Supreme Court Summarises the Consequences of Procedural Violations During Tax Audits

The Supreme Court has published a Review of the Supreme Court’s Administrative Cassation Court (ACC SC) case law on procedural violations in the appointment and conduct of tax audits. This consolidated analytical document summarises key legal positions on the obligation of supervisory authorities to comply with the requirements of the Tax Code of Ukraine when exercising their statutory powers.

The ACC SC noted that violations of the statutory procedure for appointing or conducting a tax audit may deprive its results of legal effect and render the relevant audit report inadmissible as proper evidence. In particular, improper service of the audit order, effectively substituting an on-site audit with a desk audit, or deficiencies in the preparation of requests may indicate that the supervisory authority lacked proper grounds for issuing tax assessment notices. Furthermore, the supervisory authority must duly consider the taxpayer’s objections and submitted primary accounting documents before making a final decision.

Where material procedural violations are established, courts annul the challenged tax assessment notices as unlawful. In such circumstances, there is no need to examine whether the taxpayer complied with the substantive requirements of tax legislation.