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ANNOTATION. The problem of protecting a taxpayer during the tax control by the controlling authority is analyzed in this article. In particular, the issue of invalid official permits for employees during the accomplishment of administrative checking and arrest of assets of the taxpayer.
KEYWORDS: tax control, supervisory and administrative arrest of assets of the taxpayer, invalid certificates.
THE MAIN MATERIAL. Today Ukraine is going through a difficult period, namely the time of rapid development and selection of further political and economic direction. The question filling holey of the national budget is important as ever. Quite often the impression that the tax authorities try to maximize fill the state budget is often against the law. That is why the analysis of rights of a payer and denial of access to checking by controlling authority in case of transgression is of high priority.
Extremely common is break of the law by tax authorities concerning compliance with the substantive and procedural law, namely the origin of all mandatory documents for inspection and the grounds for the inspection. Special attention should be paid to the tax authorities’ abuse and obligations to pay the tax debt, such as administrative detention assets of the taxpayer, as the analysis of the problems is of vital importance for taxpayers while defensing their rights.
Having reorganized State Customs Service of Ukraine and the State Tax Service of Ukraine after the foundation of the Ministry of Income and Fees, around 95 % of tax officials, who have not received new official permits, effectively work with old ones. It formally constitutes the ground for denial of access to checking the tax payer. However, the courts support the supervisory authority. A as the reason is the lack of state money for purchasing new official certificates. The courts also admit that it is possible to lodge an appeal against invalidity of the certificate only in case of violations in other documents for inspection; if no other violations have been elicited the taxpayer can suffer outcomes of denial of access to checking.
The decision of the Kyiv Administrative Court of Appeal of 16.04. 2013 number 2a-3638/12/1070  is meaningful because here the court found that formal errors in the impugned order referred to check and inquiry (namely to conduct on-site inspection in lieu of off-site by the defendant) does not constitute grounds for cancellation of the impugned order and recognition of the defendant’s illegal actions.
Although, conducting an indication of one type rather than another means test application to the taxpayer of other tax control mechanism that can raise other legal consequences for the taxpayer.
What is more, by the same court, but in another case an order dated 03.19.2013, the number 810/310/13-a , it was found that the failure of the original official certificate of the head of the company cannot serve as the evidence of non-exhibiting this document in terms of Art. 81 of the Tax Code of Ukraine. Based on the litigation, the taxpayer actually is deprived of the opportunity to prove ill-familiarization with official certificate of the tax authority.
Other problematic situations faced by the taxpayer while defending the rights may be the cases when the tax authority have improperly executed documents when coming to check. In particular, the sample is the decision of the Court of Appeal Ternopil region on 20/11/2012, with the case № 1903/2211/12  when a representative of the supervisory authority came to control with photocopies of referral to check the company and the order of its implementation which were certified improperly.
According to Section 81.1. p. 81 of the Tax Code of Ukraine it is contemplated that officials of the state tax authorities have the right to begin conducting the documentary-site inspection, the factual check if there is stitching for their conduction defined by this Code, and presenting the following documents:
– Referral to the calibration that indicates the date of issue, the name of the state tax service, the requisites of the order of conduction appropriate checks, the name and requisites of the subject (the object) that conducted the test (full first name and names of physical persons – verified taxpayers), purpose, type (planned or unplanned), the grounds, the start date and duration of the test, the position and the name of the official (service) of the person who will do checks. Referral to check in this case is a valid signature of the presence of the head of the state tax authority or his deputy with the seal of the state tax service;
– A copy of the order of inspection;
– Official identification of persons showed in the referral to inspection.
In this situation the court is on the taxpayer’s side, finding that the copy of the order was not properly certified, and therefore it did not have legal efficacy, and there were no specified grounds conducting the actual test in the order, which was the cause of preventing State Tax Inspection employees to the inspection.
