The Supreme Court of the RF has indicated when a person applying a special tax regime will be held liable for two or more types of liability.

The Supreme Court of the RF in one of the recent cases indicated in which cases in which the taxpayer may be held liable for failure to submit a tax return (Article 119 of the Tax Code) and liability for non-payment or incomplete payment of tax amounts (Article 122 of the Tax Code) when illegally applying special tax regimes.

In case # A32-17746/2020 taxpayer IE Adonin ET appealed to the Arbitration Court of Krasnodar Territory, challenging the decision to bring the entrepreneur to tax responsibility.

The dispute considered by the Arbitration Court arose in connection with the wrongful application of a special tax regime in the form of UTII by the entrepreneur, in connection with which his tax liability is determined under another tax regime applied by the taxpayer - STS, as well as the general regime for exceeding the maximum amount of revenue under STS.

Tax Authority during the on-site tax audit it was found that at the specified address of the taxpayer is not located commercial space required for the application of UTII for retail trade. In addition, the case considered other evidence confirming and refuting the fact of compensated retail trade.

The court, evaluating all the data in the aggregate came to the conclusion about the illegality of the special tax regime in the form of UTII.

But the main issue that interested the Supreme Court despite the small size of the responsibility was the possibility of prosecution for failure to submit a declaration to the tax authority under Article 119 of the Tax Code, in the amount of 1000 rubles for the Declaration of VAT and 1000 rubles for personal income tax declaration.

The taxpayer's position: 

It is inadmissible to bring simultaneously to responsibility for failure to submit tax returns under the general system of taxation (Article 119 of the Tax Code) and for failure to pay taxes (Article 122 of the Tax Code), as failure to submit a declaration of VAT and personal income tax was a way to commit an offense under paragraph 3 of Article 122 of the Tax Code, rather than an independent offense.

Position of the tax authority: 

The position of the tax authority was based on the distinction of these measures of responsibility. 

So in the opinion of the tax authority The objective side of the offense is an omission of a taxpayer, expressed in his failure to comply with paragraph 4 of paragraph 1 of Article 23 of the Tax Code of the obligation to submit to the tax authority at the place of registration in the prescribed manner tax returns for those taxes, which he is obliged to pay, if such an obligation is provided by the legislation on taxes and fees. The tax return is the main document of tax reporting, failure to submit it in due time jeopardizes the effective implementation of tax control and timely detection of the facts of untimely, incomplete or incorrect execution of the tax obligation. Ignoring the taxpayer's obligation to submit a tax return can significantly hinder the normal implementation of its functions by the tax authority.

Court's position:

Legislation on taxes and fees does not contain provisions that would allow qualifying the behavior of a taxpayer by a set of heterogeneous actions committed by him, which contain signs of various offenses with the absorption of sanctions applied at that (ideal set). On the contrary, by virtue of a direct instruction contained in paragraph 5 of Article 114 of the Tax Code, where one person commits two or more tax offenses, tax penalties are collected for each offense separately, without absorption of less severe sanctions more severe.

Thus, since the guilty actions of the taxpayer associated with the improper use of special tax regimes, led to the failure of him two different obligations (omission to file a declaration under the general system of taxation and inaction in the payment of taxes under the specified system of taxation), then bringing the taxpayer to justice simultaneously under Articles 119 and 122 of the Tax Code is not repeated. The fact that the taxpayer's behavior was covered by a single intent is also not a basis for absorbing the less severe sanction provided for in paragraph 1 of Article 119 of the Tax Code, a more severe sanction provided for in paragraph 3 of Article 122 of the Tax Code.

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The Supreme Court has reminded about the distinction between Article 119 and 122 of the Tax Code, and given that most disputes on the application of special tax regimes are considered in cases of "split" business, there is a risk that the tax authorities will start to consider bringing taxpayers under this category of cases, including under Article 119 of the Tax Code.

Let's remind that the maximum liability under Article 119 of the RF Tax Code is 30% of the amount of the failed declaration