Pre-court settlement of tax disputes

• Employee involved

  Alexey Stanchin

• Process description

  As part of an on-site tax audit, the tax authority concluded that the client, a general contractor for construction work, was affiliated with a counterparty.
  
  In particular, the tax authority believed that:
  (1) the transaction with the counterparty was not real
  (2) The counterparties had no sources of VAT refunds as well as the necessary material and technical resources for performance of the work undertaken.
  
  In view of the above, the Tax Compliance team offered to prepare "defensive" documents and evidence of good faith of the taxpayer.
  
  We helped the client develop a legal position confirming:
  (1) the reality of performing construction and installation works by the disputed companies
  (2) the lack of controllability between the participants of the contractual relations
  (3) the unreasonableness of allocating the VAT gaps to the disputed counterparties.
  
  The claims were appealed to the tax authority and to a higher authority.

• Result

  As part of a pre-trial appeal, the tax authority accepted the taxpayer's arguments and reduced the size of the claim, and then we secured a full reversal from the higher tax authority.

• Employee involved

  Alexey Stanchin

• Process description

  The tax authority in the framework of an on-site tax audit came to the conclusion that the taxpayer used technical links for the purposes of obtaining tax profits on VAT and income tax. In particular, the tax authority believed that: (1) in fact the provision of services took place directly from organizations that apply special tax regimes (without VAT); (2) the taxpayer and the counterparty are related business entities. In view of the above, the taxpayer was invited to dispute the technical nature of the disputed counterparties. The Tax Compliance team helped the client to elaborate a legal position which confirmed: (1) lack of controllability between the participants of the contractual relations chain; (2) economic feasibility of the transaction; (3) the reality of financial and economic activities of the disputed counterparties.

• Result

  The tax authority accepted the arguments of the taxpayer

To dispute the claims of the tax authority on the improper use of tax credits for VAT.

• Duration

  June 2019 - December 2019

• Employees involved

  Mikhail Begunov, Alexander Dmitriev

• Process description

  Additional tax control measures were taken. Evidence of the absence of interdependence with suppliers of equipment was presented. The price of the purchased equipment is indicated to be corresponding to the market level. All established violations concerned beneficiaries-importers of the supplied products, rather than the taxpayer.

• Result

  Claims of the tax authority were disputed. A positive practice was formed on additional payments to companies that supply imported equipment through a chain of suppliers

The client provided services to appeal the results of the field tax audit, the basis for the recovery of taxes was the assumption of the tax authority of the fictitious nature of the supply of equipment to some suppliers.

• Purpose

  Confirm the actual movement of goods from the importer to the customer, to confirm the absence of tax benefits in the form of overvaluation of goods.

• Employees involved

  Mikhail Begunov, Yulia Pavlova

• Process description

  As part of the on-site tax audit, the tax authority assumed the deliberate involvement of dubious counterparties in the chain of financial relationships to artificially increase the price from the importer. The developed legal position made it possible to prove that the involved counterparty imported goods in the declared volumes, which is confirmed by the information reflected in the customs declarations. Primary documents confirming the availability of goods in the client's warehouses during the audited period, as well as counterparties' expenses for the delivery of goods to the client were presented.

• Result

  As a result of successful appeal we managed to reduce the amount of additional tax charges to 83 million rubles. It was important for the client's business to challenge the additional charges based on the results of the field tax audit, as their size is substantial and in case of non-payment there is a risk of bringing the CEO of the organization to criminal liability.

Challenging the acts of prosecution on violating the deadline for CFC filing

• Employee involved

  Alexey Stanchin

• Process description

  Tax authorities imposed a fine for violation of the deadlines for CFC notifications and considered that the fine corresponded to the severity of the act, since 13 episodes were identified for different companies.
  
  In view of the above, a legal position was proposed for the taxpayer to mitigate the penalty.
  
  Tax Compliance team assisted the client in developing a legal position, identified all possible mitigating circumstances and presented arguments to the tax authority in due form.

• Result

  The tax authority accepted the arguments of the taxpayer and the penalty for each episode was reduced by 8 times.
  
  Thus, as a result of the project, tax claims of 6.5 million rubles were reduced to 812 thousand (by 5.7 million rubles or 88% of the initial claim).