One more common situation was fixed by Resolution of the Court of Appeals of Chernihiv region of 1.04. 2013 on the case number 734/403/13-p  when official tax authority effect the protocol on administrative violation under Art. 163-3 Part 1, CAO, in case of State Tax Inspection prevention inspector from the inspection. However, the Court of Appeal established that person to whom the protocol was effected (chief accountant of the company) legally did not allow to check the taxman because the basis for the inspection was not specified in the order of inspection. It means a violation of Art. 81.p. 1. Tax Code of Ukraine, according to which officials of the state tax authorities have the right to proceed for the documentary-site inspection, the actual check if there are reasons for their conduct as defined by this Code, and upon presentation or sending in cases specified by this Code documents.
Abuses by tax authorities in respect of the application to the taxpayer of such means of securing the payment of debt as the administrative detention of assets of the taxpayer are often proved (in particular, the grounds of administration). For example, the decision of the Kyiv Administrative Court of Appeal of 22/11/2012, the case number 2a-461/12/1070 , have found that when performing routine visiting documentary check, the employee taxpaying body made a breach on the application of administrative detention asset taxpayer incorrectly, applying the rule laid down in Article 94 of this Code apply only when there are two compulsory grounds:
1) In case of failure to verify the documents, copies, and 2) subject to the availability of such documents. An official tax authority gave incorrect legal assessment of the actions of the taxpayer, considering failure of primary accounting documents, in connection to the transfer of the documents in storage and to audit under civil law contract to another person as a refusal to provide documents for inspection. However, the court supported the taxpayer, stating that the taxpayer did not refuse to provide the documents; the fact of granting taxpayer contract document storage and auditing, the act of acceptance and transfer of the documents to the company to the tax authority directly indicates the beginning of the inspection, because it can be given only after the claim of the employee during the verification process. Thus, no actions of the taxpayer have been found that would indicate the avoidance of inspection, obstructing tax authority for inspection, including through non-performance requirements of paragraphs 16.1.9 p. 16 and Section 81.1 of Art. 81 Tax Сode Ukraine, or by refusing to test or refusal of access to audit.
In practice of Mykolayiv Regional Administrative Court, in particular in its decision of 16 September 2013 on the case number 814/3805/13-a , the tax authorities apply to the court on the application of administrative detention of taxpayers’ money, referring to subparagraph 94.6.2. Paragraph 94.6 of Article 94 of the Tax Code of Ukraine, which established that the arrest of the account of the taxpayer administered exclusively by a court appeal by controlling authority in court. The bank or other financial institution carries out exemption funds from the custody according to the judicial ruling. Moreover, in the proceedings of Mykolayiv Regional Administrative Court there were conditions similar to the circumstances of the case number 814/3805/13-a. The court closed the proceedings in connection with a dispute about the right (to appeal the order of the inspection and decision by which applied conditional administrative arrest of taxpayer’s property). That is, validity of administrative detention has not been confirmed by the court, so there is no legal basis for the use of arrest of property taxpayer. The tax authority’s application of administrative arrest of taxpayers’ money is unreasonable because under subparagraph 20.1.17 of paragraph 20.1 of Article 20 of the Tax Code of Ukraine, the tax authorities have the right to go to court on arrest of funds and other assets of the payer taxes that are in the bank, in case when the taxpayer who has a tax debt has no property and / or its carrying value is less than the amount of the tax debt, and / or the property can be a source of repayment of the tax debt. What is more, the tax authority in their claim was obliged to substantiate the need for administrative arrest of taxpayers’ money, which was not done.
