How to get rid of risky VAT payer status?

The riskiness of the enterprise is the result of the decision of the DPS Commission of the regional level regarding the compliance of the taxpayer with one of the points of the criteria of the risky VAT payer.

Most often, the reason for which a taxpayer is assigned to this category is point 8, namely, the presence of tax officials with information that the business transaction specified in the tax invoice or adjustment calculation is risky. As practice shows, in many situations this happens without justification, and the taxpayer does not receive an adequate explanation of the riskiness of the transaction. Moreover, the tax invoice is blocked by the automated registration system based on a set of indicators, which is far from always objective. So the question of how to get rid of the status of a risky VAT payer is relevant.

What are the main risk criteria of the enterprise?

The legislation defines various criteria according to which a VAT payer can be included in the list of risky ones. For example, it is about:

• providing forged or lost documents during registration;
• actions related to the re-registration of business to persons who have died or do not exist;
• company registration by those persons who had no real intention to do business;
• company registration without the knowledge or consent of the owners;
• the criminal record of an official of the company has not been expunged or has not been removed, or the sentence against him, which has entered into force;
• lack of active bank accounts at the enterprise;
• non-submission of tax returns by the VAT payer during the last 2 reporting periods.

You can learn much more about risk criteria and their application in a specific case by contacting professional lawyers. For example, an individual tax consultation on the exclusion of a company from the list of risky ones from the specialists of the Prikhodko&Partners law office may be relevant.

How is clause 8 of the risk criteria applied in practice?

It has already been mentioned above what is meant by point 8 of the company's risk criteria. The most common formulations according to which the enterprise is classified as risky, referring to point 8, are the following:

1. participation of the enterprise or its counterparty in risk operations;
2. inconsistency of the sold goods or services with the purchased ones;
3. purchase of goods from a counterparty, which itself has the status of risk;
4. insufficient number of personnel in the state or insufficient amount of material resources;
5. inability to track who is the supplier of the product in the supply chain.

As a rule, tax officials either use one of the mentioned wordings, or simply quote item 8 verbatim. That is, the taxpayer does not receive really detailed and substantiated information about why a decision was made regarding his compliance with the risk criteria.

How does a taxpayer find out about the status of a risky enterprise?

This issue at the level of legislation is regulated by the Resolution of the Cabinet of Ministers of Ukraine dated December 11, 2019 № 1165 "On approval of the procedures for stopping registration of tax invoices/calculation of adjustments in the Unified Register of Tax Invoices".The commission of the regional level makes the relevant decision and directs it to the VAT payer through the Automated system "Single window for submission of electronic documents". The decision is delivered to the taxpayer immediately on the day of adoption.

Appealing the decision on compliance with risk criteria

Appealing such a decision is possible in two formats. The first format is administrative or procedural. The second is judicial. As for the administrative method of appeal, it involves sending a complaint to the DPS and an accompanying package of documents, which proves that the criteria for the riskiness of economic transactions in your case are actually absent.

It is important to know that there is a 10-day period from the moment it is received to appeal the risk decision.

Our team of specialists knows how to correctly write an explanation to the DPS and what documentation is appropriate to provide in each specific case. For example, it can be foreign economic contracts and their annexes. Also, documents regarding the powers of persons who, in the interests of the taxpayer, receive the products necessary for carrying out the transaction, often become relevant. Primary supply documents, settlement documents and statements from accounts, documents regarding the confirmation of product conformity are an incomplete list of everything that may be needed in a specific situation to challenge the decision on the taxpayer's riskiness.

If the procedural method of influencing the situation does not give the desired result, then it is necessary to apply to the administrative court. We know what strategy to choose for the representation of client interests so that the case becomes a win-win.

When a company is listed as risky, it faces many complications in its business activities. Its counterparties are not able to get a tax credit, the reputation in the eyes of business partners is deteriorating. Therefore, it is worth contacting reliable lawyers who can solve this problem qualitatively. Fill out the form on the website and our lawyer will contact you shortly.