Developing a legal structure for a large Russian catering company
The client had the task of reorganizing the legal structure of the business. Significant problems in implementing the project were: (1) restrictions on corporate matters by the founders; (2) a significant amount of accumulated deductions for inseparable improvements; (3) possible tax risks associated with the foreign element of the business. In view of the above, the taxpayer was offered ways to reorganize the existing legal structure. The Tax Compliance team has prepared a guide on how to implement the said project with the least risk of future tax claims.
The client received a guide on how to improve the existing legal structure and with step-by-step actions to implement it
Judicial protection in bankruptcy proceedings at the request of the authorized body
Representing the company in arbitration court in bankruptcy proceedings at the request of the tax authority
The tax authority filed an application for declaring the Company bankrupt in order to satisfy the claim for tax arrears collection through bankruptcy proceedings. Tax Compliance specialists have developed a defense position justifying the absence of grounds to recognize the application of the tax authority as justified and the need to terminate proceedings in the case
The court accepted the arguments of the Company, acknowledged the application of the authorized body unfounded and dismissed the bankruptcy proceedings
Advising a major client on the peculiarities of becoming a resident of the Free Port of Vladivostok
The client planned to create a legal entity and make investments in the free port of Vladivostok. After the project was implemented, the legal entity to be created was to provide hotel services. The client contacted a consultant to analyze his investment project for compliance with the requirements for SPV residents. (Project implemented by employee before joining Tax Compliance)
As a result of the analysis, the client received a clear understanding of the main tax incentives for SPV and related requirements, as well as received clarifications regarding his investment project
Identification of potential tax risks of intragroup financing of companies through loans
This project examined the tax risks associated with raising loans from Russian banks and the subsequent financing of companies within the group with these funds. In particular, a whole pool of risks related to accounting for tax purposes of specific bank commissions (payments for opening a "credit line", etc.), potential reclassification of transactions and others was analyzed. (The project was implemented by an employee before joining Tax Compliance)
The client received a detailed explanation of the tax consequences, risks and ways to minimize them.
Working out optimal ways of tax accounting of marketing activities for a large British technology company
In this project the client was given the task to develop a marketing policy, the inventory of existing marketing activities and development of optimal ways of tax accounting of these activities. The project concerned interaction with bloggers and celebrities, bonus payments, outdoor advertising and advertising in shopping malls, commercial product testing, etc. (The project was implemented by an employee before joining Tax Compliance)
Marketing policy was developed for the client, taking into account the recommendations to optimize tax risks. The client also received a detailed description of the tax consequences and accounting methods of the relevant transactions.
Advising a major U.S. corporation on tax risks associated with an intragroup license agreement for an ERP system
The client planned to enter into a license agreement between the U.S. parent company and a Russian subsidiary for an expensive ERP system. A large "security dossier" was prepared for this agreement in order to present it to the tax authorities during an audit. The consultant was given the task of assessing the key tax risks related to the above transaction, as well as to research the weaknesses of the security dossier and formulate recommendations on strengthening the client's position. (The project was implemented by the employee before joining Tax Compliance)
The client received an assessment of tax risks and recommendations for their minimization, as well as clear proposals for changing the contractual structure.
Seizure of documents and inspection of premises as part of an on-site tax audit
Representation of client's interests in the framework of inspection of warehouse and office premises. Representation of the client during the seizure of original documents as part of an on-site tax audit.
Alexander Dmitriev, Yulia Pavlova
At the beginning of the working day the employees of the tax authority entered the territory of the enterprise and paralyzed the work, forbidding the employees to perform their official duties. Shipment and loading was suspended due to the inability to process the necessary documentation. An employee and lawyers of TC arrived to the place of tax control measures as soon as possible and ensured legal protection of the client, having prevented disruption of production and normal functioning of the client's warehouse.
After a conversation with the tax officials, a mutual understanding was reached and the inspection of the premises together with the seizure of documents was carried out in stages, without interfering with the production processes of the enterprise.
