Signs of unreality of operations with VAT
Tax deductions are a way to reduce taxes, for the application of which a number of conditions are necessary: a correctly assembled set of documents and the reality of the operation.
The package of documents includes the contract, invoice and closing documents. The reality of the operation is a condition under which the operation must have a business goal: for example, the acquisition of a new MFP instead of a broken one.
Plot of affairs
When a tax deduction was filed, the company submitted an invoice to the tax authority. The tax authority considered the costs of the invoice presented to be unreasonable. The court also considered that the company does not have the right to a tax deduction on VAT.
According to the tax authority, the operation, which was mediated by the invoice submitted, showed signs of unreality:
- The company-counterparty has not filed reports at the place of registration;
- The company owns no property;
- There are no employees in the company;
- Current account is closed;
- The absence of an agreement (whereas agreements are signed with other counterparties);
- Payment for the goods (bitumen) was made in cash, but the check of cash register was issued not on behalf of the company;
- Rigged signature of the head of the company.
The tax authority considered the submitted evidence to be exhaustive regarding the unreality of the VAT transaction. The company denied fictitious transactions and the lack of grounds for tax deduction. The court recognized as legal the refusal of VAT refunds.
Judicial act: Resolution of the Arbitration Court of the Central District of October 10, 2018 in the case of A54-8582 / 2017
The findings of the court:
1. The court considered the reality of the purchase of goods (bitumen): whether such an operation took place in a real business turnover, what business goals were pursued by such an operation.
2. The court accepted all the arguments of the tax authority regarding the listed signs of unreality of the transaction, the court found each of the listed signs to be proven.
3. The court made a decision on the basis of the results of the judicial handwriting examination, which confirmed the signing of the invoice on behalf of the head by several persons.
Comments:
1) Not all of these signs may indicate the unreality of a business transaction: for example, a bitumen producing company must possess the property, but not always the property is necessary for a small company that provides a narrow type of business services that does not even require tools.
2) The presence of the listed signs only in aggregate gives the right to assert that the operation is not real, while for certain signs it is not possible to come to a similar conclusion.
3) Court fees for judicial handwriting examination will be charged to the taxpayer as the person who lost the dispute.
In the event that your litigation or other dispute, contractual work or any other form of activity concerns the issues discussed in this or other of our material, we recommend checking and making sure that your legal position corresponds to the latest changes in practice and legislation.
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Elena Mironova, legal analyst. Blonde. I love pink. Like pop music. I prefer bankruptcy litigation and loans.
