Receiving an official inquiry from a tax authority indicates that a business has come under the scrutiny of the tax authorities for one reason or another. Therefore, legally competently drafted responses to requests of tax authorities can help prevent various negative consequences for the company.
Current legislation provides for two types of inquiries that a business may receive from tax authorities.
Firstly, a written inquiry can be issued by the tax authority as a supervisory body in the field of taxation under Article 73.3 of the Tax Code of Ukraine. Among the grounds specified in the Tax Code, tax authorities often refer to the discovery of facts indicating violations of tax legislation or conducting counter-audits. There are also other grounds under which the tax authority may send a written request for information. Typically, such inquiries require tax-related information about specific counterparties and copies of all primary documentation for a particular period or the entire period of cooperation with the counterparty.
According to general rules, failure to respond to inquiries with explanations and necessary documents or providing a response after the 15-day deadline constitutes grounds for an unscheduled tax audit under Article 78.1.1 of the Tax Code of Ukraine.
The second type of tax inquiry comes from the tax police as an investigative body handling tax crime cases. These inquiries are made under Article 93 of the Criminal Procedure Code of Ukraine and serve as a means of collecting evidence by the prosecution in criminal proceedings. In some cases, preparing responses to such inquiries becomes part of a unified defense strategy for both the business and its executives in criminal proceedings, as such inquiries can lead to temporary access to property and documents, searches, or summons of executives and employees as witnesses. Consequently, responses to these inquiries require even greater attention and expertise in both tax law and criminal defense.
A legally competently drafted analysis of tax inquiries enables a business to determine how to properly respond, assess whether the inquiry is lawful and justified, decide whether and how to respond, and determine which documents to provide or withhold. Most importantly, it helps ensure that the company and its management can avoid an unscheduled audit by appropriately addressing the tax authority’s inquiry.
Tax attorneys at WinnerLex Law Firm have developed effective strategies to protect clients when responding to tax inquiries, minimizing the risk of unscheduled tax audits and positively influencing clients’ business reputations as trustworthy partners with a high level of confidentiality. We also have extensive experience in business defense within criminal proceedings. Our attorneys can prepare responses to any tax authority inquiries quickly and professionally.
We provide assistance in preparing responses to the following types of inquiries:
- Related to tax audits.
- Concerning relationships with specific counterparties.
- For counter-verifications.
- To determine the usual market prices of goods.
- Regarding complaints about non-provision or improper completion of tax invoices.
- In cases of detected violations of tax, currency, or other legislation.
- If inaccuracies are found in tax declarations.
Practice experience: 19 years
Specialization: litigation support, tax, customs and antitrust practices, agricultural law, IT and M&A
Practice experience: 21 years Specialization: support of economic, civil, labor and administrative disputes, energy
Practice experience: 11 years Specialization: tax, customs and corporate disputes, support of inspections, contractual activities
Practice experience: 6 years
Specialisation: business and civil law, tax and customs practice, corporate law, registration and reorganisation of business
Practice experience: 11 years Specialization: support of economic, civil, labor and administrative disputes, inspections
Taxpayers and other participants in information relations are required to provide the information specified in a request from the controlling authority and its documentary confirmation (except for counter-verifications) within 15 business days from the day following the receipt of the request (unless otherwise stipulated by this Code). In the case of a counter-verification, taxpayers and other participants in information relations must provide the requested information within 10 business days from the day following the receipt of the request. Documentary confirmation of this information, at the controlling authority’s request, can be provided in electronic or paper form at the taxpayer’s discretion.
When receiving an order for an unscheduled inspection based on paragraphs 78.1.1 and 78.1.4 of Article 78 of the Tax Code of Ukraine, we strongly recommend thoroughly verifying the grounds for initiating such an inspection, including whether a response to the tax authority’s inquiry was provided. This is important because tax authorities often abuse their powers and initiate unscheduled inspections unlawfully.
In case of receiving a request from the controlling authority, it is necessary to carefully review it and ensure that the request is issued on the official letterhead of the State Fiscal Service (SFS), includes an outgoing registration number, date, and contains all mandatory details. If the request lacks even one of the required details, the taxpayer is relieved from the obligation to provide information and documents in response to the request.
Even if it is determined that the request was issued with violations, we still recommend providing a response to it, substantiating the reasons for not supplying the requested information. For instance, in your response, outline the deficiencies in the request and indicate that you are prepared to provide all necessary information and supporting documentation upon receiving a request that complies with the requirements of current legislation.
It is advisable to send the response to the controlling authority’s request as a registered letter with a detailed list of enclosures or to submit it in person through the taxpayer’s authorized representative at the tax office. In the latter case, two copies of the letter should be prepared: one remains with the tax office, while the other is stamped with a receipt mark, including the seal and the incoming number of the request. Information regarding the processing of the request can then be obtained from the information service of the controlling authority.
The legislator intended a somewhat different meaning for this provision than how it is applied in practice by the controlling authorities. This provision grants the controlling authority the right to request and examine primary documents used in accounting, registers, financial, statistical, and other reports related to the calculation and payment of taxes, fees, and payments, as well as compliance with legislation supervised by the controlling authorities. However, this right applies strictly during the course of inspections.
Only if the taxpayer fails to provide explanations and documentary evidence in response to a mandatory written request from the controlling authority—indicating violations of tax, currency, or other legislation by the taxpayer—within 15 business days following the day of receipt of the request.
However, this occurs when, based on the results of inspections of other taxpayers or tax-related information, facts are identified that indicate violations by the taxpayer of tax, currency, or other legislation that falls under the supervision of the controlling authorities.
A request is considered duly delivered to the taxpayer if it is sent to the taxpayer’s address (place of registration or tax address) via registered mail with acknowledgment of receipt or handed over personally against a signature of the taxpayer or their authorized official. In the case of sending the request electronically using telecommunication means with an electronic digital signature from the tax authority, it is deemed delivered upon receipt of a system-generated confirmation of delivery.
