Construction

Industries

Construction

  • analysis of tax risks associated with various forms of involving individuals in construction projects (self-employed, IE, outstaffing, etc.).
  • development of a model for accounting for income and expenses identified after the completion of work for tax purposes (as a result of revising the approximate cost of work or other changes).
  •  development and implementation of the strategy for applying VAT deductions when the contractor (subcontractor) refuses to issue an invoice.
  • analysis of compliance with the criterion of connection with the taxable activity for the purposes of application of VAT deductions.
  • Industry Experts

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Andrey Solomyany
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Yulia Pavlova

Some our cases

Construction 50 million ₽
Pre-court settlement of tax disputes

Development of a legal position confirming the reality of relations between a leading Russian construction company and its counterparties, as well as the unlawful additional accrual of income tax

  • Employee involved

    Ivan Tsvetkov

  • Process description

    The company purchased goods used in construction at the customer's facilities, paying for the supplies by means of the transfer of promissory notes. As a result of an on-site tax audit, the tax authority concluded that the Company's expenses for purchasing the aforementioned goods were not actually confirmed, on the basis of which it assessed additional VAT and corporate profit tax on all transactions with counterparties. The tax authority also assessed additional personal income tax and insurance contributions on the amount of promissory notes transferred as payment for the above transactions, qualifying these expenses as dividends of a person controlling the Company.

  • Result

    As a result of developing a legal position, preparing objections to the act, supporting additional tax control measures, preparing objections to the supplement to the act, as well as representing the Company during the consideration of audit materials by the tax authorities, the tax authorities managed to prove the unreasonableness of additional charges in terms of income tax, personal income tax and insurance premiums, thereby reducing the amount of additional charges by 76%.

Construction Successfully
Tax Audit

Assessment of the tax consequences of the liquidation of public utilities and social infrastructure facilities with their subsequent restoration.

  • Process description

    Within the framework of this project, a construction company was interested in the tax qualification of an agreement providing for a construction company to demolish social infrastructure facilities with the subsequent construction of new facilities and their transfer to the owner instead of the demolished facilities. In particular, the Client was interested in a wide range of profit tax and VAT issues, including the tax qualification of the transaction as reimbursable (barter) or gratuitous, potential tax risks and other. (The project was implemented by an employee before joining Tax Compliance)

  • Result

    As a result of the study, the client received a clear map of tax consequences, a description of tax risks and ways to minimize them.

Construction More than 50 millions ₽
Tax reserves

Supporting the client (owner of one of the largest shopping malls in Moscow) in challenging the cadastral value of the property

The tax provision for corporate property tax was identified and the process of reducing the cadastral value of the property was passed

  • Employee involved

    Nikita Zharov

  • Process description

    The client was interested in finding tax reserves for corporate property tax. The team identified an opportunity to reduce the cadastral value of the property, helped collect the necessary evidentiary basis and accompanied the legal process of contestation.

  • Result

    As a result of the lawsuit, the cadastral value of the property was reduced by more than 25 percent. The tax savings for the client amounted to more than 50 million rubles.

Construction Successfully
Health-check

Express - analysis of client's business activities for the presence of tax risks

Tax Compliance team carried out a health-check of client's business activities for the presence of tax risks

  • Employees involved

    Mikhail Begunov, Nikita Zharov, Oksana Kalashnikova

  • Process description

    The Tax Compliance team had the task to perform an express analysis of the client's business activities to check the presence of tax risks. The project successfully applied the model of "risk-oriented" approach that implies checking the areas of the Company's business activities most exposed to tax risks (income tax and VAT).

  • Result

    Based on the results of the analysis, the Tax Compliance team has identified certain business transactions that are the most associated with tax risks and developed a set of measures aimed at reducing them.

Construction Successfully
Analysis of the system for interaction with counterparties

Analysis of the effectiveness of the taxpayer's internal control system for selecting and interacting with counterparties

Increased efficiency of internal control system for the client's selection and interaction with counterparties

  • Employees involved

    Mikhail Begunov, Nikita Zharov, Oksana Kalashnikova

  • Process description

    The Tax Compliance team was tasked to analyze the client's internal control system for the risks of entering into/interacting with "technical" companies. The project analyzed: (1) internal documents of the client; (2) the client's approach to audit activities in relation to potential / existing counterparties; (3) the functionality of the client's responsible employees.

