The appeal excluded the client from the list of risky VAT payers

Case context

The tax authority recognized the client as meeting the risk criteria for a VAT payer. The basis was a general reference to paragraph 8 of the Risk Criteria and transactions with a counterparty that the tax authority considered risky.

The client repeatedly submitted explanations and documents that disclosed his business activities. Despite this, the court of first instance refused to satisfy the claim, so the case went to appeal.

Strategy

Lawyer Ksenia Ovsyannikova argued that the State Tax Service did not disclose specific tax information that allegedly confirmed the client's riskiness, and did not identify specific risky transactions or tax invoices.

The position was built on the tax authority's obligation to prove the legality of its decision, rather than shifting this burden onto the taxpayer.

Process progress

The Court of Appeal found that the State Tax Service's conclusion was in fact based on a general statement about a risky counterparty. The Court took into account the practice of the Supreme Court: it is the supervisory authority that must justify the information on the basis of which it reached a conclusion about riskiness and provide appropriate evidence.

The court concluded that the defendant had not proven the existence of grounds for applying paragraph 8 of the Risk Criteria to the client.

Experience the Power of Effective Results

The client's appeal was fully satisfied. The decision of the Khmelnytskyi District Administrative Court of 11/17/2023 was canceled.

The court found unlawful and canceled the decision of the State Tax Service dated 15.08.2022 No. 1137 on the compliance of the client with the criteria for the riskiness of a VAT payer. The State Tax Service Main Directorate in Khmelnytskyi region was obliged to exclude the client from the list of risky payers. 20,130 UAH of legal costs were also collected.

The role of our team

• appealed the negative decision of the first instance;
• proved the lack of specific tax information regarding the client's riskiness;
• achieved the exclusion of the client from the list of risky VAT payers.