Support for the procedure of obtaining installment payments on taxes
Verification of the grounds for the client's tax deferral
The client was provided with services for the preparation of documentary substantiation of compliance with all the criteria for obtaining installment payments, calculated financial indicators of solvency and current liquidity to obtain installment payments due to the threat of bankruptcy risks. An analysis of the most rational way to ensure tax liabilities, depending on the value of the company's assets and, in general, the procedure for obtaining one or another type of security. Prepared documents in respect of the property of the company, acting as security for the performance of obligations to pay taxes within the period specified in the schedule of debt repayment.
The tax authority accepted the documents and the application for installment payment, the client was given the opportunity to pay tax during the calendar year.
Advice on the legality of the calculation of excise duties as a result of improving the quality of an existing petroleum product
Advising on the legality of the calculation of excise taxes on petroleum products in connection with the change in the approach to the interpretation of the provisions of the Tax Code of the Ministry of Finance of Russia.
The client in the conditions of the oil depot, is engaged in improving the quality of fuel. Since the client did not produce a new product, no excise tax was calculated on the product received. In 2020 the Ministry of Finance of Russia changed its position, on which a number of clarifications were issued, on the basis of which the tax authority sent the client an information letter with the proposal to clarify its tax liabilities for the past tax periods. The client requested advice on the lawfulness of calculating excise duties on petroleum products due to a change in the approach to the interpretation of provisions of the Tax Code by the Russian Ministry of Finance.
The client developed a legal position to challenge the actions of the tax authority on the procedure for determining the object of taxation
Restructuring of business in order to apply exemption from VAT and insurance premiums
Elimination of tax risks of unreasonable splitting of client's financial and economic activity due to redistribution of income to several organizations in order to meet the criteria for tax relief.
Mikhail Begunov, Yulia Pavlova
A fast-casual catering client needed to restructure its business so that each created company could apply the income tax and insurance contributions exemption. The purpose of the developed legal position was to prove the absence of interdependence between the client and the established companies, to confirm the economic independence of the activities of the established companies, to exclude the tax risks inherent in the scheme of illegal business splitting due to the conclusion of a commercial concession agreement between the participants of financial transactions.
Implementation of the project allowed to reduce the tax burden of the client in subsequent tax periods by at least 200 million rubles per calendar year
Confirmation of the absence of an unjustified tax benefit in the form of a surcharge on goods
Confirm the actual movement of goods from importer to customer, confirm the absence of a scheme to obtain an unjustified tax benefit
An on-site audit was carried out in relation to a client, as a result of which additional VAT and profits tax were charged on relations with a controlled transit counterparty. According to the tax authority, the actual purchase of goods was carried out directly from a foreign supplier. As part of the legal defense, a legal position has been developed to calculate and document the actual expenses of the Company on the acquisition of goods based on the price set by the foreign counterparty, as well as costs associated with the transportation of goods. Due to the absence of primary documents, the Company initiated an independent expert assessment of the market value of transportation and other direct expenses included in the markup of goods from the disputed counterparties.
According to the results of the developed legal position it was possible to prove the lack of controllability between the participants in the chain of contractual relations, to confirm the economic feasibility of the transaction, as well as the reality of the financial and economic activities of the disputed counterparties.
Preparation of a legal position to confirm the reality of the relationship with the disputed importers of goods
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.
Mikhail Begunov, Yulia Pavlova
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.
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.
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.
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.
Support of tax control measures to confirm the reality of providing services by contractors
Elimination of tax risks of understatement of the tax base for VAT and income tax
Mikhail Begunov, Yulia Pavlova
A large distribution company sought legal assistance to develop a legal position justifying the involvement of disputed logistics companies. The tax authority disputed the reality of providing logistics services because the goods were not stored in the warehouses stated in the primary documents with the counterparties, including the tax authority found the controllability of the involved logistics companies and the lack of sufficient manpower to provide services to the client. As a part of audit support services were rendered for preparation of answers to demands of tax authorities for clarification and documentation of actual goods movement through warehouses of separate subdivisions of the company and further transfer of goods both to logistics companies and ultimate purchasers of the client. Services were rendered to strengthen the legal position, including preparation and accompaniment of client's representatives for questioning by the tax authorities. Prepared legal position with documentary evidence of availability of material resources from counterparties to provide logistics services to the client.
