Hidden business management through IT solutions: software, cloud solutions, instant messengers, etc.
Today, the key to safe tax optimization of a business is the reengineering of business processes. The goal of this reengineering is to avoid fictitiousness. It is fictitious activity, no matter what it expresses specifically - fictitious legal entities, fictitious transactions, fictitious document flow - in court is the main evidence of the unjustified tax benefit. Here is another example of this.
After publishing the Secret Chat technical solution for the hidden management of transactions “controlled” (the word “controlled” in quotation marks because it is an independent business entity de jure) on my blog, an entrepreneur approached me. He had a question whether it was possible to transmit scans of documents through channels of secret chat, for example, invoices for payment. In order for them to be paid by an accountant of a “controlled” legal entity. In my opinion, in this case, the possibility of a hidden transfer of documents is not required, because it will not solve the problem of tax security. The solution is just the reengineering of business processes. I will explain why.
Suppose we have LLC Basic Business and LLC Controlled, which is controlled from LLC Basic Business and is part of the general business. But in order for the tax benefit not to be recognized as unreasonable, it is necessary to create the appearance that LLC “Controlled” is an independent business entity. For this, the beneficiary wants to create a secret channel between LLC “Basic Business” and LLC “Controlled” to transfer invoices for payment. But in this scheme, the main question is where do the payment invoices issued by LLC “Controlled” come from LLC “Main Business”?
Even if a reliable secret channel is created, the scheme in the figure will not meet the current tax security requirements. The tax authority will easily prove the fictitious nature of the scheme. The director of LLC “Controlled” will not be able to explain where the accounts for payment from the Counterparty are taken from. Also, he will not be able to confirm business contacts with the Counterparty (calls, correspondence). Based on this, the court recognizes it as nominal. In addition, the tax authority can easily identify direct contacts of LLC Basic Business with the Counterparty, because they are conducted in public space. LLC “Controlled” with the face value will be recognized by the court as fictitious and aimed at obtaining unjustified tax benefits. This is confirmed by arbitration practice.
The LLC “Controlled” should be managed by the contractor, the employee who conducts all interaction with the Counterparty. Then the workflow will confirm the independence of the business entity. And in order to conduct business with the Counterparty in accordance with the general goals of the business, the director of LLC “Controlled” must coordinate the transactions with LLC “Main Business”. Here for this coordination we need a secret channel.
Such a scheme will fully comply with tax security requirements. It was obtained through reengineering and bringing business processes and workflow in line with the legal structure of the business. Only such a restructuring of the business is reliable.
Naturally, the foregoing is personally my opinion and may not coincide with the position of the law firm.
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Kirill Soppa, partner. I am writing articles, looking for interesting information and suggest ways of its practical use. I believe that thanks to high-quality legal analytics, clients come to a law firm, and not vice versa. Do you agree? Then let's be friends on Facebook.
