Cases

FMCG

The lawyers proved at the pre-trial stage of the dispute with the tax authorities that the intermediary companies had indeed been operating: they presented documentary evidence that the counterparties could perform their delivery obligations and had sufficient material and human resources, confirmed the flow and transportation scheme, and 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 that did not contain the scheme of withdrawal of funds for the benefit of the inspected company by minimizing the tax burden.

Lawyers successfully challenged act of tax audit and reduced tax payments by 10 times.

Mikhail Begunov, Yulia Pavlova

Information technology

The client appealed to the arbitration court with a claim to the tax authority to invalidate the decision made on the basis of the field tax audit. The basis for the accrual of additional taxes, penalties and fines served as the basis for the conclusions of the tax authority that the Client received a tax benefit in the relationship with several counterparties, which, as telecommunications operators, could not provide services for traffic transit in connection with the fact that they had signs of organizations that do not perform real financial and economic activities. A particular difficulty in proving the case lies in the fact that the "traffic service" is not tangible and can not be visualized, so it was very difficult to collect evidence of the reality of transmitting traffic. As the result of legal efforts and well-designed defense strategy the court of the first instance partially rendered a judgment in favor of the Client. In this case the court saw an opportunity to interpret the concept of "due diligence" in favor of telecom companies. This approach (if supported by higher courts) can be used by other recipients of similar services (in particular, telecommunications companies), both at the stage of selecting counterparties, and when defending against claims of tax authorities.

Tax Compliance team managed to defend around 50% of additional tax charges (in terms of corporate income tax, the client's claims were recognized as legitimate). This dispute is unique and constitutes positive arbitration practice for the entire telecommunications industry.

Mikhail Begunov, Denis Kozhevnikov, Andrey Solomyany

Retail

The Client petitioned the court to suspend the tax authorities' decision based on the results of an on-site tax audit according to which the tax authorities had charged substantial amounts of additional tax and VAT as well as penalties and fines totaling over 3 billion rubles. Most of the claims were related to expenses for logistics services because the tax authority suspected that they were of a fictitious nature. The lawyers worked out a legal position on the expediency of suspension of the tax authority's decision. As part of the litigation we provided documents confirming the movement of goods from the Client's suppliers to the end buyer with the participation of logistics companies, as well as with the help of experts, confirmed the market value of services. Cash write-offs from company accounts were converted, allowing the Client to continue business operations and avoid significant financial losses.

Thanks to position developed by lawyers and provided evidence, the court took interim measures and actually suspended the tax authorities' decision. An important precedent was created and positive arbitration practice on cancellation of tax authorities' decisions was formed. Judicial practice has developed an approach according to which a taxpayer should not be held liable for the actions of third parties. According to independent experts, the case may be of importance for the practice of application of Article 54.1 of the Tax Code (interaction with technical participants in transactions solely for the purpose of reducing tax liabilities) in general and, in particular, for large taxpayers who make extensive use of the services of third-party transportation and logistics companies, such as in the FMCG industry.

Mikhail Begunov, Denis Kozhevnikov

Manufacturing companies

The tax audit was carried out in respect of the Client; as a result of it the tax authority decided to assess additional VAT and profit tax on the relations with the controllable transit counterparty created for the purpose of artificial document flow in order to withdraw money for uncontrolled turnover through the one-day companies. The lawyers contested the decision of the tax authorities, worked out a legal position that allowed calculating and documenting the Client's actual expenses related to the purchase of goods, and successfully initiated an independent expert evaluation of the market value of transportation expenses included in the surcharge on goods from the transit counterparty.

The amount of charges was reduced by 520 million rubles, or 85% of tax claims. Lawyers formed the law enforcement practice under Article 54.1 of the Tax Code of the Russian Federation in terms of real tax liabilities ("reconstruction of VAT and income tax").

Mikhail Begunov, Yulia Pavlova

Manufacturing companies

The tax authorities charged the Client with additional VAT and income tax. As the result, tax authorities assumed the existence of fictitious supplies of goods to four counterparties. In two episodes, mechanisms were applied to calculate the tax reconstruction within the framework of Art. 54.1 of the Tax Code (the interaction with the technical participants of the transaction solely for the purpose of reducing the tax liabilities). The lawyers contested the results of on-site tax audit in the pretrial order at the stage of filing objections to the act of the audit, as well as addendums to the act. The lawyers performed a comprehensive analysis of the Client's business, estimated the average market value of the goods purchased from the disputed counterparties, confirmed the reality of the counterparties' business operations by analyzing supply contracts, interviewing counterparties' employees, and analyzing bills of lading for the delivery of goods.

As the result of tax audit and additional control measures provided by the lawyers, the Client managed to avoid large additional charges from unfair counterparties. According to results of pre-trial legal defense, the lawyers managed to dispute 85% of additional tax charges of total amount of tax claim and thus saved a considerable amount of circulating assets for the Client.

Mikhail Begunov, Yulia Pavlova