According to the results of consideration of the explanations and documents provided by the client on the actual order of execution of obligations by the disputed counterparties, it was possible to prove that the transactions concluded were not aimed at obtaining unjustified tax savings.
Reconciliations of mutual settlements with tax authorities and non-budgetary funds as part of business liquidation
Settlement of debts to the budget as part of settlements with non-budgetary funds. Extend the period of voluntary liquidation through the court. To complete voluntary liquidation
TAX COMPLAENS was approached by the owner of a large hotel complex, who received a decision to refuse to register a liquidation balance sheet and make an entry in the Unified State Register of Legal Entities on the termination of the company in connection with liquidation. The reason for the decision to refuse the existence of unfulfilled obligations to non-budgetary funds, namely the Pension Fund of the Russian Federation. After analyzing the reasons for the refusal it was discovered that the company was in debt to the amount of 5 million rubles, but there was no information on the debt in the personal accounts submitted to the tax authority by the Pension Fund. In connection with the fact that the company submitted the documents to the registration authority 11 months after the start of liquidation and received the refusal to register the specialists of LLC "TAX COMPLAENS" applied to the court for the extension of the voluntary liquidation by 6 months
As a result of interaction of specialists of "TAX COMPLAENS" Ltd. with tax authorities and the Pension Fund all necessary actions to correct unreliable information about debts to the budget were taken and the legal entity ceased its activities by excluding it from the Unified State Register of Legal Entities as a result of voluntary liquidation.
Pre-verification analysis in connection with business liquidation
Development of legal position substantiating the purpose of reorganization / liquidation of some enterprises. As part of the pre-inspection analysis, the participation of Tax Compliance attorneys in interrogations of directors and employees of companies and submission of documents upon request
A client who owns a chain of restaurants on the territory of the Russian Federation applied to the company for the reorganization / liquidation of some of the enterprises most affected by the worsening situation due to the spread of a new coronavirus infection. After notification of the tax authorities about the beginning of the reorganization / liquidation procedure, the client received requests for documents on financial and economic activities of the enterprises as part of the pre-inspection analysis
As a result of pre-inspection analysis not a single legal entity was not assigned to an on-site tax audit. The client subsequently turned to TAX COMPLAENS LLC to support the reorganization / liquidation of companies.
Tax Compliance attorneys advised on tax risks for a petroleum products company
The Client was under the threat of a field tax audit and additional tax charges if the company did not voluntarily submit revised excise tax returns and did not pay the tax and penalties. The lawyers evaluated the materials of tax authorities, available judicial practice, and clarifications of the Ministry of Finance and Federal Tax Service. As the result our lawyers reasoned to the Client that voluntary tax payment is more efficient for the Client than an on-site tax audit and further litigation in courts, including the fact that the amount of taxes to be paid voluntarily would be considerably smaller. Tax Compliance attorneys developed a new approach to the application of the letter of the Ministry of Finance and prepared a legal position to substantiate the advisability of independent calculation of tax liabilities of the Client on excise taxes and their voluntary payment to the budget, due to changes in the approach of the Russian Federal Tax Service in terms of charging excise taxes when mixing oil products, as well as the current negative judicial practice on this topic.
The client prepared a refined tax return and completed the tax calculations. We managed to avoid penalties and fines of more than 190 million rubles.
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.
Preparation of a cassation appeal against the judicial acts of the first and appellate instances in connection with the requirement to send the case for a new review
Preparation of the legal position of the cassation appeal in relation to the circumstances surrounding the refusal of the court of appeal to accept complaints from individuals brought to subsidiary liability
The Moscow Arbitration Court issued a ruling rejecting the taxpayer's claims to invalidate a non-normative legal act of the tax authority. In its reasoning, the court concluded that a number of individuals were involved in the organization, as well as the creation by them of a "scheme" of tax evasion by the company. Subsequently, the above conclusions of the court served as the basis for the tax authority to apply to the court for bringing the individuals to subsidiary liability. On the basis of the circumstances described by the court of first instance, the physical persons have prepared and sent to the court an appeal in rebuttal of the conclusions of the court of first instance. The court of appeal refused to consider the appeal of individuals and terminated proceedings on them motivating its determination by the fact that the appealed judicial act does not directly affect the legal rights of the appellant and does not impose on it unlawful duties.
