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.

It has been proven that the adoption of interim measures will not upset the balance of public and private interests and will allow the client to continue to conduct its business.

• Employee involved

  Mikhail Begunov

• Process description

  The client, with the support of Tax Compliance, applied to court for suspension of the tax authority's decision based on the results of an on-site tax audit. Enforcement of that decision could have caused considerable damage to the company and paralyzed its activity, taking into consideration the substantial amount of tax charges that could have been critical for the client's business.

• Result

  We managed to work out a convincing legal position, based on which the court took interim measures. Representatives of the tax authority appealed the interim measures, but thanks to the efforts of our lawyers the court ruling was upheld, despite the fact that according to statistics less than 37% of applications for interim measures are satisfied by the courts.

• Employees involved

  Mikhail Begunov, Nikita Zharov

• Process description

  The client applied for the purpose of identifying and assessing tax risks that may arise in the course of realisation of transactions with shares in the charter capitals of the Companies.

• Result

  The Tax Compliance team conducted due diligence in connection with planning transactions with shares in the authorised capital of the Companies. The key feature of the project was the assessment of the impact on tax consequences of the presence of a substantial amount of retained earnings on the balance sheet of the Companies, which were planned to be distributed immediately after the acquisition of shares by the Client. As a result of the project, the Tax Compliance team assessed for the Client the tax risks that may arise in connection with the transactions. In particular, in the course of the project implementation Tax Compliance specialists: (1) conducted comprehensive due diligence of transactions; (2) assessed the possibility of reclassification of transactions by the tax authority; (3) structured the planned transactions taking into account the tax consequences of their execution.

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.

The client was provided with services to support an on-site tax audit and development of a legal position to confirm the costs of logistics services of unfair counterparties.

• Purpose

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

• Employees involved

  Mikhail Begunov, Yulia Pavlova

• Process description

  A large distribution company sought legal assistance to develop a legal position justifying the involvement of disputed logistics companies. The tax authority disputed the reality of providing logistics services because the goods were not stored in the warehouses stated in the primary documents with the counterparties, including the tax authority found the controllability of the involved logistics companies and the lack of sufficient manpower to provide services to the client. As a part of audit support services were rendered for preparation of answers to demands of tax authorities for clarification and documentation of actual goods movement through warehouses of separate subdivisions of the company and further transfer of goods both to logistics companies and ultimate purchasers of the client. Services were rendered to strengthen the legal position, including preparation and accompaniment of client's representatives for questioning by the tax authorities. Prepared legal position with documentary evidence of availability of material resources from counterparties to provide logistics services to the client.

• Result

  According to the results of consideration of the explanations and documents provided by the client on the actual order of execution of obligations by the disputed counterparties, it was possible to prove that the transactions concluded were not aimed at obtaining unjustified tax savings.

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

• 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.

The client provided services to appeal against the results of a field tax audit, the basis for the collection of taxes was the assumption of the tax authority of the fictitious nature of the transaction to increase the price of goods

• Purpose

  Confirm the actual movement of goods from importer to customer, confirm the absence of a scheme to obtain an unjustified tax benefit

• Employee involved

  Mikhail Begunov

• Process description

  An on-site audit was carried out in relation to a client, as a result of which additional VAT and profits tax were charged on relations with a controlled transit counterparty. According to the tax authority, the actual purchase of goods was carried out directly from a foreign supplier. As part of the legal defense, a legal position has been developed to calculate and document the actual expenses of the Company on the acquisition of goods based on the price set by the foreign counterparty, as well as costs associated with the transportation of goods. Due to the absence of primary documents, the Company initiated an independent expert assessment of the market value of transportation and other direct expenses included in the markup of goods from the disputed counterparties.

• Result

  According to the results of the developed legal position it was possible to prove the lack of controllability between the participants in the chain of contractual relations, to confirm the economic feasibility of the transaction, as well as the reality of the financial and economic activities of the disputed counterparties.

The reality of the activities of subcontracting organizations was proved and the claims of the tax authority were removed

• Duration

  February 2023 - May 2023

• Purpose

  Challenge the tax authority's claims that the company used "unfair counterparties" in a chain of subcontractors.

• Employees involved

  Mikhail Begunov, Ivan Tsvetkov

• Process description

  A tax authority refused to take into account VAT expenses and deductions in respect of a taxpayer's relations with several counterparties. Taks Compliance specialists have developed a position which provides for both a full appeal against additional tax assessments on several episodes and the application of "tax reconstruction".

• Result

  Arguments and arguments formed for the taxpayer were accepted by the tax authority. Tax claims were reduced by 80%: by more than 410 million rubles.

