Tax Compliance attorneys represented a company engaged in the wholesale trade of household goods, hardware and tools
During the pre-trial stage of the dispute with the tax authorities, the lawyers proved the reality of intermediary companies: provided documentary evidence of the possibility of the counterparties to fulfill their supply obligations and the availability of appropriate material and human resources, confirmed the scheme of goods movement and transportation, collected explanations from the counterparties' employees. The lawyers contested the conclusions of the tax authorities that there was intent in the actions of the client in purchasing products from intermediaries solely for the purpose of obtaining illegal tax savings. This case resulted in additional positive pre-trial practice of challenging the decisions of the tax authorities, where there is no established scheme of withdrawal of funds for the benefit of the inspected company by minimizing the tax burden.
The lawyers successfully challenged the act of the tax audit and reduced the tax to accrual of 10 times.
Protection of interests of a major oil company engaged in the wholesale trade of solid, liquid and gaseous fuels and petroleum products
An on-site tax audit was conducted with respect to the Client, as a result of which the tax authority charged the taxpayer with fictitious document turnover with three vendors, rendering services of advertising on TV channels (RBC-TV, Channel 8, Good Cinema, World Business Channel) and radio stations (Radio Energiya MO 103.5 FM, Europe Plus MO 90.5 FM, Avtoradio MO, Humor FM, Megapolis FM, Retro FM, Nashe Radio, BEST FM, Kommersant FM). The project was complicated by the fact that the analysis showed no direct money transfers from the Client to the TV channels and radio stations. To prove the cost of advertising an expert audit was conducted to determine the actual tax liabilities of advertising services purchased by the company directly from TV channels and radio stations on the basis of primary documents (broadcasting statements), taking into account the terms of the contractual relationship with the disputed counterparties.
Tax Compliance lawyers appealed the act of tax audit and prepared a legal position that resulted in the reduction of additional tax charges based on the results of the field tax audit by 80%. As part of the appeal of the audit results the mechanisms of tax reconstruction calculation were applied to reduce the amounts of arrears, taking into account the actual expenses of the company. This approach may be used when declaring expenses of oil companies.
Supporting an on-site tax audit of a Russian construction company
Alexey Stanchin
A taxpayer approached the Tax Compliance team regarding tax risk minimisation.
Our work on the project included advising the client on:
(1) separate VAT accounting
(2) VAT treatment of the DDE and the POA
(3) availability of receivables
(4) issues related to field tax audit
(5) Interactions with tax authorities during a PIT
(6) justification of accounting policy principles used by a taxpayer to a tax authority.
In view of the above, the Tax Compliance team offered the taxpayer an action plan to support the field tax audit and helped develop a legal position confirming:
(1) the validity of applying separate accounting for the use of transactions under the DDE and the ACP
(2) no additional accruals of non-operating income are required.
In addition, we managed to eliminate the client's risks in terms of separate VAT accounting and identify other risks in taxation.
As a result of the project, the claimed claims of the tax authority were reduced by 99%.
Preparation of a legal position to confirm the reality of the relationship with subcontractors
Elimination of tax risks of understatement of the tax base for VAT and income tax
Mikhail Begunov, Yulia Pavlova
An on-site tax audit is being conducted in respect of the client, the tax authority does not confirm the performance of construction and installation works by subcontractors, since the actual performers of the works have not been identified. In the frame of legal defense and support of tax control measures we rendered services on search of factual executors of works according to materials, provided by tax authorities within the frame of on site tax audit. The procedure of tax reconstruction in view of the submitted primary documents on the actual executors of works, which were involved by the disputed subcontractors, was carried out. An information letter was sent to the tax authority in order to confirm that the client is ready to pay the tax arrears, taking into account the recalculation of the amount of unjustified tax savings before the delivery of the decision on the audit.
Implementation of the project allowed to reduce the amount of income tax and VAT arrears
Elimination of risks of reclassification of transaction with interdependent company-lender.
Confirmation of the economic feasibility of borrowing funds from a related company in order to avoid reclassification of the transaction as payment of "hidden" dividends.
Mikhail Begunov
As part of the ongoing activities, the tax authority planned to schedule an audit and recognize the transaction as an actual payment of dividends to the ultimate beneficiaries and recognition of interest on loans subject to capitalization and controlled indebtedness. As part of the legal assistance provided to the tax authority, documents and clarifications were prepared to confirm the actual purpose and direction of the use of borrowed funds.
According to the results of consideration of materials, it was possible to prove that the transaction to attract the loan funds is not aimed at misrepresenting the facts of financial and economic activity and does not imply an intent to increase the cost of the client and receive an unjustified tax benefit for income tax.