Blocking tax invoices: how to restore registration and avoid financial losses

Blocking of tax invoices and adjustment calculations (TI/AC) has been one of the most painful problems for Ukrainian business for several years. For the taxpayer, this means not only a technical suspension of the tax credit, but also direct financial losses, conflicts with counterparties, risk of additional charges and fines.

Law firm Axel Legal (axellegal.com.ua) has extensive practical experience in handling cases related to the blocking of tax invoices, administrative and judicial appeals against decisions of tax authorities, as well as compensation for losses incurred by businesses in such situations.

What is the blocking of tax invoices and why does it occur?

Blocking of tax invoices takes place within the following limits systems for monitoring compliance of TI/CC with risk criteriaThe taxation regime provided for by the Tax Code of Ukraine and bylaws is not applicable.

The waybill may be suspended if:

• the taxpayer is recognized as a risky one;

• the transaction meets the risk criteria;

• the tax authority considers the tax history to be insufficient;

• there are formal inconsistencies in the documents.

In practice, blocking often occurs without proper analysis of real economic activityand the decisions of the tax authorities are formal and boilerplate.

Main risks for business

Blocking of TI/CC has a number of negative consequences for the taxpayer:

• loss of tax credit from counterparties;

• breach of contractual obligations;

• delayed payments and cash gaps;

• increased attention from the tax authorities;

• the risk of being included in the list of "risky" payers;

• potential tax disputes and audits.

That is why fast and professional response for blocking tax invoices is critical.

Algorithm of actions after blocking a tax invoice

Lawyers axellegal.com.ua apply a clear step-by-step approach to the renewal of TI/CA registration.

1. Analysis of the grounds for blocking

The first step is a detailed analysis:

• receipts of suspension of registration;

• risk criteria applied by the STS;

• taxpayer status (risky/non-risky).

In most cases, the wording of the tax authorities is general, which opens up opportunities for effective refutation.

2. Submission of explanations and a package of documents

The taxpayer has the right to submit explanations and copies of primary documents confirming the reality of the business transaction. Such documents usually include:

• contracts;

• expense invoices;

• certificates of completion;

• payment documents;

• waybills;

• warehouse documents.

The formation of this package requires legal accuracyThe tax authorities often use any formal deficiencies as grounds for refusal.

3. Appeal against the decision of the STS commission

In case of refusal to register a tax invoice, the next steps are as follows administrative appeal decision of the State Tax Service commission.

Practice Axel Legal indicates that the complaint is well prepared:

• records violations of the procedure;

• demonstrates the lack of motivation for the decision;

• lays the groundwork for further legal defense.

Judicial restoration of tax invoice registration

Why the court is the most effective mechanism

The administrative procedure does not always yield results, so the key tool for protecting business remains judicial appeal.

Courts are increasingly taking the side of taxpayers and ordering them to do so:

• cancel the decision to refuse registration;

• register tax invoices on the date of submission;

• restore the violated rights of the taxpayer.

Lawyers axellegal.com.ua represent such cases at all stages, including cassation review by the Supreme Court.

The Supreme Court's practice on blocking TI

The Supreme Court has formed a number of key legal positions, in particular:

• the tax authority must clearly justify the reasons for the blocking;

• formal references to risk criteria are insufficient;

• the taxpayer does not have to prove "risk-free" if primary documents are provided;

• the decision to refuse must be motivated and individualized.

It is the use of this practice that allows you to Axel Legal achieve positive solutions for clients.

How to avoid financial losses in the future

In addition to the renewal of TI/CC registration, it is important to minimize the risk of repeated blocking. To do this, lawyers axellegal.com.ua recommend:

• audit the tax model of the business;

• check counterparties;

• systematize primary documents;

• ensure compliance with the codes of goods and services;

• respond to requests from the State Tax Service in a timely manner.

Comprehensive legal support allows us to turn the problem of blocking tax invoices from a constant risk into a controlled process.

Why you should contact Axel Legal

Law firm Axel Legal:

• specializes in tax disputes;

• has successful experience in renewal of TI/CC registration;

• represents businesses in disputes with the State Tax Service;

• actively uses the practice of the Supreme Court;

• works for the result and protection of the client's financial interests.

Conclusion.

Blocking tax invoices is a serious challenge for businesses, but not a hopeless situation. Timely legal assistance, a clear defense strategy and professional legal support allow not only to restore the registration of a tax invoice, but also to avoid significant financial losses.

If your business has faced the blocking of tax invoices contact the law firm Axel Legal (axellegal.com.ua)where tax protection of business is one of the key practices.