• Employees involved

  Mikhail Begunov, Ivan Tsvetkov, Nikita Zharov

• Process description

  The Tax Compliance team was given the task of analyzing the tax risks associated with the procedure for taxing the income of individuals working outside of Russia.

• Result

  The Tax Compliance team has identified the areas most exposed to tax risks and prepared recommendations for improving document management (in terms of processing the client's labor relations with employees working outside of Russia) based on the results of the analysis.

The tax authority's position on the application of price adjustments between parties to a financial and economic transaction has been appealed as part of the tax audit of transfer pricing.

• Employee involved

  Mikhail Begunov

• Process description

  Price adjustment would have entailed an additional charge of income tax on the formed tax base based on the market prices of the transaction. The project developed a legal position indicating that the formed pricing corresponds to the market level, because the calculation of the cost of the taxpayer's goods contains production costs, economically justified in terms of the type of activity.

• Result

  As a result of the successful legal defense, additional tax assessments in the amount of 280 million ₽ were avoided.

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.

A transportation company sought advice on assessing tax risks in a transaction involving the sale of interest-bearing bonds.

• Purpose

  Structuring of tax risks and minimization of possible tax claims

• Employee involved

  Mikhail Begunov

• Process description

  A client engaged in helicopter transportation rendered consulting services for the analysis of tax risks in a transaction involving the sale of interest-bearing bonds, which resulted in a loss. Due to the fact that the securities are not traded on the organized securities market and were sold to a related party, there was a risk of additional profit tax charges when accounting for expenses on the purchase of securities.

• Result

  Implementation of the project made it possible to eliminate the probability of tax claims

• Employees involved

  Mikhail Begunov, Nikita Zharov

• Process description

  Due to the imposed sanctions, "unfriendly" participants in a Russian company were planning to sell a business in Russia. The potential buyer of the business was a Russian retailer. The client was interested in analyzing tax risks, currency and anti-sanctions restrictions in relation to a potential transaction to acquire a business from unfriendly residents.

• Result

  The Tax Compliance team at the end of the project: (1) analyzed the application of anti-sanctions and currency regulation acts; (2) identified and described tax risks associated with the implementation of the transaction; (3) developed a plan for the implementation of the transaction taking into account all risks and restrictions.

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

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.

Reduced the amount of damage by six times and achieved the termination of the criminal case

• Employees involved

  Mikhail Begunov, Alexander Dmitriev, Yulia Pavlova

• Process description

  At the stage of pre-trial appeal of the tax authorities' decision, the law enforcement officers included in the audit, without waiting for the completion of the tax audit, forwarded the collected materials to the investigating authorities for initiation of a criminal case under part 2 article 199 of the Criminal Code. The criminal case was brought against the CEO and an unidentified group of people from the company's management. The amount of damage, according to the tax and investigative authorities amounted to more than 500 million rubles.

• Result

  In accordance with the correctly built strategy of defense in the investigation of the criminal case and as a result of additional measures of tax control, lawyers and employees of Tax Compliance provided documents on "tax reconstruction", disclosed the real tax liabilities, as well as conducted an examination of the costs of transporting goods, which allowed to reduce the damages to 80 million rubles and termination of the criminal case on the fact of absence of corpus delicti in connection with the payment of arrears.

Client support within the framework of obtaining the status of an accredited IT company

• Employees involved

  Mikhail Begunov, Nikita Zharov

• Process description

  The Tax Compliance team had the following tasks: (1) to analyze the possibility of obtaining the status of an accredited IT company by the organization; (2) accompany the client in obtaining the status of an accredited IT company.

• Result

  Based on the results of the analysis, the Tax Compliance team suggested that the client finalize the organization’s website in order to ensure its compliance with the requirements established by Decree of the Government of the Russian Federation of September 30, 2022 N 1729. After making adjustments, the Tax Compliance team: (1) helped the client collect a package of documents required to apply for obtaining the status of an accredited IT company; (2) assisted the client in drafting a statement confirming the share of the company's income from IT activities. Based on the results of consideration of the client's application, it was decided to include it in the list of organizations accredited in the field of IT.

Recommendations were prepared to change the structure of economic relations within the Group in order to comply with the requirements of Article 54.1 of the Tax Code of the Russian Federation

• Employees involved

  Mikhail Begunov, Nikita Zharov

• Process description

  The team had the task to analyze the nature of the Group's activities for the risks of imputing the scheme of "splitting" the business. The team analyzed: (1) circumstances of business entities within the Group in terms of meeting the conditions for the application of special tax regimes; (2) circumstances of creation of certain business entities; (3) specifics of business relationships within the Group.