Similarly, it has been established by the Resolution of the Lviv Administrative Court of 08.10.2013, the case № 876/5984/13 . Substantiating the reasons of appeal the appellant (the tax authority) states that the reason for taking this measure as an administrative arrest of accounts of the taxpayer is the presence of proper basis for the application of this arrest which is listed in Art. 94 of the Tax Code of Ukraine and at the same time the availability of sufficient data to believe that the non-use of such arrest can threaten cash disappearance. The plaintiff in the case proved neither presence of adequate grounds for administrative arrest in cash arrest, nor sufficient reasons to believe that non-use of such arrest can threaten cash disappearance and inability to repay the tax debt. In contrast to the previous views of the court, the Appellate Administrative Court of Vinnitsa (order dated 18.06.2013 in the case number 802/583/13-a ) indicated that the refusal to accept (in particular due to the presence of the parties to the dispute on the law) makes it impossible to repeat the appeal by the applicant with the same representation. The applicant in this case has the right to apply to the same claim to the court in a general way (of Sections 5, 6 st.183 3 CAS Ukraine). The verification of reasonableness of administrative arrest involves indication by the court the reasons of the grounds of administrative arrest as defined in paragraph 94.2 of Article 94 of the Tax Code Ukraine. The subject of the verification is a decision of the head of the tax authority (his deputy) on the imposition administrative arrest on the property taxpayer conditions under which such a decision can be made. Concerning Article 94 § 94.10 Tax Code Ukraine, such an inspection should be completed according to the judicial ruling. On this basis, the court makes a decision about the ability to adjudication of claims to confirm reasonableness of the arrest of the taxpayer’s property. Moreover, the appellate court denies the decision of the court of primary jurisdiction upon the relationship of reasonableness period of judicial review of administrative arrest of property of the taxpayer for the submission of the tax authority and the ability to adjudication of claims to confirm reasonableness of the arrest. The appellate court claims that if the above decision is not complied, the legal sense and perspective of Part 6 provisions of Art. 183-3 Administrate Code Ukraine will be lost and the tax authority’s rights will become limited in this regard. It becomes obvious that in this situation the appellate court goes on the side of controlling authority, finding that the court of primary jurisdiction had to check not the decision on application of administrative arrest in the context of confirmation of reasonableness, but its validity.
Thus, the following conclusions can be made:
Tax authorities allow a great number of violations of the law, including non-compliance with official documents, in particular errors in the documents and improperly certified copies of documents.
Similarly, the tax authorities often abuse their right to administrative arrest assets of the taxpayer, which could result in negative consequences for the taxpayer.
Court practice is sufficiently controversial to protection of taxpayers’ rights in the fight against the illegal actions of the tax authorities. In one case, the court is on the side of the taxpayer, in another, on the side of the tax authority.
It is considered a mistake when the court claims the factual error that in reality in the order it is said inspect one type instead of another. Whereas the reasons that gave rise to one type of inspection may not always be the case for other species, and applied the approved type of inspection in a wrong way can result in negative legal consequences for the taxpayer.
We are disagreed that the court’s position to the manner of the presentation of the official tax authority identification as much as the taxpayer is actually deprived from the opportunity to prove ill-familiarization with official certificate of tax officials.
The usage of administrative assets arrest of the taxpayer is disputable. It is difficult to agree with the position of the court about the issue of validity of administrative arrest in this case. As the court has not established whether the tax authority has the right to the use of administrative assets arrest of the taxpayer, and therefore the court cannot satisfy the filing the tax authority’s application for such type of providing tax debt of the taxpayer.
1. Resolution of the Court of Appeal Ternopil region on 20/11/2012, with the case № 1903/2211/12: Retrieved from http://www.reyestr.court.gov.ua/Review/27929338
2. Resolution of the Court of Appeals of Chernihiv region of 1.04. 2013 on the case number 734/403/13-p Retrieved from http://www.reyestr.court.gov.ua/Review/30378009
3. Resolution Vinnitsa Administrative Court of 06.18.2013 in case number 802/583/13-a Retrieved from http://www.reyestr.court.gov.ua/Review/32029614
4. Resolution of Kyiv Appeal Administrative Court from 16.04. 2013 number 2a-3638/12/1070 Retrieved from http://www.reyestr.court.gov.ua/Review/31376215
5. Resolution of the Kyiv Appeal Administrative Court of 19.03.2013, № 810/310/13-a Retrieved from http://www.reyestr.court.gov.ua/Review/30136794
6. Resolution of Lviv Administrative Court of 08.10.2013, with the case № 876/5984/13: Retrieved from http://www.reyestr.court.gov.ua/Review/34073197
7. Resolution of Mykolayiv Regional Administrative Court of 16 September 2013 on the case number 814/3805/13-a Retrieved from http://www.reyestr.court.gov.ua/Review/33591422
8. Resolution of the Kyiv Administrative Court of Appeal of 22/11/2012, the generalized case number 2a-461/12/1070 Retrieved from http://www.reyestr.court.gov.ua/Review/27756180