{"id":10802,"date":"2026-08-25T14:48:49","date_gmt":"2026-08-25T11:48:49","guid":{"rendered":"https:\/\/axellegal.com.ua\/?p=10802"},"modified":"2026-08-25T14:52:37","modified_gmt":"2026-08-25T11:52:37","slug":"kejs-z-praktyky-podatkovi-spory","status":"publish","type":"post","link":"https:\/\/axellegal.com.ua\/en\/kejs-z-praktyky-podatkovi-spory\/","title":{"rendered":"Case Study: Tax Disputes"},"content":{"rendered":"

Axel Legal<\/a> overturned the State Tax Service\u2019s decision to reduce the negative VAT balance\u2014even in cases where the audit had formally \u201cidentified\u201d discrepancies<\/p>\n

The Axel Legal team successfully defended the interests of a Ukrainian business\u2014a supplier of medical and laboratory equipment\u2014in a dispute with the Main Directorate of the State Tax Service in Kyiv. Two courts ruled that the tax assessment notice, which reduced the company\u2019s VAT credit, was unlawful.<\/p>\n

The Essence of the Dispute<\/h3>\n

The tax authority conducted an unscheduled on-site audit of the company\u2019s records regarding the reporting of a negative VAT balance for a specific reporting period.<\/p>\n

The basis for this decision was the results of the inventory count: the regulatory authority found discrepancies between the actual quantity of certain inventory items and the accounting records. On this basis, the State Tax Service concluded that the VAT credit had been overstated and issued a tax assessment notice. The company disagreed with this and filed a lawsuit.<\/p>\n

Key Defense Strategy: Challenge Not Only the Merits but Also the Procedure<\/h3>\n

In most tax disputes, businesses focus on one thing: proving that no violation occurred\u2014that the goods exist, the accounting is accurate, and the transactions are genuine. This is the right approach, but it is not enough.<\/p>\n

The Axel Legal team has added a second, independent line of defense\u2014challenging the legality of the audit itself. A documentary unscheduled audit is possible only if there is a clear basis under the Tax Code of Ukraine and exclusively within the scope specified therein. The tax authority does not have the right to use general supervisory powers as a blanket justification for any audit.<\/p>\n

The Defense's Position: Two Independent Grounds for Reversal<\/h3>\n

1.\u2060 \u2060Error in the basis for the audit. Budgetary VAT refunds and negative VAT balances are different items on the tax return with different legal significance. The tax authority cannot substitute the subject of the audit or arbitrarily expand its scope.<\/p>\n

2.\u2060 \u2060The conclusions are unfounded on their merits. The State Tax Service effectively equated the results of an inventory conducted after the end of the reporting period with a violation occurring specifically during the period under audit. The physical absence of a portion of the goods at a single storage location as of the inventory date does not in itself prove that the goods were removed from business operations or that the negative balance was overstated\u2014especially since the company provided documents confirming that the remaining inventory was held in secure storage by a counterparty. This evidence should have been examined on its merits rather than ignored.<\/p>\n

Result<\/h3>\n

The trial court granted the claim in full and overturned the tax assessment notice as unlawful. The appellate court upheld this decision and dismissed the tax authority\u2019s appeal.<\/p>\n

Why This Is Important for Business<\/h3>\n

The main practical takeaway from this case: in a dispute with the State Tax Service, it is not enough to defend yourself solely on the merits of the claims. The illegality of the audit itself is an independent\u2014and often underestimated\u2014ground for overturning a decision. Before delving into the evidence on the merits, it is worth checking:<\/p>\n

\u25cf Did the tax authority have a legal basis for conducting the audit?
\n\u25cf Whether the scope and limits of the audit have been correctly defined;
\n\u25cf Did the regulatory agency exceed its authority?;
\n\u25cf Do the findings pertain specifically to the reporting period that was audited?
\n\u25cf Whether the taxpayer's documents and explanations were properly taken into account.
\nA comprehensive analysis of the entire procedure\u2014from the order to conduct the inspection to the content of the report and the decision itself\u2014often paves the way for a reversal in cases where a defense \u201con the merits\u201d would be significantly more difficult.<\/p>\n

Axel Legal<\/a> provides legal support to businesses in tax disputes\u2014from analyzing the legality of tax audits to full legal representation in all courts.<\/p>\n

Author of the article:\u00a0<\/strong>Vitaliy Bodiuk<\/strong><\/p>\n\n\n

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\n 4.9\/5 - (604 votes) <\/div>\n <\/div>","protected":false},"excerpt":{"rendered":"

Axel Legal overturned the State Tax Service\u2019s decision to reduce the VAT credit\u2014even in cases where the audit had formally \u201cidentified\u201d discrepancies The Axel Legal team defended the interests of a Ukrainian business\u2014a supplier of medical and laboratory equipment \u2014 in a dispute with the Main Directorate of the State Tax Service in Kyiv. Two courts ruled that the tax notice-decision, which reduced the company\u2019s VAT credit, was unlawful. [\u2026]<\/p>","protected":false},"author":1,"featured_media":10805,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"footnotes":""},"categories":[1,116],"tags":[],"class_list":["post-10802","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","category-porady-advokata"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t