• Result

  Based on the results of the analysis, the risks of qualifying the nature of the Group's activities as a "split" business scheme were identified and recommendations for changing the structure of business relationships within the Group were developed.

• Employees involved

  Mikhail Begunov, Nikita Zharov

• Process description

  The tax authority sent a Russian branch of an international engineering group a request for documents and information. The auditors analyzed the intra-group transactions of the Russian branch. In order to assist in preparing a response to the request, the Client contacted Tax Compliance specialists.

• Result

  As a result of the project, the Tax Compliance team: (1) analyzed the documents and information requested by the tax authority; (2) drafted a timely response to the tax authority's request; (3) described the client's tax risks in relation to intra-group services.

• Employee involved

  Mikhail Begunov

• Process description

  The client was interested in a number of services regarding the transition to tax monitoring (hereinafter referred to as TM): - diagnosing readiness to join the TM with the development of recommendations and a roadmap; - finalization and formalization of the internal control system in terms of the tax function and the tax risk management system in order to comply with the requirements of the Federal Tax Service of Russia; - preparation of a package of documents in the formats approved by the Federal Tax Service of Russia for submission upon entry into the tax monitoring regime; - development of requirements for the information system of tax monitoring for the possibility of providing access to it to the tax authority; - development of requirements for electronic archive;

• Result

  Diagnostics of the Company's readiness to join the NM was carried out, a road map was developed. Improved and formalized systems of internal control and tax risk management. A package of documents for entry into the NM has been prepared. The documents, including the regulation on information exchange and regulations on internal control and tax risk management systems, have been agreed upon and successfully adopted by the tax authority. Requirements for the tax monitoring information system and electronic archive were developed, discussions were held with the developers. The documents have been agreed upon and successfully accepted by the developers.

The client provided services to appeal the results of the field tax audit, the basis for the recovery of taxes was the assumption of the tax authority of the fictitious nature of the supply of equipment to some suppliers.

• Purpose

  Confirm the actual movement of goods from the importer to the customer, to confirm the absence of tax benefits in the form of overvaluation of goods.

• Employees involved

  Mikhail Begunov, Yulia Pavlova

• Process description

  As part of the on-site tax audit, the tax authority assumed the deliberate involvement of dubious counterparties in the chain of financial relationships to artificially increase the price from the importer. The developed legal position made it possible to prove that the involved counterparty imported goods in the declared volumes, which is confirmed by the information reflected in the customs declarations. Primary documents confirming the availability of goods in the client's warehouses during the audited period, as well as counterparties' expenses for the delivery of goods to the client were presented.

• Result

  As a result of successful appeal we managed to reduce the amount of additional tax charges to 83 million rubles. It was important for the client's business to challenge the additional charges based on the results of the field tax audit, as their size is substantial and in case of non-payment there is a risk of bringing the CEO of the organization to criminal liability.

• Employees involved

  Mikhail Begunov, Nikita Zharov

• Process description

  A client registered a company in an IFZA freezone in the UAE. He needed to open a corporate account with a bank in the UAE for settlements with counterparties.

• Result

  The TC team helped the client to open corporate accounts (in AED / USD) in a bank in the UAE. As part of the project, our specialists assisted with the preparation of the necessary documents and communication with the bank's representatives.

• Employees involved

  Mikhail Begunov, Nikita Zharov

• Process description

  A client provides IT services for a parent company. The company believed that the IT services provided to the parent organisation may not comply with the provisions of the Russian Tax Code for the application of tax exemptions. The company contacted Tax Compliance in order to assess the possibility to apply tax exemptions.

• Result

  The Tax Compliance team as a result of the project: (1) analysed the client's intercompany agreements to determine the validity of tax exemptions for IT companies; (2) developed proposals to adjust agreements and primary documentation to ensure their compliance with tax legislation.

Development of requirements for the functionality of an analytical data mart for the purposes of tax monitoring

• Purpose

  Develop requirements for the functionality of an analytical data mart for the purposes of tax monitoring

• Employee involved

  Mikhail Begunov

• Process description

  The client was interested in providing the following services: - development of business requirements and functional requirements for the analytical data mart; - support of communication with an IT integrator during the implementation of a data mart.