  • Result

    The Tax Compliance team identified ineffective areas of the internal control system and prepared recommendations aimed at reducing the risks of entering into business relationships/interactions with "technical" companies.

Construction Successfully
Support in the framework of pre-test analysis

The tax authority decided not to conduct an on-site tax audit of the taxpayer

  • Employees involved

    Mikhail Begunov, Nikita Zharov

  • Process description

    The tax authority, as part of its pre-inspection analysis, concluded that the taxpayer had accounted for tax purposes for business transactions with "technical" companies. In view of the above, the taxpayer was offered to adjust its tax liabilities by more than 17 million rubles. The Tax Compliance team helped the client to elaborate a legal position that confirmed: (1) the reality of business transactions with the disputed counterparties; (2) the client's "commercial" discretion before entering into relations with the disputed counterparties; (3) the reality of obligations fulfillment under transactions directly by the declared counterparties.

  • Result

    The tax authority accepted the arguments of the taxpayer, and decided not to conduct an on-site tax audit against him.

Construction 39 million ₽
Pre-court settlement of tax disputes

Preparation of a legal position confirming the reality of engaging subcontractors

The client was rendered services to draw up an objection to the act of a tax audit, additional materials of tax control, the basis for the collection of taxes was the assumption of the tax authority that the organization has not carried out construction work on the site.

  • Purpose

    Confirm the actual performance of works by subcontractors for the construction of the Moscow-St. Petersburg Expressway, confirming the absence of a scheme to obtain an unjustified tax benefit

  • Employee involved

    Alexey Stanchin

  • Process description

    An on-site audit was carried out in respect of the client, as a result of which additional VAT was charged on the counterparty. According to the tax authority, in fact the specified work was not performed by the disputed counterparty, but was performed by the taxpayer itself or other organizations. In the legal defense developed a legal position, which proved that the performers were part of the same group of companies, consisting of more than 12 legal entities. The taxpayer, when working with the counterparty considered it as a single economic entity and could not know about the corporate structure of the counterparty.

  • Result

    According to the results of the developed legal position it was possible to confirm the economic feasibility of the transaction, as well as the reality of the financial and economic activities of the disputed counterparties.

Construction 1 billion ₽
Support in the framework of pre-test analysis

Preparation of a legal position to confirm the reality of the relationship with subcontractors

The client sought advice on the preparation of objections to the protocol of the commission on the legalization of the tax base. Based on the results of the pre-inspection analysis, the tax authority found the subcontractors involved to be controlled, as well as risks indicating that the counterparty did not have the resources to perform the work.

  • Purpose

    Elimination of tax risks of understatement of the tax base for VAT and income tax

  • Employee involved

    Yulia Pavlova

  • Process description

    Tax control measures were carried out in relation to the client, the tax authority indicates the need to clarify the tax liabilities of the client on the subcontractor. According to the tax authority, the contractor involved could not perform work for the client. As part of the legal defense and preparation of a response to the protocol of the commission was able to prove the lack of involvement of the client in the regulation of the disputed counterparty, to confirm the economic feasibility of engaging a controversial counterparty.

  • Result

    The implementation of the project allowed to save the client's current assets, exclude the possibility of the appointment of a field tax audit.

Construction Successfully
Support of tax audits

The client was provided with services to appeal the results of the field tax audit and preparation of documentary evidence to confirm the reality of work performed by subcontractors.

  • Purpose

    Elimination of tax risks of understatement of the tax base for VAT and income tax

  • Employees involved

    Mikhail Begunov, Yulia Pavlova

  • Process description

    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.

  • Result

    Implementation of the project allowed to reduce the amount of income tax and VAT arrears

Construction Successfully
refund

Confirmation of the validity of the application for VAT refund outside the three-year period

Confirm the possibility of a VAT refund

  • Purpose

    Services were rendered to confirm the actual costs of the shared participant in the construction of non-residential premises

  • Employee involved

    Mikhail Begunov

  • Process description

    A legal entity, a shareholder of non-residential premises construction, applied for legal assistance on VAT refund from the budget on invoices issued by agency method through the developer of the construction. The builder had been deducting invoices for a long period of more than 5 years and reissued them to the client. As part of the audit support, we were able to develop a legal position confirming the reality of work performed by the developer's counterparties, including the validity of VAT refunds from the budget on invoices beyond the three-year period.

  • Result

    As a result of consulting on the submission of supporting primary documents, preparation of contractor witnesses, it was possible to refund the entire claimed amount of VAT from the budget.

