After an on-site/combined tax audit, based on the results of which the taxpayer has been held liable for large or especially large-scale tax evasion, the director of the organization faces criminal risks, the circumstances of which we will disclose below.

In case of completion of a tax audit and non-payment of taxes on the demand issued upon expiry of two months from the date of its non-fulfillment, materials of the audit are transferred to investigative bodies for subsequent prosecution of officials of the organization for criminal liability.

According to the results of an initial investigation, the investigating authorities initiate a criminal case against the CEO of the organization under Article 199 of the Criminal Code of the Russian Federation.

As a rule, based on the results of a criminal investigation, the investigation comes to the same conclusion as the tax authority - the director of the organization used a scheme to optimize the tax base.

After the case has been sent to court and the CEO has paid off the arrears, penalties and fines in full, the criminal case is terminated on non-rehabilitative grounds. 

Everything would be fine, but there are certain unfavorable legal consequences in this situation. 

The organization has incurred losses, and who will reimburse them? The founder/shareholders decide to dismiss the director and initiate a lawsuit to recover the losses from the former director. 

In accordance with the position of the higher courts according to clause 4 of the Resolution of the Plenum of the RF from 30.07.2013 № 62 losses of the legal entity may be recovered from the director in case of his unreasonable behavior, because the performance of his duties implies good faith and reasonableness. 

In substantiating the good faith and reasonableness of his actions (inaction) the director may provide evidence that the qualification of actions (inaction) of the legal entity as an offense at the time of their commission was not obvious, including due to the lack of uniformity in the application of the law by tax, customs and other authorities, due to which it was impossible to draw an unambiguous conclusion about the illegality of the relevant actions (inaction) of the legal entity.

The basis for this is paragraph 3 of article 53 of the Civil Code of the RF. The practice of applying such explanations shows that a taxpayer manages to recover from its former head the entire amount of arrears (№ A40-56721/2013) or the amount of a fine for understating the amount of VAT payable to the budget (№ A32-39319/2016) only in a situation where the tax audit established the facts of unreality of the disputed transaction.

Negative cases of recent years:

• Denial determination of the Supreme Court of the Russian Federation of 17.05.2022 in case No. A40-141695/2020.
  
• Denial ruling of the Supreme Court of the Russian Federation of 25.04.2022 in case № A32-14157/2020.
• The ruling of the Arbitration Court of the Ural district on 16.06.2022 in case № A76-15908/2019.
• Resolution of the Ninth Arbitration Court of Appeal of 15.02.2022 in case № A40-54046/2021.
• Ruling of the Arbitration Court of the Moscow District on 16.02.2022 in case No. A40-246910/2020.

Positive cases of recent years:

• Decision of the Arbitration Court of the Central District of 29.10.2022 in case No. A23-3794/2018.

Arguments for refusal to recover damages from the director:

• It was not proved that the director committed unlawful actions that caused losses to the company and that there was a causal link between the director's actions (inaction) and the losses incurred (№ A40-54046/2021).
  
• Finance director was given power of attorney with a wide range of powers for relations with the disputed counterparties (№ A40-141695/2020).
• The taxpayer had relations with the disputed counterparties even before the director began to exercise his authority (№ A40-141695/2020).
• The actions of the director did not go beyond the usual business (entrepreneurial) risk. There is no evidence that the director acted intentionally in order to cause losses to the taxpayer, against his interests, colluded with counterparties in transactions or was affiliated with them (A40-141695/2020).

Arguments for satisfaction of the recovery of damages from the director:

• The director did not take any measures to establish the legal capacity and business reputation of the counterparty, which indicates a lack of due diligence, good faith and reasonableness in the conclusion of contracts for the sale of property.
  

Based on the analysis of judicial practice in recent years we can conclude that the courts only in exceptional cases satisfy the claims of the taxpayer-organization to recover from the former director of the damage caused by the results of the tax audit. As a rule, it is not possible to prove that the director committed unlawful actions that caused losses to the company and that there is a causal link between the director's actions (inaction) and the losses incurred.