• Result

  The analysis of business processes and IT systems of the Company, mechanisms of their interaction was carried out. Business requirements for the functionality of the data mart were formed based on the requirements of the Federal Tax Service of Russia, the requirements and wishes of the Company, and the best practices for implementing data marts. There was a discussion of business requirements with an IT integrator, as well as a discussion of the capabilities and logic of the integrator's IT solution. The functional requirements for the system were formed and agreed with the integrator, support was provided for the development and testing of the data mart.

• Employees involved

  Mikhail Begunov, Nikita Zharov, Andrey Solomyany

• Process description

  In the course of an on-site tax audit, the tax authority questioned the reality of the Company's relationships with a number of disputed counterparties. As a consequence, the tax authority reconstructed the Company's tax liabilities, which were based on information about real business transactions. At the same time, the tax authority denied the Company the right to a VAT deduction for relations with real counterparties. In the opinion of the tax authority, the Company was not entitled to a separate VAT deduction (as part of the reconstruction) due to the expiration of the three-year period established by Art. 172 of the Tax Code, as a prerequisite for applying deductions.

• Result

  Tax Compliance team helped the client to prepare a legal position and represented the company in court proceedings. The court of the first instance fully satisfied the claims of the Company, admitting unlawful additional charges of VAT (including the appropriate amount of penalties). The decision of the court may have a significant impact on the development of practice of application of Article 54.1 of the Tax Code, in particular on the issue of the procedure of determining the actual size of the tax liabilities and the inapplicability of the condition of the deadline for claiming deductions in case of tax reconstruction.

The field tax audit period was disputed.

• Duration

  June 2019 - December 2019

• Employee involved

  Mikhail Begunov

• Process description

  The tax authority appointed a field audit after the company's reorganization started, although the field audit partially covers the periods of previous audits. An appeal was lodged to a higher tax authority. The field tax audit was reversed.

• Result

  We cancelled the results of the field tax audit for the previously inspected period. There is a positive practice of pre-trial appeal against the decision of tax authorities to appoint an on-site tax audit for the same tax period in case of its appointment in connection with the reorganization or liquidation of the company under Article 89 of the Tax Code.

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.

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.

Development of a description of a comprehensive internal control system and requirements for automation of control procedures when implementing a unified information system for accounting and tax accounting of the largest industrial holding

• Purpose

  Development of a description of a comprehensive internal control system and requirements for automation of control procedures

• Employee involved

  Mikhail Begunov

• Process description

  The client was interested in providing the following services: - development of a detailed description of the risks of the financial function (including accounting, formation of regulated reporting, planning and budgeting, treasury); - development of a description of control procedures covering the specified risks; - formation of a risk matrix and control procedures with analysts necessary for the Company; - development and implementation of documents regulating the definition of the boundaries of the internal control system of the financial function, updating its description, testing the effectiveness of the design and operational effectiveness of control procedures, conducting a procedure for assessing the effectiveness of the internal control system by the Company's management;

• Result

  An analysis of the business processes of the financial function was carried out, risks and controls were described, and a matrix of risks and controls was formed. Documents regulating the functioning of the internal control service, as well as a package of applied documents, have been formed. Requirements for the automation of control procedures and recommendations for further improvement of the internal control system have been developed.The company highly appreciated the results of the project and the effect of the introduction of a comprehensive internal control system - the results of the project helped to increase the management's confidence in the correctness of accounting and reporting data, the timeliness of payments, the completeness and correctness of budgets, reduce the risk of errors and inaccuracies, and increase the responsibility of employees.

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

• Employees involved

  Mikhail Begunov, Nikita Zharov

• 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.

Settled a dispute with the tax authority on the legality of accounting exchange rate differences for income tax purposes

• Employees involved

  Mikhail Begunov, Nikita Zharov

• Process description

  The Company was accounting for profit taxation purposes for income/expenses in the form of exchange rate differences. Based on the results of the on-site tax audit, the tax authority concluded that the Company's expenses in the form of exchange rate differences do not meet the criterion of documentary support and should not be taken into account for profit taxation purposes

• Result

  The Tax Compliance team has prepared an appeal to the superior tax authority (Department of the Federal Tax Service of the subject), in which it: (1) presented evidence of sufficient documentary support of the respective expenses; (2) pointed out the methodological errors committed by the auditors in calculating the additional tax charges. Upon consideration of the appeal, the superior tax authority upheld the Company's position in full.

