Most tax disputes are lost not in court, but in the early days of the audit. Documents are submitted without an inventory list, explanations are given \u201cverbally,\u201d deadlines for filing objections are missed\u2014and a year later in court, the company has no way to refute the statement in the audit report that \u201cthe taxpayer did not provide the documents.\u201d<\/p>\n
Below is the process we follow to assist clients during a documentary tax audit: from the moment the inspectors arrive at the door to filing a lawsuit.<\/p>\n
From the moment tax officials arrive, the company must pursue two lines of defense simultaneously:<\/p>\n
Even if the report describes a \u201cviolation,\u201d the first question to answer is: Did the tax authority have the legal right to identify it specifically as part of this audit?<\/p>\n
The first thing we do is obtain and document the three documents required by the Tax Code of Ukraine to initiate an on-site audit:<\/p>\n
We verify whether the individuals named in the referral and the certificate match, as well as the type of inspection ordered, its basis, subject matter, period, start date, and duration. We immediately forward the order and the referral to the attorney to verify the legality of the grounds.<\/p>\n
Important:<\/strong> The director does not make the decision to refuse access to the inspection \u201con the spot.\u201d This is a separate legal strategy with its own consequences, and the decision to pursue it is made in consultation with the defense attorney.<\/p>\n All communication with the auditors must go through the director, the chief accountant, or another designated person\u2014and a lawyer. Employees must be made aware of three rules:<\/p>\n This does not constitute an obstruction of the audit. It means that the information is provided in an organized manner and only after its accuracy has been verified.<\/p>\n From day one, we keep copies of orders and referrals, all requests from the tax authorities and our responses to them, cover letters, documents submitted, proof of receipt, and all correspondence in one place.<\/p>\n At the same time, we're keeping a simple timeline: date \u2014 what the State Tax Service requested \u2014 what the company responded \u2014 what documents were submitted.<\/strong> It is this file that will later form the basis for the objections, the complaint, and the lawsuit.<\/p>\n Once an audit begins, the company is required to provide documents related to the subject of the audit, so we do not ignore requests. However, we analyze each request: what exactly is being requested, for what time period, whether it relates to the subject of the audit, and what the deadline is.<\/p>\n If a request goes beyond the scope of the audit or is worded unclearly, we document this in writing in our response\u2014rather than refusing it verbally.<\/p>\n This is one of the most important rules. You cannot simply hand the inspector a box of documents, a flash drive, or a folder. The proper procedure is as follows:<\/p>\n This is precisely what makes it possible to later refute the typical statement in the audit report: \u201cThe taxpayer did not provide the documents prior to the audit.\u201d<\/p>\n Originals are provided to the auditors for review, and duly certified copies are included in the audit materials. The transfer or seizure of originals is permitted only on lawful grounds and with proper documentation. A request for copies of documents that, in the tax authority\u2019s opinion, indicate a violation must also comply with the requirements of Article 85 of the Tax Code of Ukraine.<\/p>\n If an inspector has questions about a specific transaction, counterparty, product, or accounting entry, please submit your questions in writing, and we will respond in writing.<\/p>\n A single inaccurate statement by a director or accountant may later appear in the report as the \u201cCompany\u2019s position.\u201d The response should be brief, factual, and supported by documentation.<\/p>\n If the actual presence of goods is being verified, the company\u2019s designated employees participate in the process. We verify the quantity and location of the goods, their secure storage with third parties, goods in transit, and goods that have been shipped or received.<\/p>\n If necessary, we take photos and gather supporting documents. We immediately state in writing any disagreement with the inspectors\u2019 findings, rather than \u201clater.