The individuals filed a cassation appeal in which they disclosed the circumstances that affected the court's ruling to bring them to subsidiary liability based on the judicial act of the court of first instance. Based on the results of consideration of the cassation appeal, the court sent the case for a new review to the court of appellate instance. The court found that the findings of the trial court affected their legal rights by virtue of their subsidiary liability under another court case.
Litigation defense of Russia's largest distributor of household chemicals, personal care products, perfumes, decorative cosmetics and other consumer goods.
The client petitioned the court to invalidate the tax authority's decision based on the results of the on-site tax audit, according to which he had been charged with substantial amounts of NGOs and VAT, as well as related penalties and fines in the amount of 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. Enforcement of this decision could have caused significant damage to the company and paralyzed its operations (given the significant amount of tax charges that could have been critical to the client's business).
Thanks to professionalism of Tax Compliance lawyers we managed to choose the right line of defense, based on which the court of the first instance partially upheld the client's claims (most of additional tax charges were declared illegal). It also set an important precedent and resulted in positive arbitration practice of annulling tax authorities' decisions. This case supported the approach according to which the taxpayer should not be held liable for the actions of third parties. According to independent experts, the dispute may be of great importance for the practice of application of Article 54.1 of the Tax Code in general and, in particular, for large taxpayers who make extensive use of the services of third-party transportation and logistics companies, such as those operating in the FMCG sector. In addition, interim measures were obtained in this dispute, which allowed the company to stay afloat until the resolution of the dispute on the merits (preventing the debit of funds from the company's accounts).
Protecting the interests of the largest supplier of oil and gas equipment to domestic and global industry leaders.
Mikhail Begunov, Yulia Pavlova
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").
Represented a major distributor of perfumes and cosmetics in a tax dispute in arbitration court in a criminal case for tax evasion on the grounds of the crime under Part 2 Article 199 of the Criminal Code.
Mikhail Begunov, Alexander Dmitriev
Investigative authorities have initiated criminal proceedings against managers of an organization on the grounds of committing a crime under part 2 of Art. 199 of the Criminal Code of the Russian Federation. Our lawyers have analyzed the resolution on institution of criminal proceedings and came to the conclusion that it may be cancelled on the following grounds: First reason for cancellation - in the framework of the preliminary investigation the Client's officials, who managed the company during the tax audit, were not interrogated, the role of each of them is not defined, that does not allow to make a conclusion on the presence of the actions of a specific person of the elements of the crime, provided by Art. 199 part 2 of the Criminal Code. 2 OF THE CRIMINAL CODE. The second reason for cancellation - the decision of the tax authority to prosecute for a tax offense suspended by the arbitration court before making a decision on the court case on the Company's application to recognize the decision of the tax authority invalid and, in addition, by the time of institution of criminal proceedings established by Article 32 § 3 of the Tax Code has not expired, and, respectively, the materials of the tax authorities were sent to investigative authorities in violation of the law.
Tax Compliance attorneys were able to prove the illegality of the initiation of criminal proceedings, the prosecutor's office considered the complaint and issued a resolution to cancel the investigator's resolution to initiate a criminal case. The initiation of criminal proceedings against the Client under Art. 199 of the Criminal Code was cancelled by the prosecutor's office.
Represented a major supplier of shut-off and control valves in a criminal case brought under Article 199 of the Russian Criminal Code before the tax authorities' decision on the field audit.
Mikhail Begunov, Alexander Dmitriev, Yulia Pavlova
At the stage of pre-trial appeal of the tax authorities' decision, the law enforcement officers included in the audit, without waiting for the completion of the tax audit, forwarded the collected materials to the investigating authorities for initiation of a criminal case under part 2 article 199 of the Criminal Code. The criminal case was brought against the CEO and an unidentified group of people from the company's management. The amount of damage, according to the tax and investigative authorities amounted to more than 500 million rubles.
In accordance with the correctly built strategy of defense in the investigation of the criminal case and as a result of additional measures of tax control, lawyers and employees of Tax Compliance provided documents on "tax reconstruction", disclosed the real tax liabilities, as well as conducted an examination of the costs of transporting goods, which allowed to reduce the damages to 80 million rubles and termination of the criminal case on the fact of absence of corpus delicti in connection with the payment of arrears.