The tax authority revealed violations of tax laws on relations with suppliers and charged the company with the appropriate mandatory payments

• Purpose

  Appealing the decision of the tax authority on the field tax audit of the relationship on the supply of raw materials with certain counterparties

• Employee involved

  Mikhail Begunov

• Process description

  According to the results of the second field tax audit in connection with the violation of the rules of Art. 54.1 of the Tax Code, the company was charged a significant amount of additional taxes and penalties in terms of transactions for the supply of raw materials concluded with several counterparties. During the trial, the court was presented with evidence of the uniqueness of the raw materials purchased from the disputed counterparties and their actual use in production, the circumstances of the conclusion and execution of transactions by the disputed counterparties, as well as the availability of material and labor resources in sufficient volume.

• Result

  The legal position developed by our specialists made it possible to appeal against additional tax charges of 117 million rubles on several counterparties. The court decision to invalidate the results of the field tax audit in this part was upheld in courts of appellate and cassation instances. The client was able to use the position developed to challenge the actions of the tax authority in the framework of field audits for other tax periods in respect of the same counterparties.

Challenging of the tax authority decision on violation of the terms of loan repayment, issued by the taxpayer to a foreign company.

• Duration

  June 2019 - March 2020

• Employees involved

  Mikhail Begunov, Andrey Solomyany

• Process description

  In the opinion of the tax authority, the organization violated the term for receiving (returning) the deposit by a resident of foreign currency in accordance with the terms of the loan agreement issued by the taxpayer to the foreign company

• Result

  As a result, all claims of the tax authority with regard to violation of terms for receiving foreign currency by a resident in accordance with the terms of the loan agreement were successfully challenged in courts of 3 instances, as the tax authority did not take into account the submitted additional agreements to the loan agreement with the foreign company.

The client was provided with services to appeal the results of a field tax audit, provided legal assistance to justify the disputed supply of raw materials and reduce the amount of taxes to be recovered

• Purpose

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

• Employee involved

  Mikhail Begunov

• Process description

  A tax audit was carried out in relation to the client, the basis for the collection of taxes was the assumption of the tax authority of the fictitious nature of the supply of raw materials for some suppliers. It was proved at the stage of objections and additional measures of tax control that it is necessary to measure quantitative indicators at the beginning and at the end of the production process. The tax authority was given the calculations for write-offs of the materials purchased from the disputed contractors and the information about the residuals of raw materials. The tax authority's claims have been partly withdrawn in relation to profits tax. The taxpayer's objections were partially satisfied in the amount of 343 mln rubles. Within the framework of the appeal to the superior body the client's claims on recalculation of tax liabilities were partially satisfied.

• Result

  A positive practice of pre-trial appealing the acts of tax authorities in respect of manufacturers of medicines is formed, taking into account the specifics of the industry. The importance of the project is to provide legal assistance to the manufacturer of vital and socially important drugs.

• Employees involved

  Mikhail Begunov, Nikita Zharov, Ivan Tsvetkov

• Process description

  The tax authority, as part of its pre-inspection analysis, concluded that the taxpayer used a "split" business scheme. In particular, the tax authority believed that: (1) the inclusion of a retailer who applied the simplified taxation system ("Counterparty") in the chain "producer - end buyer" is due solely to tax motives; (2) the taxpayer and the counterparty are interdependent business entities. In view of the above, the taxpayer was requested to adjust its tax liabilities and submit revised tax returns. The Tax Compliance team helped the client to elaborate a legal position confirming that (1) business transactions with the Counterparty are real; (2) business transactions with the Counterparty have a business purpose; (3) no interdependence exists between the taxpayer and the Counterparty.

• Result

  The tax authority accepted the arguments of the taxpayer.

We disputed the claim of the tax authority to suppliers of raw materials for medicines.

• Purpose

  Claims of the tax authority for income tax were partially withdrawn. The taxpayer's objections were partially satisfied in the amount of 343 million ₽. Positive practice of pre-trial appeal against acts of tax authorities in relation to manufacturers of medicines was formed taking into consideration the specifics of the industry.

• Employee involved

  Mikhail Begunov

• Process description

  At the stage of objections and additional activities it was proved that it is necessary to measure quantitative indicators at the beginning and at the end of the production process. The tax authority has been provided with calculations on writing-off materials purchased from contested counterparties and information on raw material remainders.

• Result

  Claims of the tax authority for income tax were partially withdrawn. The taxpayer's objections were partially satisfied in the amount of 343 million ₽. Positive practice of pre-trial appeal against acts of tax authorities in relation to manufacturers of medicines was formed taking into consideration the specifics of the industry.

• Employees involved

  Mikhail Begunov, Nikita Zharov, Andrey Solomyany

• Process description

  The client approached Tax Compliance to provide support in the development and promotion of a legislative initiative to extend IT business tax incentives to a new segment of IT companies.

