Associates with Legal Alliance has made a precedent in a tax case

Team of professionals of Legal Alliance has made a judicial precedent and asserted the position of its client in a complex analogous case.

The position of the tax authority was based on the fact that the relationship between taxpayers with their counterparties were allegedly not real and rather fictitious one, and the arguments were based primarily on information that counter checks on such counterparties was impossible to conduct.

Courts of the first and appellate instances delivered a judgment in favor of the tax authority, while the Supreme Administrative Court of Ukraine has canceled such decision and sent the case back for retrial.

The Supreme Administrative Court of Ukraine, in its judgment, inter alia, noted that there is no reason to hold liable economic entities, in particular counterparties, for the failure of another entity to comply with the obligations on proper bookkeeping, as well as the fact that the liability for the inaccuracy of the data in primary documents shall be allocated to persons responsible for accounting and compilation of these primary documents. Therefore counterparties of the company can not be held liable for the negligent performance of their duties on the compilation of primary documents.

In addition, the court noted that the representatives of the State Enterprise "Ukrspetstechnika system" had provided documents demonstrating the real nature of committed transactions with counterparties. This position is consistent with the principles of individual liability of taxpayers, which are incorporated in the tax legislation of Ukraine.

During the retrial, the District Administrative Court of Ukraine upheld the claim and canceled the controversial tax decisions.

The case was supported by the counsel Natalya Lavrenova and the associate Konstantin Boiko.