The admission of the fiscal service to an audit results in no opportunity to further challenge the authority to conduct it

The admission of the fiscal service to an audit results in no opportunity to further challenge the authority to conduct it

The taxpayers’ claims aimed to challenge decisions, actions or omissions of supervisory authorities with respect to scheduling and/or conducting audits, can be subject to consideration if only by the time of the court decision there was no admission of officials to the audit under challenge.

The Supreme Court has decided so in its resolution in the case No. 804/1113/16.

The dispute has arisen since pursuant to the schedule the fiscal service ordered to conduct a documentary scheduled on-site audit, issued the report on completion thereof, basing on which a tax decision notice as to increase of company’s monetary VAT obligations and penalties was rewarded.

The claimant whilst applying to the court and requiring invalidation of the order, referred to the fact that the moratorium on audits was applicable to the company pursuant to the Final Provisions of the Law of Ukraine No. 71-VIII dated 28 December 2014 (hereinafter – “Law No. 71-VIII”).

The panel of judges noted that a taxpayer claiming the order and the grounds for scheduling a tax audit, in particular, an on-site one, are violated, shall protect its rights by means of no admission of officials to conduct audit. If the admission to the tax audit took place, only the essence of the revealed violations of tax and other legislation shall be the subject matter of consideration in court.

Thus, the panel of judges finds the conclusions of the court of first instance justified, because the claimant admitting officials of the supervisory authority to conduct the audit shall cease to have the right to challenge the order on on-site audit thereafter.

Due to these circumstances, invalidation of the report cannot result in restoration of the company’s violated rights, since such are violated by the audit aftereffect in the form of a tax decision notice.

At the same time, the claimant shall be free to challenge the said tax notice decision on the grounds of its incompatibility with the law or the competence of the supervisory authority, including the grounds for applying a state-guaranteed moratorium on audits provided for by the Final Provisions of Law No. 71-VIII.