• Result

  The Tax Compliance team helped the client develop a draft law aimed at extending tax incentives for IT businesses to a new segment of IT companies. As a result of the project, the Tax Compliance team prepared a resolution to the Ministry of Justice of the Russian Federation to promote the above legislative initiative. The legislative initiative is under consideration.

• Employees involved

  Mikhail Begunov, Nikita Zharov

• Process description

  The client purchases certain goods from suppliers, on the sale of which the suppliers apply a reduced rate of VAT. The client subsequently sells these goods as part of its own business activities, subjecting them to a VAT rate of 20%.
  
  The client was interested in analysing the possibility of applying a reduced VAT rate when selling the said goods, as well as the mandatory legal requirements that the client needs to comply with in order to achieve the said objective.

• Result

  As a result of the project, the Tax Compliance team managed to assess tax risks associated with the application of the reduced VAT rate for the Client and to suggest ways to minimize them.
  
  In particular, in the course of the project Tax Compliance specialists: (1) analyzed documentation relating to the products sold by the client; (2) developed proposals on changing the document flow in order to apply the reduced VAT rate.

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 ₽.

• Employees involved

  Mikhail Begunov, Nikita Zharov

• Process description

  When selling products, the customer uses a customer loyalty bonus program. Under the said loyalty program customers accumulate bonuses, with which they can later pay up to 100% of the cost of purchased products. The client was interested in the analysis of tax risks and procedure of registration of cash receipts in case of full payment of the cost of production by purchasers with bonuses.

• Result

  As a result of the project realization Tax Compliance team managed to assess tax risks related to VAT and income tax for the Client and to suggest the ways of their minimization. In particular, in the course of the project Tax Compliance specialists: (1) analyzed the Client's loyalty bonus program; (2) developed proposals to minimize the risks associated with the recognition of such sales of goods for bonuses as a gratuitous one.

We proved the illegality of the initiation of criminal proceedings and obtained the cancellation of the case by the prosecutor's office

• Employees involved

  Mikhail Begunov, Alexander Dmitriev

• Process description

  Investigative authorities have initiated criminal proceedings against managers of an organization on the grounds of committing a crime under part 2 of Art. 199 of the Criminal Code of the Russian Federation. Our lawyers have analyzed the resolution on institution of criminal proceedings and came to the conclusion that it may be cancelled on the following grounds: First reason for cancellation - in the framework of the preliminary investigation the Client's officials, who managed the company during the tax audit, were not interrogated, the role of each of them is not defined, that does not allow to make a conclusion on the presence of the actions of a specific person of the elements of the crime, provided by Art. 199 part 2 of the Criminal Code. 2 OF THE CRIMINAL CODE. The second reason for cancellation - the decision of the tax authority to prosecute for a tax offense suspended by the arbitration court before making a decision on the court case on the Company's application to recognize the decision of the tax authority invalid and, in addition, by the time of institution of criminal proceedings established by Article 32 § 3 of the Tax Code has not expired, and, respectively, the materials of the tax authorities were sent to investigative authorities in violation of the law.

• Result

  Tax Compliance attorneys were able to prove the illegality of the initiation of criminal proceedings, the prosecutor's office considered the complaint and issued a resolution to cancel the investigator's resolution to initiate a criminal case. The initiation of criminal proceedings against the Client under Art. 199 of the Criminal Code was cancelled by the prosecutor's office.

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.

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

• Employees involved

  Mikhail Begunov, Nikita Zharov

• Process description

  The Tax Compliance team had the task of analyzing the personal income tax risks that may arise for a shareholder of a large catering chain due to participation in a CFC. Since the establishment of the foreign organization, the client has not submitted a CFC notification to the tax authority. At the time of the opinion, the statute of limitations under the relevant article of the Tax Code had not expired. The client was interested in the analysis and cost estimate of tax risks for failure to submit CFC information.

• Result

  As a result of the analysis, Tax Compliance specialists prepared an opinion describing the tax risks and estimated their costs.

Advising a client on obtaining the status of an accredited IT company

• Employees involved

  Mikhail Begunov, Nikita Zharov

• Process description

  The Tax Compliance team was faced with the task of assessing the prospects for the client to obtain the status of an accredited IT company.

