Will it be possible to recover lost profits from the inspectors?

PUBLICATIONS \ 03.03.2022

The inspectors blocked the company’s bank account. As a result, the enterprise was unable to place funds on deposit and, accordingly, receive additional profit. Is it real to recover these funds from tax inspectors? The answer to the question was given by Lyubov Kuznetsova, Acsour’s Senior Lawyer.

In August 2021, the cassation instance received a case on the recovery of lost profits by inspectors from the Lipetsk Power Supply Company. The plot of the dispute is quite simple. On December 19, 2019, the tax authority issued a decision to claim the arrears and a decision to suspend operations on the company’s accounts. The organization, the very next day after the decision was made, sent the inspectors a payment order, from which it followed that the amount of the debt was paid by the taxpayer a little more than two months before the decision of the inspectors, namely on October 14, 2019. Further, the company submitted an application to the bank for the placement of 109,000,000 rubles in it. Since at the time of sending the document to the credit institution the account was still blocked, the bank refused to place the deposit and the taxpayer suffered losses in the form of lost profits in the amount of 48,678 rubles.

SYSTEM PROBLEM

 Indeed, there are provisions in the Tax Code providing for the procedure according to which a company can recover losses in full from the inspectorate. But only in two cases: if an illegal act was issued by the tax authority or if there were illegal actions (omission) of officers. The corresponding provisions are contained in sub-clause 14 of clause 1 of article 21 of the Tax Code of the Russian Federation.

This provision is mirrored in article 103 of the Tax Code on the responsibility of the inspectorate for losses caused to taxpayers (article 25 of the Tax Code of the Russian Federation). There is an explanation for this state of affairs: initially, the taxpayer is a weak party in relationships with inspectors, therefore they should be able to protect its rights, including using civil law mechanisms. That is, business has the right to apply civil legislation to property relations based on administrative subordination. Such a position, in particular, is set out in the Ruling of the Constitutional court of the Russian Federation dated April 19, 2001 No. 99-O “On the refusal to accept for consideration the complaint of the public limited company Bolshevik on violation of constitutional rights and freedoms by clause 3 of article 2 and clause 1 of article 395 of the Civil Code of the Russian Federation”. A similar procedure also applies when recovering losses from the tax authority, including lost profits.

RIGHT TO RECOVERY

The civil legislation attributes the possibility of recovering losses to the presence of several circumstances in the aggregate: the occurrence of harm, the wrongfulness of the behaviour and guilt of the party which caused the damage, the causal relationships between them and the amount of losses to be recovered.

When considering a dispute in a commercial (‘arbitration’) court for the recovery of losses, the enterprise will have to:

• confirm the existence of losses;
• justify their scope;
• prove the fact of the offense;
• demonstrate the existence of a connection between the violation committed and the losses incurred.

In the case discussed above, the company provided evidence of payment of tax arrears, namely a copy of the payment order for payment of tax penalties, and also proved that the bank refused to place the deposit only because the account was blocked by the tax authority, and presented a calculation of lost profits.

FINAL DECISION

Nevertheless, in the dispute under discussion, the judges refused to satisfy the taxpayer’s claims. But why?

The court found that the organization submitted a copy of the payment order for payment of arrears, in which the KBK account was incorrectly indicated, as a result of which the funds were transferred to the budget in the wrong account. Concluding that there was no causal relationships between the actions of the decision-making inspectorate and the lost profits received by the company, the court did not assess that the arrears had actually been repaid by the time the inspectorate made its decision.

The court did not establish whether the inspectors had the opportunity to unilaterally clarify the tax payment without making a decision on holding the taxpayer liable.

In this case, the judges had to take into account a number of circumstances, which, in particular, include the following:

• the presence in the budget of a tax arrears paid with an error;
• the ability of the tax authority to independently clarify the payment in the procedure prescribed by clause 7 of article 45 of the Tax Code of the Russian Federation;
• the reasonableness and conscientiousness of the company’s actions, the absence in its actions of signs of abuse of the right to create an artificial situation to recover for losses at the expense of the budget.

The court of cassation instance considered that the actions of the business were aimed at artificially recovering lost profits from the tax authority in the form of lost income from the placement of funds, and there was no causal relationships between the actions of the inspectors and the consequences that occurred for the company as a result of the actions of inspectors.

Let us give an example of a similar dispute – Resolution No. F09-6763/18 of the Commercial (‘Arbitration’) court of the Ural District dated October 19, 2018 in case No. A47-11579/2017. When considering the case, the company managed to prove the untimely payment of tax and the absence of grounds for charging penalties.

When considering the dispute, the court investigated in detail the issue of the illegality of the actions of the inspectors, which led to the impossibility of the company placing deposits in banks. As a result, the organization managed to recover from the inspectorate almost 2,000,000 rubles of losses in the form of lost profits in the form of interest.

RECOMMENDATIONS FOR BUSINESS

Do not forget that you have to submit evidence to the court justifying the illegality of the act, decision or actions (omission) of the authority or officer that caused harm to the company. Despite the fact that the burden of proving the circumstances that served as the basis for the making of such an act or decision, or for the commission of such actions or omission, lies with the tax authority, in practice, the success of a dispute for a business depends precisely on the activity of the company.

Apart from this, be prepared to prove that there is causal relationships between the actions or omission and the resulting losses. The company will also be required to submit a calculation of losses, including lost profits. And, finally, to prove the guilt of the tax authority in causing losses.