Pre-court settlement of tax disputes

The dispute with the tax authority regarding the legality of the application of a reduced tax rate at source is resolved

• Employee involved

  Nikita Zharov

• Process description

  A company applied a reduced withholding tax rate in relation to dividends distributed to a foreign shareholder. The tax authority, as part of an on-site tax audit, investigated the circumstances of the foreign organization's activities and the legitimacy of the application of the preferential provisions of the IRS. As a result of the audit, the tax authority concluded that the standard rate of 15 percent was to be applied to dividends.

• Result

  The team helped the client to successfully pass an on-site tax audit, in particular assisted in preparation of answers to tax authorities' requirements, accompanied the client during interrogations of employees and other control measures, provided methodological support to the client on arising issues. Subsequently, the team helped to form a legal position that was used by the client during the pre-trial and trial stages. As a result, the dispute with the tax authorities was successfully resolved in favor of the client in court

The client was provided with services to appeal the results of a field tax audit, provided legal assistance to justify the disputed supply of raw materials and reduce the amount of taxes to be recovered

• Purpose

  Confirmation of the actual size of the client's tax liabilities due to the tax reconstruction procedure

• Employee involved

  Mikhail Begunov

• Process description

  A tax audit was carried out in relation to the client, the basis for the collection of taxes was the assumption of the tax authority of the fictitious nature of the supply of raw materials for some suppliers. It was proved at the stage of objections and additional measures of tax control that it is necessary to measure quantitative indicators at the beginning and at the end of the production process. The tax authority was given the calculations for write-offs of the materials purchased from the disputed contractors and the information about the residuals of raw materials. The tax authority's claims have been partly withdrawn in relation to profits tax. The taxpayer's objections were partially satisfied in the amount of 343 mln rubles. Within the framework of the appeal to the superior body the client's claims on recalculation of tax liabilities were partially satisfied.

• Result

  A positive practice of pre-trial appealing the acts of tax authorities in respect of manufacturers of medicines is formed, taking into account the specifics of the industry. The importance of the project is to provide legal assistance to the manufacturer of vital and socially important drugs.

• Employee involved

  Alexey Stanchin

• Process description

  Following an on-site audit, the tax authority concluded that the taxpayer had created a formal document flow to understate the tax base. In particular, the tax authority believed that: (1) the client had methodological violations under VAT; (2) the use of zinc dust in production was overstated; (3) an agency agreement was concluded with a PE for tax saving purposes.
  
  The Tax Compliance team helped the client develop a legal position to challenge the results of an on-site tax audit substantiating:
  
  (1) incorrect application by the tax authority of the methodology for determining import deductions based on the organisation's accounting policy;
  (2) the use of zinc dust in production;
  (3) the existence of a business purpose in concluding the agency agreement.

• Result

  The tax authority partly accepted the taxpayer's arguments and the tax claim was reduced by 46%.

Cancelled the decision of the tax authority to hold the taxpayer liable under paragraph 3 of Article 122 of the Tax Code ("willful" failure to pay taxes).

• Employees involved

  Mikhail Begunov, Nikita Zharov

• Process description

  Based on the results of a tax audit, the tax authorities brought the taxpayer to liability provided for in Paragraph 3, Article 122 of the RF Tax Code ("willful" failure to pay taxes / 40% fine). Tax Compliance team helped the client develop a legal position according to which the tax authority had no grounds for qualification of the taxpayer's actions as "intentional".

• Result

  The higher tax authority accepted the arguments of the taxpayer. In particular, the qualification of the tax offense was changed and additional mitigating circumstances were taken into account. As a result, the penalties were reduced by 87%. The economic effect for the client was 7.5 million ₽.

Claims of the tax authority to have "unscrupulous contractors" in the chain of subcontractors were disputed.

• Duration

  December 2018 - April 2019

• Employees involved

  Alexander Dmitriev, Yulia Pavlova

• Process description

  With the help of additional tax control measures, the reality of subcontractors' activities was proved. The absence of intent in the client's actions was proved. The tax authority calculated tax liabilities without primary documents.

• Result

  Claims of the tax authority on the field inspection report were appealed and withdrawn. A positive pre-trial appeal against the acts of the tax authorities in favor of the taxpayers under 54.1 of the Tax Code was formed.