• Result

  Based on the results of the analysis, the Tax Compliance team came to the conclusion that in the current period the client does not meet the conditions established by Decree of the Government of the Russian Federation of September 30, 2022 N 1729. In addition, the Tax Compliance team developed a road map in which it outlined a possible algorithm of actions that will allow the client to apply for the status of an accredited IT company in the next period. The client's management approved the roadmap and decided to implement the Tax Compliance proposals in order to ensure the possibility to apply for the status of an accredited IT company in the next period

• Employees involved

  Mikhail Begunov, Nikita Zharov

• Process description

  The Client was considering the possibility of separating the IT function from the management company structure within the Group into a separate legal entity. In this regard, the Client was interested in analysing (1) the corporate structure of the Group for risks of claims related to the "split" of the business; (2) the business contracts of the newly established IT Company for compliance with the requirements of tax legislation in terms of the application of tax benefits for IT companies.

• Result

  In the course of the project implementation Tax Compliance specialists: (1) conducted a comprehensive analysis of interaction between the Group and IT-companies and prepared proposals for adjusting the corporate structure in order to reduce risks in terms of "splitting" the business; (2) developed proposals for adjusting the provisions of the agreement in order to ensure its compliance with the requirements of tax legislation in terms of applying tax benefits for IT-companies.

• Employees involved

  Mikhail Begunov, Nikita Zharov

• Process description

  The client (mainland - a company in the UAE) was interested in legal support of the procedure of dismissal of an employee. The process was complicated by the fact that it had to be completed within a short period of time before the employee left the UAE.

• Result

  The TC team assisted the client in the framework of dismissal of an employee, in particular: (1) drafting the necessary documents; (2) supporting communication with the UAE governmental authorities.

To dispute the claims of the tax authority on the improper use of tax credits for VAT.

• Duration

  June 2019 - December 2019

• Employees involved

  Mikhail Begunov, Alexander Dmitriev

• Process description

  Additional tax control measures were taken. Evidence of the absence of interdependence with suppliers of equipment was presented. The price of the purchased equipment is indicated to be corresponding to the market level. All established violations concerned beneficiaries-importers of the supplied products, rather than the taxpayer.

• Result

  Claims of the tax authority were disputed. A positive practice was formed on additional payments to companies that supply imported equipment through a chain of suppliers

• Employees involved

  Mikhail Begunov, Nikita Zharov

• Process description

  The client (mainland - a company in the UAE) was interested in legal support of an acquisition of assets in India. The TC team acted as a legal advisor within the framework of the project on the UAE side.

• Result

  Our experts accompanied the client in the process of obtaining authorization from the UAE governmental authorities for the transaction and assisted him in preparing an agreement for the acquisition of an asset in India.

• Employees involved

  Mikhail Begunov, Nikita Zharov, Andrey Solomyany

• Process description

  Under the contract, the client (the general contractor) was to receive income from the client. At the same time, the client had a payable to a subcontractor. The client was interested in setting off the counterclaims and analysing the resulting tax risks.

• Result

  As a result of the project, Tax Compliance team managed to assess potential tax risks related to the transaction for the client and suggest ways to minimise them (changing the documents on business transactions, justifying the existence of a "business purpose" of the transactions, etc.).

Analysis of the client's business structure for the possibility of applying the tax benefits provided for in the IT maneuver

• Purpose

  The Tax Compliance team had the task of analyzing certain types of business transactions for the possibility of applying VAT and income tax benefits.

• Employees involved

  Mikhail Begunov, Nikita Zharov

• Process description

  Analysis of individual business transactions for their compliance with the conditions for the application of VAT exemption and accounting for the purpose of 90% threshold of income from IT-activities was carried out.

• Result

  Based on the results of the analysis, Tax Compliance team has come to the conclusion that the business operations of the client comply with the conditions stipulated by Articles 149 and 284 of the Tax Code of the Russian Federation; recommendations on the improvement of the internal document flow in the company have been prepared as well. As a result, the client decided to start applying the tax benefits provided for by the IT maneuver.

• Employees involved

  Mikhail Begunov, Nikita Zharov, Alexander Dmitriev

• Process description

  The tax authority conducted an on-site audit of the client for all taxes and levies for a three-year period. As a result of the on-site tax audit, the auditors made claims on transactions with a number of counterparties. In the tax authority's view, the client had recorded business transactions with 7 technical entities in breach of Article 54.1 of the Tax Code.
  
  Tax Compliance specialists helped the client to successfully complete an on-site tax audit. In particular, in the course of the project the Team:
  
  (1) helped develop a legal position as part of the preparation of objections to the act;
  (2) represented the client in the meetings with the tax authorities;
  (3) accompanied the client in the framework of additional tax control measures.
  
  Due to the team's assistance, the testimony of the general director of one of the disputed counterparties was admitted into the tax audit file. The CEO's testimony helped convince the auditors that all of the client's business transactions with one of the disputed counterparties were real.