\u201d<\/p>\n While the accounting department responds to inquiries, the defense attorney analyzes the procedure:<\/p>\n Any such violation constitutes an independent basis for challenging the results of the audit, regardless of what the tax authority actually stated in its report.<\/p>\n Be sure to record the date the report is received: the deadlines are calculated from that date. Signing the report does not imply agreement with its conclusions. If possible, when signing, it is sufficient to note: \u201cWe do not agree with the conclusions; an objection will be filed.\u201d<\/p>\n Next, we compare each statement in the report with the audit file. In particular, we check the phrase \u201cdocuments not provided\u201d: if they were provided, we cite the number and date of the specific cover letter in our objection.<\/p>\n We structure our rebuttal in two sections:<\/p>\n In our objections, we state that a company representative wishes to participate in the review of the audit materials\u2014which are being reviewed by a special commission of the regulatory authority.<\/p>\n We record the date the tax assessment notice was received. The complaint is filed with the higher-level tax authority. We again attach the key documents and evidence of their prior submission to the complaint.<\/p>\n The structure is the same: the illegality of the inspection and the procedure, plus a rebuttal of the alleged violations on their merits.<\/p>\n If the State Tax Service has not revoked the tax assessment notice, we\u2019ll go to court. The complaint isn\u2019t drafted from scratch after a decision on the appeal is issued; in fact, it\u2019s prepared during the objection phase.<\/p>\n In court, we are maintaining the same two arguments: the illegality of the inspection and the absence of a violation on the merits.<\/p>\n Missing the deadline for filing an objection or appeal deprives the company of an entire stage of its defense, so it\u2019s important to mark the deadlines on your calendar the day you receive the document.<\/p>\n A tax audit cannot be conducted on a \u201cgive us everything you have, and we\u2019ll sort it out later\u201d basis. Every request, every document, and every response must be documented in writing.<\/p>\n If the case goes to court in a year, it should be clear from the case file that:<\/p>\n Have you been audited, or have you received a notice scheduling an audit?<\/strong> Contact AXELLEGAL even before you submit your first document: we will verify the legality of the audit, coordinate communication with the inspectors, and handle the case until the unlawful additional assessments are rescinded.<\/p>\n Author of the article: Vitaliy Bodiuk<\/strong><\/p>\n Managing Partner AXELLEGAL<\/a>, an experienced attorney specializing in tax and administrative law.<\/p>\n\n\nStep 2. Appoint one person to be in charge<\/h3>\n
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Step 3. Create a separate folder for verification<\/h3>\n
Step 2. The Audit Process: Each Step Is Documented in Writing<\/h2>\n
Step 4. Submit documents only in a controlled manner<\/h3>\n
Step 5. No document without a cover letter and description<\/h3>\n
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Step 6. Originals\u2014for reference only<\/h3>\n
Step 7. Explanation\u2014in writing and after verifying the facts<\/h3>\n
Step 8. Inventory \u2014 Under Full Control<\/h3>\n
Step 9. The attorney verifies the legality of the audit itself<\/h3>\n
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Stage 3. Official document, decision, court: Deadlines Are Everything<\/h2>\n
Step 10. The inspection report is not yet a decision<\/h3>\n
Step 11. Objection to the report<\/h3>\n
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Step 12. Tax Notice-Decision \u2014 Administrative Appeal<\/h3>\n
Step 13. Court<\/h3>\n
Deadlines You Can't Miss<\/h3>\n
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\n What to Serve<\/th>\n Term<\/th>\n From what date is it calculated?<\/th>\n<\/tr>\n \n Objections to the inspection report<\/td>\n 10 business days<\/td>\n The day following the day the certificate was received<\/td>\n<\/tr>\n \n Appeal Against a Traffic Ticket to a Higher-Level Authority<\/td>\n 10 business days<\/td>\n The day following the day the tax assessment notice was received<\/td>\n<\/tr>\n \n A Lawsuit Following an Administrative Appeal<\/td>\n Safe benchmark \u2014 1 month (Section 56.19 of the Tax Code of Ukraine)<\/td>\n Conclusion of the Administrative Appeal Process<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n The Golden Rule for Business Owners<\/h2>\n
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