initiation of criminal proceedings on tax offences (Art. 198-199.2 of the Criminal Code of the RF) can only be materials sent by the tax authorities to resolve the issue of initiation of criminal proceedings [3]. At the same time, the criminal procedural legislation does not contain instructions on the exact order in which the tax authorities send the relevant materials.

In fact, this means that the investigating authorities have the right to make a decision to institute criminal proceedings on the basis of materials submitted by the tax authorities both in accordance with clause. 3 Art. 32 para. 3 of the Tax Code of the RF, as well as para. 3 of Art. 82 of the Tax Code of the RF. 

Thus, the current legislation of the Russian Federation allows the investigating authorities to take a decision to initiate criminal proceedings based on the materials collected by the tax authorities both within the framework of a pre-inspection analysis and within the framework of a tax audit.

In this regard, businesses should be attentive to the analysis of their financial and business activities by the tax authority outside of tax audits and take a proactive stance in forming a legal position challenging the tax authority's position. Otherwise, the materials collected by the inspectorate in the course of pre-inspection analysis may be sent to an investigative body for a decision to initiate criminal proceedings for tax offences.

[1] clause 1 of Art. 82 of the Tax Code of the Russian Federation.

[2] Letter of the Ministry of Finance of Russia dated 01/25/2017 No. 03-02-08/3619.

[3] part 1.3 of Art. 140 of the RF CCP.