Due diligence: new cases of application of Article 54.1 of the Tax Code of the Russian Federation

Legal Digest News
We remind you of the need to comply with the requirements of Article 54.1 of the Tax Code of the Russian Federation, namely, due diligence when working with counterparties. In practice, the attention of regulatory authorities has become more intense, and there are more court cases.

Taking into consideration the established judicial practice, new criteria have been identified that prove that a taxpayer receives an unjustified tax benefit.

The contractor’s affiliation

If it turns out that the counterparties are controlled by the contracting authority, whose managers receive income from the activities of such counterparties, then the organizations may impose additional taxes and penalties (Resolution of the Arbitration Court of the Volga Region dated 02/27/2024 No. F06−12 495/2023).

According to the court case, the organization entered into a contract for the supply of materials and the performance of work with the counterparty of the 1st link, which, in turn, concluded a contract for the supply of materials with the counterparty of the 2nd link. The courts revealed a sign of the interdependence and control of such persons by the customer company. The established facts of kinship of individuals exercising the powers of officials in groups of companies indicated their control. And the employees interviewed as witnesses confirmed these arguments.

In this regard, the unjustified tax benefit of the organization was proved, and the total amount of additional charges amounted to more than 2,000,000 rubles.

A characteristic of a "technical" organization

The Eleventh Arbitration Court of Appeal, in its Decision dated 03/05/2024 No. 11AP-19 508/2023 in case No. A55−31 191/2022, determined that the company cooperated with contractors who have characteristic of a "technical" organization, namely the absence of:

  • the actual location of the counterparty at the address specified during registration
  • the necessary material and labor resources for the implementation of activities
  • expenses related to real economic activity
  • on the settlement accounts of the funds transferred to their suppliers, reflected in the purchase book
  • the business purpose accompanying the activity — obtaining economic benefits.

On the basis of which the organization was charged penalties and additional income tax and VAT for cooperation with "technical" contractors.

Absence of a contractor at the actual registration address

During the trial, it was established that the counterparty organization with which the contract for construction and installation works was concluded has the characteristics of a company that does not actually carry out financial and economic activities. This is due to the absence of an executive body at the place of registration.

In addition, the employees of the contract did not perform work at the construction site, as they were officially employed and received income from other companies.

On the basis of which compliance with the requirements of Article 54.1 of the Tax Code of the Russian Federation was violated, and the companies added VAT in the amount of 2,400,000 rubles.

Price difference in contracts with contractors

In the event that the price of similar goods and services with counterparties differs, then this case is a sign of unjustified tax benefit (Decision of the Arbitration Court of the Volgograd District dated 02/26/2024 No. A12−22 677/2023).

During the trial, it was found out that the prices of transport services provided by counterparties were significantly overstated compared to the prices of services provided by other persons. In this regard, these actions were taken in order to overestimate the cost of the STS and ultimately reduce the amount of tax payable. The company’s guilt was proved, on the basis of which it was required to pay an additional tax in the amount of 2,660,000 rubles.

Document inconsistency

If the documentation for the deduction of VAT does not comply with the requirements of Article 54.1 of the Tax Code of the Russian Federation, then such a deduction may be refused to the company (Resolution of the Thirteenth Arbitration Court of Appeal dated 02/26/2024 No. 13AP-41 404/2023).

The court concluded that the documents submitted by the company in support of VAT deductions did not comply with the requirements of Article 54.1 of the Tax Code of the Russian Federation, since the reality of the transaction with the counterparty was not proven. The counterparty itself is recognized as a "technical" company, which is why transactions were made formally, with improper documentation.

In this regard, the companies added VAT in the amount of 11,500 000 rubles and accrued penalties in the amount of 2,900,000 rubles.

Non-payment of taxes by the contractor

The Arbitration Court of the Central District established that a company may be entitled to VAT deductions if there is sufficient confidence that its counterparties pay taxes in good faith (Resolution No. F10−3196/2023 dated 08/24/2023 in case No. A54−9974/2021).

However, in the case under consideration, the reality of the transaction was not proven, the fact of the "transit" nature of the cash flow and the submission of VAT tax returns with a minimum amount of taxes were established, and a number of counterparties did not pay such taxes at all.

The company tried to prove that it had shown commercial prudence and checked the contractors, but all the arguments turned out to be inconclusive. The result is 6,000,000 rubles of additional VAT charges and 500,000 rubles of a fine.

Availability of transit companies

Если контрагент включает в схему транзитные компании, которые в реальности договор не исполняют, то это нарушение положений статьи 54.1 НК РФ.

If the contractor includes transit companies in the scheme, which in reality do not fulfill the contract, then this is a violation of the provisions of Article 54.1 of the Tax Code of the Russian Federation.

In the Decision of the Arbitration Court of the West Siberian District dated 02/27/2024 No. F04−36/2024, it was noted that transit companies controlled by the customer himself were included in the legal relationship between the customer company and the contractor. At the same time, the supplies were not carried out by the counterparty. A comparative analysis of supplies from real suppliers showed a 20% margin on transactions.

On the basis of which the company was charged additional income tax and VAT in the amount of 49,207,000 rubles and 44,205,000 rubles, respectively, and a fine of 2,515,000 rubles was imposed.

The application of Article 54.1 of the Tax Code of the Russian Federation is aimed at countering tax abuses and the receipt of tax revenues through tax evasion. Such abuses may include illegal reduction of the tax base or the amount of the tax itself as a result of transactions with a contractor company.

Tax violations can be avoided if the taxpayer company shows due diligence and carefully checks the counterparty for signs of an "unscrupulous company". To do this, it is necessary:

  • Use counterparty verification services;
  • Request a number of documents in order to confirm the exercise of due diligence;
  • Have information on legal and financial risks related to the legal status of the counterparty;
  • Prepare a systematic report on the verification of the counterparty’s integrity.

For verification of counterparties and compliance with the requirements of Article 54.1 of the Tax Code of the Russian Federation, please contact the legal department of Acsour.