To date, pre-trial authorities have begun to actively use this method of counteracting tax evasion by real-sector enterprises as a seizure of VAT in the electronic VAT administration system, to which businesses are entitled to file tax invoices and / or adjustments to the single tax adjustments overhead.

 In support of their petitions submitted to investigating judges, investigators / prosecutors note that such amounts are subject to unlawful activity because they are obtained as a result of illegal activity and can be used to provide unjustified VAT tax credit to businesses in the real economy, which in turn to help tax evaders. But the imperfection of this procedure and the fact that it is not defined by the current law allows defense attorneys to appeal against such arrests and to withdraw them by order of the Court of Appeal or even the same judge who ordered such arrest.

 Under the provisions of Article 131 of the CPC of Ukraine, the measure of securing criminal proceedings is the seizure of property, which according to Art. 190 of the Civil Code of Ukraine the amount of VAT in the SEA VAT is not included, because it does not possess the relevant features. Thus, the amount of the VAT registration limit is simply a record in the electronic VAT administration system, has a purely administrative and legal nature and exists only within the administrative relationship between the taxpayer and the GFS. These figures in the database are not the object of the material world, they can not be considered property of the enterprise, cash or electronic money, and therefore are not the subject of property rights, which can be restricted by seizure in accordance with Art. 170 of the CPC of Ukraine.

 The prosecution party, in the context of criminal proceedings, requests the investigating judges to arrest the CEA VAT limit. Having received the decision of the investigating judge for the purpose of its execution, the investigator / prosecutor sends it to the State Fiscal Service of Ukraine. And tax authorities, in turn, in the absence of any regulatory acts that may regulate the procedure for the application of such an arrest, implement this decision.

 Typically, businesses will become aware of the arrest when they are unable to file tax invoices or adjustment calculations with the ERPN, or even better, when the enterprise’s counterparties inform them that they have also been blocked from registering.

 Failure to receive information on the presence of such an arrest by enterprises is due to the fact that, in accordance with the provisions of Part 2 of Art. 172 of the CPC of Ukraine, the issue was resolved without their notice of participation in the trial.

 According to paragraph 9 of Part 1 of Art. 309 of the CPC of Ukraine the decisions on arrest are subject to appeal. And such a period, upon appeal, is five days from the date of receipt of the decision of the investigating judge.

 According to the practice of the Kyiv Court of Appeal, the decisions of investigating judges on the imposition of an arrest on the VAT limit in the EDS are subject to unconditional cancellation, since such amounts cannot be considered as evidence of a criminal offense and cannot be further seized. The Chambers of Judges of the Kyiv Court of Appeal state that the VAT limit amounts are a calculated indicator determined in accordance with the provisions of the Tax Code of Ukraine, and the data stored in the electronic VAT administration system, which is managed and stored by a state body – the State Fiscal Service of Ukraine. it is automatic and interference with these indicators is forbidden.

 If the company has not used the right of appeal, then the request to cancel such arrest may appeal to the investigating judge of the court, which resolved the question of its imposition, using the provisions of Article 174 of the CPC of Ukraine.

 Interestingly, when considering such motions, the investigating judges also concluded that the VAT limit could not be material evidence, in accordance with the provisions of Art. 98 of the CPC of Ukraine, it cannot be confiscated, alienated, and directed to extinguish a civil claim, and therefore decide to cancel such arrest.

  So, if your business is blocked by arresting a VAT limit, you can contact our company. Attorneys with experience in law enforcement agencies will prepare the required package of documents and will accompany the arrest procedure until its final execution by the State Tax Service of Ukraine.

Author: Anatoliy Perepelchenko

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