• Result

  The tax authority's additional charge was reduced by 40%.

The airline sought advice on the assessment of tax risks in the restructuring of debt on purchased discounted borrowings.

• Purpose

  Exclusion of tax claims from the tax authorities, structuring the transaction according to the model of issuing preferred shares by the company and the possibility of applying Article 277 of the Tax Code when offsetting obligations.

• Employee involved

  Mikhail Begunov

• Process description

  A client of a major airline company was advised on analyzing tax risks associated with the purchase of discounted debt from credit institutions and the offsetting of debt obligations against securities.

• Result

  Legal position aimed at justification and structuring of the transaction allowed the client to exclude the possibility of tax claims on income tax, as well as to take into account the losses of previous tax periods in the expenses.

The client received services to support tax control measures to verify the legality of the reflection of interest on loans received from an interdependent company with a foreign interest in the expenses and to verify compliance with currency legislation

• Purpose

  Confirmation of the economic feasibility of borrowing funds from a related company in order to avoid reclassification of the transaction as payment of "hidden" dividends.

• Employee involved

  Mikhail Begunov

• Process description

  As part of the ongoing activities, the tax authority planned to schedule an audit and recognize the transaction as an actual payment of dividends to the ultimate beneficiaries and recognition of interest on loans subject to capitalization and controlled indebtedness. As part of the legal assistance provided to the tax authority, documents and clarifications were prepared to confirm the actual purpose and direction of the use of borrowed funds.

• Result

  According to the results of consideration of materials, it was possible to prove that the transaction to attract the loan funds is not aimed at misrepresenting the facts of financial and economic activity and does not imply an intent to increase the cost of the client and receive an unjustified tax benefit for income tax.

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.

The client seeks advice on restructuring the business of three companies in order to apply the tax exemption for VAT and insurance premiums.

• Purpose

  Elimination of tax risks of unreasonable splitting of client's financial and economic activity due to redistribution of income to several organizations in order to meet the criteria for tax relief.

• Employees involved

  Mikhail Begunov, Yulia Pavlova

• Process description

  A fast-casual catering client needed to restructure its business so that each created company could apply the income tax and insurance contributions exemption. The purpose of the developed legal position was to prove the absence of interdependence between the client and the established companies, to confirm the economic independence of the activities of the established companies, to exclude the tax risks inherent in the scheme of illegal business splitting due to the conclusion of a commercial concession agreement between the participants of financial transactions.

• Result

  Implementation of the project allowed to reduce the tax burden of the client in subsequent tax periods by at least 200 million rubles per calendar year

The Federal Tax Service inspected the client and assessed additional VAT and income tax. Tax Compliance experts managed to reduce the additional charges by 85%.

• Employees involved

  Mikhail Begunov, Yulia Pavlova

• Process description

  The tax audit was carried out in respect of the Client; as a result of it the tax authority decided to assess additional VAT and profit tax on the relations with the controllable transit counterparty created for the purpose of artificial document flow in order to withdraw money for uncontrolled turnover through the one-day companies. The lawyers contested the decision of the tax authorities, worked out a legal position that allowed calculating and documenting the Client's actual expenses related to the purchase of goods, and successfully initiated an independent expert evaluation of the market value of transportation expenses included in the surcharge on goods from the transit counterparty.

• Result

  The amount of charges was reduced by 520 million rubles, or 85% of tax claims. Lawyers formed the law enforcement practice under Article 54.1 of the Tax Code of the Russian Federation in terms of real tax liabilities ("reconstruction of VAT and income tax").

• Employees involved

  Mikhail Begunov, Nikita Zharov

• Process description

  The client planned to restructure intragroup indebtedness totalling more than RUB 42bn. The transaction was complicated by tax risks, as well as restrictions imposed by currency and sanctions regulations.

• Result

  The Tax Compliance team analysed currency and tax legislation as well as their application, including issues related to repatriation of funds under loan agreements, tax consequences of assignment of rights, transfer of debt, thin capitalisation rules for leasing companies and application of provisions of double taxation avoidance agreements.
  
  As a result of the project, Tax Compliance team managed to offer the client a way of carrying out a business transaction which would meet the requirements of currency legislation as well as be the least exposed to the risks of tax legislation violation (including debt transfer between the Group companies / forgiveness of debt in the framework of economic relations between the "parent" - "subsidiary" companies).
  
  In addition, the Tax Compliance team was able to identify areas of tax efficiency improvement in relation to the proposed transaction, in particular, it proposed a method of transaction that allowed avoiding tax payments under thin capitalisation rules.