Construction Successfully
refund

Support of VAT refund procedure

Confirm the possibility of a VAT refund

  • Purpose

    Confirmation of the actual costs of a large developer-investor to obtain a VAT refund from the budget

  • Employee involved

    Mikhail Begunov

  • Process description

    The client was rendered services on justification of expenses for construction of non-residential premises. As a result of support of desk audit of VAT return for refund, the tax authority established the illegality of claimed deductions in the chain of suppliers due to the lack of a source for VAT refunds. As part of the audit support, the tax authority succeeded in developing a legal position that confirmed the reality of performing the work by contractors. They also managed to prove that there were no grounds to hold the client liable for the actions of third parties for non-payment of taxes to the budget and formation of VAT gaps.

  • Result

    As a result of consulting on the submission of supporting primary documents, preparation of contractor witnesses, it was possible to refund the entire claimed amount of VAT from the budget.

Construction Successfully
Support of tax audits

Preparation of a legal position to confirm the reality of the relationship with subcontractors

The client was provided with services to appeal the results of the field tax audit and preparation of documentary evidence to confirm the reality of work performed by subcontractors.

  • Purpose

    Elimination of tax risks of understatement of the tax base for VAT and income tax

  • Employees involved

    Mikhail Begunov, Yulia Pavlova

  • Process description

    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.

  • Result

    Implementation of the project allowed to reduce the amount of income tax and VAT arrears

Construction Successfully
Pre-court settlement of tax disputes

Preparation of a legal position confirming the reality of delivery of goods by a subcontractor

The client was provided services to appeal the results of an on-site tax audit, according to the act was established the minimization of tax liabilities on the difference between the cost of works and materials supplied and the withdrawal of this difference in order to illegally cash out through the subcontracting "transit" companies.

  • Purpose

    Confirmation of the actual size of the client's tax liabilities due to the tax reconstruction procedure.

  • Employees involved

    Mikhail Begunov, Yulia Pavlova

  • Process description

    According to the results of an on-site tax audit, the tax authority points to the creation of a fictitious document flow with subcontractors engaged in order to acquire, in fact, goods (building materials), while overstating the cost of construction and VAT deductions. The amount of tax arrears is calculated from the full amount of the transaction on financial and economic relations with the disputed counterparties. As a part of support of additional tax control measures we rendered services on preparation of legal position for tax reconstruction in order to calculate the actual tax liabilities of the client. The primary documents confirming the client's expenses on purchase of materials used in construction of the facilities were submitted to apply the computational method of tax liabilities determination.

  • Result

    As a result of successfully developed legal position at the stage of support of additional measures of tax control it was possible to reduce the amount of additional tax charges in the amount of not less than 3 billion rubles.

Construction Successfully
Pre-court settlement of tax disputes

Support of the client in appealing to the Central Office of the Federal Tax Service of Russia against the decision of the tax authority on the issue of bringing to responsibility for willful non-payment of taxes

The Federal Tax Service has decided to reduce the amount of penalties for non-payment of taxes

  • Employees involved

    Mikhail Begunov, Nikita Zharov

  • Process description

    The tax authority based on the results of a tax audit held the taxpayer liable for non-payment of taxes. On appeal, the superior tax authority accepted some of the taxpayer's arguments, but refused to take into account certain mitigating circumstances in order to reduce the amount of penalties. The Tax Compliance team helped the client develop a legal position for submission to the Central Office of the Russian Federal Tax Service.

  • Result

    The Central Office of the Federal Tax Service accepted the arguments of the taxpayer. In particular, certain mitigating circumstances were taken into account. As a result, the amount of penalties was reduced fourfold.

Construction Successfully
Subsidiary liability for tax offenses

The client is interested in the analysis of potential risks of bringing individual individuals to subsidiary liability

  • Duration

    Preparation of an expert opinion with an assessment of the risks of subsidiary liability

  • Purpose

    Preparation of an opinion with an analysis of the risks of bringing individuals to subsidiary liability for the company's obligations and possible mechanisms to reduce these risks

  • Process description

    An on-site tax audit was conducted in relation to a construction company. The transactions with "unscrupulous" counterparties were the subject of the audit. The client contacted Tax Compliance to assess the risks of bringing individuals who participated in the management of the audited company to subsidiary liability and possible actions to mitigate these risks

  • Result

    After analyzing the documents and information provided, Tax Compliance consultants prepared an expert report describing the risks of bringing the interested individuals to subsidiary liability for the obligations of the company subject to a field tax audit, as well as recommendations for specific steps to mitigate such risks.

