Refusal to register a tax invoice: how to appeal?

Complaint against the decision to refuse registration of a tax invoice

Tax authorities' refusal to register a tax invoice is one of the most common problems faced by VAT payers, which can create real financial risks and make it impossible to properly claim a tax credit from a counterparty. Since tax invoices are often blocked automatically, without a detailed analysis of the transaction, legislation provides taxpayers with effective protection tools. In most cases, the basis for refusal is the triggering of risky transaction criteria or the inclusion of the taxpayer in a risky list. However, this does not mean the transaction is fictitious or unconfirmed.

An appeal against a refusal decision is filed in accordance with Article 56 of the Tax Code of Ukraine and paragraph 56.23 of the special procedure for appealing decisions on tax invoices/adjustment calculations. At the same time, the grounds for decisions on registration or refusal are defined by Procedure No. 520. Thus, the legal framework consists of two components: the regulatory framework governing the decision-making procedure itself and the regulatory framework governing the appeal mechanism. The taxpayer may choose either administrative or judicial remedies, with administrative appeals being faster and often successful.

Experience confirms that a properly prepared package of documents and a clear statement of circumstances allow one to defend one's position even in a situation where a regional commission deems a transaction risky or unreliable.

To effectively file a complaint, it's important to immediately prepare the necessary evidence. This typically includes contracts and supplementary agreements, specifications, delivery notes, certificates of completion, consignment notes, bank statements, payment instructions, and business correspondence with the counterparty. These documents confirm the validity of the transaction and the payer's ability to fulfill contractual obligations using their own resources.

Appealing a decision to refuse registration of a tax invoice

There are two ways to appeal a decision: administratively and judicially. The most common method is the administrative one, which involves filing a complaint with the State Tax Service of Ukraine through the Taxpayer's Electronic Account. This method requires no additional costs and allows the matter to be resolved relatively quickly.

Documents refuting the tax authority's arguments must be attached to the complaint. To do this, you must specifically respond to the reasons for the blocking stated on the receipt:

• if the tax authority indicates a lack of primary documents, provide copies;
• if the basis is non-compliance with safety criteria, provide explanations and documents confirming the availability of personnel, fixed assets, and warehouse space;
• if supply volumes are in question, demonstrate the actual movement of goods or provision of services.

If the administrative route is unsuccessful, the taxpayer has every right to appeal to the administrative court. Court proceedings are more thorough: the court evaluates the factual circumstances, examines documents, may question witnesses, or order an expert assessment. A positive court decision is binding on the State Tax Service and results in the registration of the tax invoice on the date of its initial filing.

The period for appealing a refusal to register a tax invoice

Time limits are crucial in these disputes. An appeal against a refusal must be filed within ten calendar days of receiving the decision. This is an imperative deadline, and missing it significantly complicates the possibility of an administrative review. Therefore, upon receiving the refusal receipt, the taxpayer should begin preparing the documents immediately.

The regulatory authority reviews the complaint within 10 business days. Based on its review, the State Tax Service may overturn the regional commission's decision or leave it unchanged. If the complaint is dismissed or if the taxpayer chooses to pursue legal action immediately, a claim may be filed with the administrative court within six months of receiving the contested decision. However, from a practical standpoint, it is best to file a lawsuit without delay to avoid complications in settlements and delays in tax accounting.

The procedure for considering a complaint regarding a decision to refuse registration of tax invoices/adjustment calculations

After a complaint is filed, the central commission of the State Tax Service conducts a comprehensive analysis of the documents provided. This review includes verifying information in electronic registries, comparing accounting and tax records, and assessing the validity of the business transaction.

When considering a complaint, the following circumstances are taken into account:

1. the actual movement of goods or provision of services;
2. the financial feasibility of the transaction;
3. the availability of personnel, equipment, production, or warehouse resources;
4. the transaction volume corresponds to the payer's normal business activities;
5. the completeness of the primary documents and their compliance with legal requirements.

The commission may request additional documents, but the taxpayer is not obligated to resubmit any documents already submitted along with the explanations. The decision on the complaint is sent to the taxpayer electronically. If the complaint is upheld, the tax invoice is automatically registered, eliminating the need to resubmit. If the complaint is dismissed, the taxpayer may exercise their right to judicial redress, where the evidence is considered comprehensively and objectively.

In various situations, it is the presence of a complete and logically structured evidence base, along with a correctly formulated legal position, that allows for a successful appeal of the tax authority's decision and the registration of the tax invoice, even in complex and controversial cases.