Unblocking VAT Invoices
Reasons for VAT Invoice Blocking: How to Avoid Risks?
The VAT invoice registration monitoring system operates automatically and identifies potentially risky transactions. Many entrepreneurs face VAT invoice blocking without understanding the reasons behind it. The main factors may include discrepancies in documentation, signs of fictitious business operations, or the riskiness of counterparties.
Typical reasons for blocking include:
- Inclusion of the taxpayer in the list of risky business entities (Regulation No. 1165).
- Detection of risky transactions according to automated criteria (TCU, Art. 201.16).
- Providing false or incomplete data during registration.
Regular internal audits, counterparty verification, and proper documentation management can help prevent blocking.
Action Plan for VAT Invoice Blocking
If your VAT invoice is blocked, you must act immediately. The most important thing in this situation is to clearly understand the reason for the blocking and respond promptly to minimize financial risks and losses.
Action plan:
- Obtain and carefully review the ERPN receipt indicating the reason for the blocking (TCU, Art. 201.16.1).
- Prepare the necessary primary documents and detailed written explanations.
- Submit the document package through the taxpayer’s electronic office.
- Wait for the tax authority’s commission decision within five business days.
Administrative Appeal Against VAT Invoice Blocking
If the commission’s decision is negative, the taxpayer can use the administrative appeal procedure. This mechanism allows for a quick review of the tax authority’s decision without going to court.
The administrative appeal process includes the following steps:
- Preparing and submitting a complaint to the State Tax Service of Ukraine (TCU, Art. 56.23).
- Attaching documents confirming the reality of business transactions.
- Reviewing the complaint within ten business days.
Judicial Procedure for VAT Invoice Unblocking
If the administrative appeal does not yield a positive result, the company must prepare for judicial protection of its rights. Court practice shows that properly forming an evidentiary base can lead to an effective decision in favor of the taxpayer.
The judicial appeal process includes the following stages:
- Preparing a lawsuit with clear justification of the illegality of the tax authority’s decision (CAS of Ukraine, Art. 160).
- Collecting documents and evidence proving the reality of business operations.
- Filing the lawsuit with the district administrative court.
Legal Services for VAT Invoice Unblocking
A qualified lawyer is a crucial asset in the VAT invoice unblocking process. A tax lawyer helps avoid common mistakes, significantly increasing the chances of successfully resolving the dispute.
A lawyer will ensure:
- A full analysis of the situation and reasons for the blocking.
- Proper preparation and submission of the required documents.
- Support of the case in both administrative and judicial procedures.
Inclusion of a Business in the List of Risky Taxpayers: Reasons and Consequences
Being listed as a risky entity is a serious issue that essentially blocks business operations. The tax authorities may classify a company as risky due to the lack of assets or personnel, insufficient turnover, or participation in dubious transactions.
Consequences of being classified as risky:
- Blocking all subsequent VAT invoices.
- Increased control from the tax authorities.
- Significant reputational risks among partners.
Urgent Actions for VAT Invoice Blocking: A Checklist for Businesses
When a business faces VAT invoice blocking, time is a crucial factor. The faster you act, the fewer risks you will face.
Checklist of urgent actions:
- Obtain and analyze the receipt indicating the reason for the blocking.
- Prepare a package of documents and explanations.
- Submit the documents to the tax authority for review by the commission.
- If denied, immediately appeal the decision administratively or through the courts.
Legal Aspects of VAT Invoice Registration Suspension
Legal grounds for the suspension of invoice registration are regulated by the Tax Code of Ukraine (Art. 201.16 of the TCU) and Cabinet of Ministers Resolution No. 1165. These documents define the criteria for risk assessment and the procedure for reviewing taxpayer complaints.
A legally competent approach to resolving the issue is key to successful protection.
Preventing VAT Invoice Blocking: The Role of Internal Audits
Regular internal audits help businesses minimize the risk of VAT invoice blocking. Audits help identify documentation deficiencies and problematic counterparties in time, preventing negative consequences in the future.
Benefits of audits:
- Identification of potential risks.
- Preparation of documents in compliance with tax law requirements.
- Prevention of inclusion in the list of risky entities.
Advantages of Working with Dextra Law
By working with Dextra Law, you get an experienced team of tax lawyers with practical expertise in unblocking invoices of any complexity.
Benefits of working with us:
- An individual approach to each client.
- Full support from document preparation to court representation.
- Quick problem resolution with minimal risks.
Contact Dextra Law and receive professional legal assistance today!
Frequently Asked Questions (FAQ)
Due to automatic tax authority control that identified risks in your business activities or counterparties.
The standard review period is five days at the tax authority level, but if an appeal is required, the process may take several months.
Yes, by maintaining transparent operations, thoroughly checking counterparties, and complying with tax law requirements.
You can submit a complaint to the tax authority or file a lawsuit to challenge the decision.
Yes, legal support significantly increases the chances of a successful resolution, as a lawyer understands legal nuances and can effectively protect business interests.