Construction Successfully
Development of a detailed step-by-step action plan for the liquidation of the business

Development of a detailed step-by-step plan for the voluntary liquidation of intra-holding companies

The client has decided to reduce the areas of business, due to lack of liquidity.

  • Purpose

    Analysis of activities and development of a detailed action plan and measures to minimize risks in the liquidation of intra-holding companies

  • Employee involved

    Alexander Dmitriev

  • Process description

    The Austrian company had a number of subsidiaries on the territory of Russian Federation, engaged in sales, warranty services and development of technical documentation for ship equipment. Due to the recession of economic activity and purchasing power of business, the company decided to reduce its presence on the Russian market and made a decision to close a number of directions.

  • Result

    After an in-depth analysis of financial and economic activities of companies and assessment of risks a detailed plan describing all stages of liquidation of legal entities was drawn up. One of the stages was the reconciliation of mutual settlements with intra-holding companies and withdrawal of the parent company from the Austrian jurisdiction. There was also a plan for the transfer / dismissal of more than 150 employees of the liquidated legal entities. Translated with www.DeepL.com/Translator (free version)

Construction 7.5 mln ₽
Pre-court settlement of tax disputes

Support of the client in appeal against the decision of the tax authority on the issue of bringing to responsibility for willful non-payment of taxes

Cancelled the decision of the tax authority to hold the taxpayer liable under paragraph 3 of Article 122 of the Tax Code ("willful" failure to pay taxes).

  • Employees involved

    Mikhail Begunov, Nikita Zharov

  • Process description

    Based on the results of a tax audit, the tax authorities brought the taxpayer to liability provided for in Paragraph 3, Article 122 of the RF Tax Code ("willful" failure to pay taxes / 40% fine). Tax Compliance team helped the client develop a legal position according to which the tax authority had no grounds for qualification of the taxpayer's actions as "intentional".

  • Result

    The higher tax authority accepted the arguments of the taxpayer. In particular, the qualification of the tax offense was changed and additional mitigating circumstances were taken into account. As a result, the penalties were reduced by 87%. The economic effect for the client was 7.5 million ₽.

Construction Successfully
Advice on taxation of CFCs

Support of the client at the stage of advising on payment of taxes from CFC profits, as well as assistance in preparing a tax amnesty declaration

Services were rendered to the beneficiary of a construction company for retrospective disclosure of information on participation in a controlled foreign company and on the existence of bank accounts opened outside the Russian Federation.

  • Employee involved

    Yulia Pavlova

  • Process description

    At the time of drawing up and submission of notifications to the tax authorities the statute of limitations under p. 1 of Article 129.6 of the Tax Code had not expired, i.e. the client still had the risk of tax liability for untimely disclosure of information about the CFC. In order to exclude tax liability for failure to submit CFC notifications for previous tax periods, the client was provided with services to prepare a special tax declaration allowing to apply the tax amnesty under the Federal Law of May 29, 2019 № 110-FZ within the voluntary declaration of their assets. Also within the framework of the project we assessed the grounds for the absence of an individual's obligations to withhold personal income tax from the profit of a CFC.

  • Result

    As a result of legal defense, tax liability and penalties for late submission of CFC notifications due to the application of tax amnesty provisions were avoided

Construction 30 mln ₽
Tax Audit

Overpaid insurance premiums were refunded to a large manufacturing company

The company incorrectly calculated and paid SIF contributions for three years

  • Purpose

    Return overpaid insurance premiums

  • Employee involved

    Anna Karpova

  • Process description

    The company incorrectly calculated and paid Social Insurance Fund contributions for three years. The company's specialists audited personnel documents, as well as all tax returns and payments to the funds.

  • Result

    Tax Compliance specialists conducted a tax and personnel audit, restored personnel documents for three years and prepared revised tax returns. As a result, more than 30 million rubles of overpaid insurance premiums were returned from the budget.

Construction Successfully
Tax support of transactions

Automated business processes in a manufacturing group of companies

There was no interaction structure within the group of companies. It took 5 employees and a long period of time to generate management reports and accounting sets of documents.

