Tax authorities’ requests. Tax inquiries
Requests of tax authorities, response to tax inquiries – this is the direction of the tax consultant of the law firm AGTL Kharkiv, Kyiv, Odessa. When conducting tax audits, as well as outside of such checks, the tax authorities can request additional documents and information from the taxpayer or his counterparties. And sometimes in practice such a request can be made with a significant excess of the rights of tax authorities. Answer or not?
Explanations on such requests can protect the taxpayer from risks or, on the contrary, cause new charges. In addition, there may be situations where the taxpayer simply cannot submit documents on request: requested documents may be missing, may be lost, or made with errors. What should the taxpayer do in this case, because failure to submit documents will entail a fine?
With the apparent simplicity of this action, as a rule, it is the responses to requests that are the basis of communication with the responsible body – on such a response depends all subsequent communication with the tax authority for several periods in advance.
Did you get a request?
Taxpayers periodically receive requests from tax authorities for information and its documentary confirmation (further – requests).
These requests often embarrass taxpayers because:
- or require a wider range of information than the grounds for submitting a request.
- or, in the taxpayer’s opinion, incorrectly framed.
Article 73 of the Tax Code of Ukraine enshrines the right of supervisory bodies to send written requests to taxpayers to provide the information necessary to perform the functions assigned to the regulatory bodies, tasks, and its documentary confirmation.
But when you receive such a request, it is not always necessary to provide explanations and copies of primary documents. After all, in most cases, having received copies of the claimed documents, the regulatory authorities carry out checks, and record violations of tax laws.As a result, the law-abiding taxpayer receives a tax notice-decision in which he is charged the amount of tax or penalties.
But it is impossible to ignore such a request, because the tax code of Ukraine stipulates that not providing a response to such a request is considered to be the basis for an unscheduled documentary check.
The inspection is usually accompanied by a loss of a large amount of time, and as a result of the inspection, the company still in most cases receives a tax notice-decision on the additional amount of taxes, or the application of fines. In the future, appealing the PPR will require much more money and time than a timely and informed response to the request.
How do I respond to a request?
In accordance with article 73.3 of Article 73 of the Tax Code of Ukraine (the NCU), the tax authorities have the right to appeal to taxpayers with a written request for information necessary to perform the functions assigned to the tax authorities and its documentary confirmation. The order of receipt of such information by the tax service is determined by the resolution of the Cabinet of Ministers No.1245 of 27.12.2010.
Reasons for the request
A written request is sent to the tax payer if there is at least one of the following grounds:
- based on the analysis of tax information obtained in accordance with the law, the facts reveal that the taxpayer violated tax, currency legislation, legislation in the area of prevention and counter-laundering of proceeds of crime, or financing of terrorism and other legislation, which is monitored by the tax authorities;
- To determine the level of normal prices for goods (works, services) during inspections;
- The data contained in the tax returns filed by the tax payer has been revealed;
- a complaint has been filed against the taxpayer about the failure to provide a tax invoice to the buyer or to violate the rules of filling out the tax invoice;
- In the case of counter-reconciliation;
- in other situations defined by the NCU.
Making a request
The request is signed by the head (deputy head) of the state tax service and necessarily contains:
- Number and date
- a reference to the law under which the tax authority is entitled to such information;
- Grounds for inquiry
- A list of requested questions and supporting documents;
- sanctions for failing to comply with the requirements of the request.
Submitting a request
A request is considered to be submitted if it is mailed by letter with a notice of delivery to a tax address or provided under a receipt to the taxpayer or his official, and in the case of electronic referral – when the software-formed delivery message is received. If the request is made in violation of the above requirements, the taxpayer is exempt from the obligation to provide a response to such a request.
Taxpayers are required to submit requested information and documentation within one month of the day the request is received.
It is not necessary to voluntarily issue original documents outside the company at the written request of the tax authorities (pp. 20.1.23 p. 20.1 art. 20, p. 85.5 p. 85 NKU). The only exceptions are cases of seizure of documents:
- By court order;
- on the decision of the investigator on the production of investigative actions – search or noting (Article 177, 178 of the Criminal Procedure Code of Ukraine);
- by the court’s decision to seize the original primary financial and accounting documents (p. 20.1.40 p. 20.1 p. 20 NKU).
The response to the query must contain
1. The number and date of the tax authority’s request to which the answer is provided.
2. Preamble: “Having carefully studied… we are forced to report the following.”
3. The analytical part. There is a need for a consistent analysis of the references to all the regulations mentioned in the request, and if they are applied incorrectly or out of place, indicate that the requirements of the existing legislation are not in place. If desired, it is possible to explain in which cases the request requirements would be legitimate and would be satisfied.
4. The formulation of the conclusion that the requirements specified in the request do not comply with the current legislation, and therefore can not be enforced.
5. A polite reminder that state authorities and their officials are obliged to act only on the basis, within the limits of the powers and the way that are provided by the Constitution and the laws of Ukraine (v. 2 p. 19 of the Constitution of Ukraine).
6. A polite farewell.
It is important to note that the unmotivated refusal to provide the documents mentioned in the request is the basis for an unscheduled inspection. Therefore, it is necessary to respond to the requests of tax authorities. In this case, you either satisfy the requirements in the requests of the tax authorities, providing copies of all the necessary documents, or must give a written reasoned refusal to satisfy such requirements.
Be sure to refer to the rules of the current legislation, which you consider violated, as a justification for the refusal to provide the requested information and documents. Also in responding to the request it is advisable to emphasize that you are a law-abiding bona fide taxpayer and in case of legal requirements are obliged to fulfill them immediately.
How can I submit a response to a request or a refusal to provide information to the GFS body?
You can respond to a request or a letter denying the requested information:
- send a bespoke letter to the GFS in the mail with an attachment and a notice of delivery. The attachment, certified by a post office worker, will be proof of what documents you sent to the GFS body, and the notice of delivery will be proof of receipt by the GFS body of this letter;
- directly to the GFS body. In this case, check that the second instance of your response is marked on its receipt by the GFS body.
Our experts will be happy to help you prepare responses to requests for tax authorities, in particular:
- To analyze the request in terms of the authority of the tax authority to obtain the requested information;
- provide advice on the possible consequences of responding to a request, its motives and reasons;
- Prepare clarifications for the tax authority, as appropriate as possible to the interests of the taxpayer;
- If necessary, represent the interests of the taxpayer when giving oral explanations to the tax authority;
- to appeal against the actions of the tax authority and its officials, if necessary to protect the interests of the taxpayer.
No matter how difficult the request of the tax authorities, our clients have the right to count on prompt assistance from our specialists, who will help to build interaction with the tax authorities from the most advantageous position for the taxpayer.
Every year, thanks to the efforts of our company, taxpayers using our services, including responses to requests from tax authorities, save a significant amount of money. With the legal assistance of our lawyers, your company will be protected from unreasonable requests by regulatory authorities.