Ilyashev & Partners Law Firm successfully represented a Ukrainian manufacturer of energy-efficient equipment in a dispute with the State Tax Service of Ukraine. The firm secured the invalidation and cancellation of tax assessment notices totaling over UAH 8.3 million.

The State Fiscal Service of Ukraine's Main Directorate inspected the facilities of the Ukrainian manufacturer. This resulted in tax assessment notices assessing penalties totalling UAH 8.3 million for violations regarding income tax and value added tax understatement. The manufacturer of energy-efficient equipment was accused, inter alia, of the fact that the said counterparties did not have enough personnel to carry out the relevant financial and business transactions, not confirming the facts of the purchase of goods by the counterparties that were subsequently sold by the company, lack of production equipment, warehouse and office premises, equipment necessary for carrying out financial and business activities, etc.

The Ukrainian manufacturer filed a claim to challenge the tax assessment notices, but lost in the first instance court and the appeal court. For the protection of the client’s interests, Ilyashev & Partners was involved in the case at the stage of cassation appeal in the Supreme Court and prepared a revised legal position.

During the case hearing, the Supreme Court accepted the legal position of Ilyashev & Partners’ attorneys, who proved that the tax authority's conclusions were unfounded and refuted by the primary accounting documents, which fully confirm the lawfulness of the company's tax benefits formation for the period audited. Therefore, the Supreme Court cancelled the decisions of the first and appellate instances and sent the case to the first instance court for a new trial.

During the latest trial, Ilyashev & Partners’ team proved that the tax audit was biased. Its results were based solely on the assumptions of the tax authorities about violations of tax legislation by entities other than the Ukrainian manufacturer.

Ilyashev & Partners’ attorneys provided irrefutable evidence of the company's legitimate business transactions with its counterparties. They also provided evidence of the absence of abuses on the part of the Ukrainian manufacturer related to the payment of value-added tax accrued throughout the supply chain. The court of first instance agreed with Ilyashev & Partners’ arguments and cancelled the tax assessment notices totalling over UAH 8.3 million.

Disagreeing with the first-instance court decision, tax authority representatives filed an appeal with the Court of Appeal, which rejected the tax authority's arguments and dismissed the appeal.

The case was handled by Oleksandr Denysenko, Attorney at Law, Counsel at Ilyashev & Partners Law Firm.