  • Purpose

    Set up and automate internal accounting and management accounting between group companies

  • Employee involved

    Anna Karpova

  • Process description

    The client set a task to set up and automate internal accounting and management accounting between the companies of the group. Initially, there was no structure of interaction between departments and in general between the companies of the group, for the formation of management reports and accounting set of documents involved 5 people and required a long period of time.

  • Result

    The specialists of our company have developed reporting forms, set up a chain of interaction between employees of the organizations in the group, reduced the number of employees involved in the formation of all the necessary reports to 2 people. Accounting set of documents is formed automatically due to the introduction of external processing to the program 1C

Construction Successfully
Tax Audit

Successful tax audit to identify "problematic" counterparties

The tax authority has sent an information letter to encourage the taxpayer to adjust the tax base for VAT and make an additional payment to the budget of 80 million ₽.

  • Duration

    2019

  • Employees involved

    Mikhail Begunov, Alexander Dmitriev

  • Process description

    In the course of tax audit of problematic counterparties, real tax risks in terms of relationships with suppliers were established, which amounted to 15 million ₽. In the other part of the requirements of the tax authority were not proved: the organization provided the primary documents with the substantiation of the reality of supplies, as well as the documents on full reflection by the suppliers of the amounts of proceeds from sales in VAT declarations, and their contact information.

  • Result

    As a result of a successful tax audit, the organization independently adjusted the tax base for VAT and paid 15 million ₽ on their own. This allowed avoiding field tax audits and additional penalties.

Construction 50 mln ₽
Pre-court settlement of tax disputes

It was proved that there was no affiliation with suppliers, and reality of subcontractors’ activities.

Claims of the tax authority were partially eliminated. Claims of the tax authority on the involvement of "unscrupulous counterparties" were withdrawn.

  • Duration

    October 2019 - March 2020

  • Employees involved

    Mikhail Begunov, Alexander Dmitriev

  • Process description

    With the help of additional tax control measures, the reality of subcontractors' activities was proved. The absence of intent in the actions of the client and lack of affiliation with suppliers, which partially confirmed the disputed shipments, was proved.

  • Result

    Claims of the tax authority for the field inspection report were appealed and partially withdrawn. Positive pre-trial appeal against the acts of tax authorities in favor of taxpayers under 54.1 of the Tax Code was formed.

Construction 139 mln ₽
Pre-court settlement of tax disputes

The reality of subcontractors' activities was proved and the claims of the tax authority were withdrawn.

Claims of the tax authority to have "unscrupulous contractors" in the chain of subcontractors were disputed.

  • Duration

    December 2018 - April 2019

  • Employees involved

    Alexander Dmitriev, Yulia Pavlova

  • Process description

    With the help of additional tax control measures, the reality of subcontractors' activities was proved. The absence of intent in the client's actions was proved. The tax authority calculated tax liabilities without primary documents.

  • Result

    Claims of the tax authority on the field inspection report were appealed and withdrawn. A positive pre-trial appeal against the acts of the tax authorities in favor of the taxpayers under 54.1 of the Tax Code was formed.

Construction 70 mln ₽
Support of tax audits

Support of a field audit of a construction company and preparation of a tax reconstruction calculation that allowed to reduce the amount of tax claims by half

During the on-site tax audit, the Inspectorate found that the Company had concluded contracts for construction work and the supply of building materials with "technical" organizations that were financially and administratively controlled by the Company.

  • Employees involved

    Mikhail Begunov, Yulia Pavlova

  • Process description

    The task was complicated by the fact that - the volume of money transfers from the Company to "technical" organizations was 70% and higher; - Access to bank accounts and the electronic document management system with the fiscal authorities was carried out from the same device at the same time interval; - overlap of key employees; - coordination of business activities of "technical" organizations was performed by the Company; - the Company had direct relations with the actual suppliers and contractors before the inclusion of "technical" organizations in the chain of suppliers and contractors; - part of funds sent by the Company to the accounts of "technical" organizations was subsequently transferred by them to the accounts of actual suppliers and contractors.

  • Result

    Our lawyers have achieved the application of tax reconstruction according to the letter № БВ-4-7/3060@ of 10.03.2021 issued by the Federal Tax Service of Russia, thanks to which the Inspectorate has taken into account the real amount of expenses, attributable to the services of actual contractors and suppliers. Also, to confirm the reality of the expenses we have prepared and submitted a package of documents. Actions of Tax Compliance lawyers helped to reduce the amount of tax claims by half and formed the practice of tax reconstruction.