Representing a major distributor in court on the issue of interim measures and suspension of the tax authority's decision
The client, with the support of Tax Compliance, applied to court for suspension of the tax authority's decision based on the results of an on-site tax audit. Enforcement of that decision could have caused considerable damage to the company and paralyzed its activity, taking into consideration the substantial amount of tax charges that could have been critical for the client's business.
We managed to work out a convincing legal position, based on which the court took interim measures. Representatives of the tax authority appealed the interim measures, but thanks to the efforts of our lawyers the court ruling was upheld, despite the fact that according to statistics less than 37% of applications for interim measures are satisfied by the courts.
Reducing insurance premiums and structuring the assets of a large tolling company
Reduce insurance premiums and structure assets
A business model was proposed and implemented where the company is organized in the form of a production cooperative. The members of the production cooperative do not receive a salary, but a share of the net profit; these payments are not subject to insurance premiums according to the current tax legislation.
As a result of the introduction of the production cooperative, transactions within the holding company were structured, resulting in a reduction in insurance premiums of more than 20% of the annual payroll.
Transaction structuring and tax planning at FMCG group of companies
As a result, successful structuring and tax planning efforts eliminated risks in excess of 80 million ₽.
In the course of structuring the transactions, risks in terms of price thresholds between interdependent companies within the group were established, regulations and additional rules were developed and implemented by all companies of the group to justify the correct application of prices when selling products within the group, as well as to support the feasibility of transactions between them.
As a result, successful structuring and tax planning efforts eliminated risks in excess of 80 million ₽.
Preparation of documents for joining the tax monitoring system, updating accounting policy for tax accounting purposes
Connection to the tax monitoring system and reducing the risk of additional additional tax assessments.
Within support of the procedure of transfer to tax monitoring the client was rendered services on preparation of documents according to the requirements of the Federal Tax Service Russian FTS. In particular, it was actualized and brought in compliance with the effective tax legislation, the accounting policy for tax accounting purposes, documents regulating the company's internal control system were prepared of the company, and prepared tables and data on coordinators of of subdivisions and levels of control within the company.
Successful work on the analysis and preparation of documents required for the transition to tax monitoring, as well as interaction with the tax authority to address procedural issues in connecting to the tax monitoring system, allowed the client to take advantage of the transition to this mode of tax control and reduce the risk of additional additional tax assessments.
The company's interests in the case of violation of currency legislation were protected in arbitration courts of three instances.
June 2019 - March 2020
Mikhail Begunov, Andrey Solomyany
In the opinion of the tax authority, the organization violated the term for receiving (returning) the deposit by a resident of foreign currency in accordance with the terms of the loan agreement issued by the taxpayer to the foreign company
As a result, all claims of the tax authority with regard to violation of terms for receiving foreign currency by a resident in accordance with the terms of the loan agreement were successfully challenged in courts of 3 instances, as the tax authority did not take into account the submitted additional agreements to the loan agreement with the foreign company.
Challenging additional charges to a major retailer in a case concerning the application of tax deductions for VAT on recycled goods
As a result, claims of the tax authorities were successfully challenged in the arbitration court after the second round of judicial appeal since the Tax Compliance lawyers managed to prove the reality of transportation of fruits from the importer to the disputed supplier. They also provided a technological description of the utilization of the goods and the validity of the VAT deduction for the disputed transaction. Translated with www.DeepL.com/Translator (free version)
The tax authority charged the grocery retailer additional VAT and income tax on the fruit supplier, citing the impossibility of tracing the goods from the importer to the final supplier for this delivery, as well as the presence of formal claims against the supplier. Also in connection with the fact that the fruit supplied was of improper quality and disposed of by the client within the same tax period, the tax authority further argued the impossibility of applying VAT deductions due to the lack of the object of taxation.
As a result, claims of the tax authorities were successfully challenged in the arbitration court after the second round of judicial appeal since the Tax Compliance lawyers managed to prove the reality of transportation of fruits from the importer to the disputed supplier. They also provided a technological description of the utilization of the goods and the validity of the VAT deduction for the disputed transaction.