Cases

• Employee involved

  Alexey Stanchin

• Process description

  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.

• Result

  As a result of the project, the claimed claims of the tax authority were reduced by 99%.

• Employees involved

  Mikhail Begunov, Nikita Zharov

• Process description

  The client planned to restructure intragroup indebtedness totalling more than RUB 42bn. The transaction was complicated by tax risks, as well as restrictions imposed by currency and sanctions regulations.

• Result

  The Tax Compliance team analysed currency and tax legislation as well as their application, including issues related to repatriation of funds under loan agreements, tax consequences of assignment of rights, transfer of debt, thin capitalisation rules for leasing companies and application of provisions of double taxation avoidance agreements.
  
  As a result of the project, Tax Compliance team managed to offer the client a way of carrying out a business transaction which would meet the requirements of currency legislation as well as be the least exposed to the risks of tax legislation violation (including debt transfer between the Group companies / forgiveness of debt in the framework of economic relations between the "parent" - "subsidiary" companies).
  
  In addition, the Tax Compliance team was able to identify areas of tax efficiency improvement in relation to the proposed transaction, in particular, it proposed a method of transaction that allowed avoiding tax payments under thin capitalisation rules.

• Employees involved

  Mikhail Begunov, Nikita Zharov, Andrey Solomyany

• Process description

  In the course of an on-site tax audit, the tax authority questioned the reality of the Company's relationships with a number of disputed counterparties. As a consequence, the tax authority reconstructed the Company's tax liabilities, which were based on information about real business transactions. At the same time, the tax authority denied the Company the right to a VAT deduction for relations with real counterparties. In the opinion of the tax authority, the Company was not entitled to a separate VAT deduction (as part of the reconstruction) due to the expiration of the three-year period established by Art. 172 of the Tax Code, as a prerequisite for applying deductions.

• Result

  Tax Compliance team helped the client to prepare a legal position and represented the company in court proceedings. The court of the first instance fully satisfied the claims of the Company, admitting unlawful additional charges of VAT (including the appropriate amount of penalties). The decision of the court may have a significant impact on the development of practice of application of Article 54.1 of the Tax Code, in particular on the issue of the procedure of determining the actual size of the tax liabilities and the inapplicability of the condition of the deadline for claiming deductions in case of tax reconstruction.

• Employees involved

  Mikhail Begunov, Nikita Zharov, Andrey Solomyany

• Process description

  Under the contract, the client (the general contractor) was to receive income from the client. At the same time, the client had a payable to a subcontractor. The client was interested in setting off the counterclaims and analysing the resulting tax risks.

• Result

  As a result of the project, Tax Compliance team managed to assess potential tax risks related to the transaction for the client and suggest ways to minimise them (changing the documents on business transactions, justifying the existence of a "business purpose" of the transactions, etc.).

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).