Specially for the Yurydychna Gazeta
VAT reimbursement, especially when it is related to the export of grain, is of course not an easy process, but the tax office often tries to make it much more difficult.
So, for the year 2022-2023, we had 25 court cases against tax authorities and all of them were won for our clients.
However, the latest court case has us worried. And not only about the fate of 4 million hryvnias of the client’s VAT, but also about the stability of judicial practice in this area and fair justice as such.
The fact is that the tax office tries to apply new tactics every time it draws up acts and makes a decision. This time, despite the new-old arguments of the tax office, which are completely baseless, the first instance and the appeal refused to grant us the claim. Hope remained only in the Supreme Court, which not only did not let us down, but also to our joy clearly confirmed the mistakes of the previous instances, which we insisted on.
As for practical conclusions from this case, the Supreme Court once again confirmed the immutability of the following approaches:
– The presence or absence of certain documents, as well as deficiencies in their execution, cannot be the basis for concluding that there are no economic transactions, if changes in the structure of assets and liabilities, in the company’s own capital in connection with its economic activity can be seen from other data.
– The position of the Supreme Court is established that the violation by certain suppliers of goods (works, services) in the supply chain of the requirements of tax legislation or the rules of conducting economic activity cannot be the basis for a conclusion that an unfounded tax benefit has been received by a bona fide taxpayer.
– Even proven defectiveness of one of the primary documents for a part of the goods does not confirm the unmerchandisability of the entire lot or contract.
– The Tax Office cannot determine the presence or absence of business transactions between entities based on the register of tax invoices, because they may not be VAT payers. Usually, such situations arise when transportation is carried out by non-VAT payers, that is, tax invoices for such transactions are not registered, and the tax office makes the wrong conclusion that there was neither transportation nor goods.
– The taxpayer cannot be responsible for the formation of documents in relationships in which he was not a party. For example, for freight invoices, as the goods were delivered at the expense of the supplier.
– If there is an elevator and especially a port at the place of delivery, they must issue and register warehouse documents, this significantly helps to bring the commerciality of the operation.
– The tax office cannot refer to facts and/or documents and their absence in a court hearing, if they were not investigated during the audit and are not the basis of the conclusions set forth in the act.
And we would also like to add: compliance, control of execution of documents by the counterparty, collection of documents along the supply chain are certainly not the responsibility of your business, but if you reimburse VAT, then these actions will significantly reduce the risks of tax claims and increase the chances of success of the court case, if any.