VAT Lawyer

VAT is one of the most complex and controversial taxes in Ukraine, generating the largest number of disputes between business and the tax service. Blocking tax invoices, refusal of refunds, assessments due to working with “risky” counterparties – these problems can paralyze a company’s operations within days. A professional VAT lawyer helps protect the right to tax credit, appeal unlawful tax decisions, and preserve business financial stability.

What Does a VAT Lawyer Do and When is One Essential

A VAT lawyer specializes in resolving disputes related to value-added tax. This is a narrow specialization requiring deep understanding of both the Tax Code of Ukraine and current Supreme Court judicial practice.

Main areas of VAT lawyer work: appealing blocking of tax invoices in UERTI (Unified Electronic Register of Tax Invoices), protecting tax credit rights when counterparty claims arise, supporting desk and documentary VAT audits, appealing tax notice-decisions on VAT assessments, VAT refunds and removal from risky taxpayers list.

A lawyer is essential when tax authorities have blocked tax invoice registration and business cannot operate, when a notice-decision on VAT assessment of millions of hryvnias has been received, when VAT refund from budget is refused, when a company is included in the risky taxpayers list, during criminal proceedings under Article 212 Criminal Code (tax evasion).

Tax Invoice Blocking: Causes and Defense Algorithm

Blocking tax invoice registration in UERTI is the most painful problem for VAT payers, capable of stopping company operations in one day.

Risk criteria by which tax authorities block invoices: tax burden indicator below industry average, negative VAT value for two or more consecutive reporting periods, work with counterparties in risky list, activity volumes inconsistent with available resources (absence of personnel, fixed assets), profitability indicators atypical for the industry.

Defense algorithm when blocking consists of several stages. Within 365 days from blocking date, the payer has the right to submit explanations and documents refuting transaction risk. Tax authorities are obliged to review them within 5 working days and decide on registration or refusal.

If tax authorities left the invoice blocked, the payer can go to court with a claim to mandate tax invoice registration. It’s important to act quickly, as blocking paralyzes operations.

The lawyer prepares substantiated explanations with evidence of transaction reality: contracts, specifications, transport documents, acceptance-transfer acts, payment documents, evidence of counterparty’s financial and economic capacity. If administrative defense failed, the lawyer immediately goes to court and seeks expedited case consideration.

Desk VAT Audit: Assessment Risks

Desk audit of VAT declaration is conducted automatically within 30 calendar days after submission. This is the most common type of control, during which most tax claims arise.

What tax authorities check: compliance of tax invoices registered in UERTI with declaration data, indicator logic and their ratios, compliance of supplier and buyer declaration data, presence of fictitious signs in counterparties, justification of VAT refund right.

Main assessment risks arise from working with shell company counterparties. If a counterparty with fictitious signs is found in the supply chain, tax authorities may refuse tax credit to all subsequent buyers. UERTI discrepancies when supplier failed to register tax invoice or made errors also lead to credit refusal. Export operations are checked most thoroughly – from export confirmation to currency receipts.

The lawyer helps at desk audit stage prepare explanations for tax requests, prove transaction reality even with counterparty problems, promptly correct technical errors in invoices, appeal audit act and notice-decision.

VAT Tax Credit: Typical Claims and Defense

The right to tax credit is the most disputed issue in VAT payer relations with tax service. This is where most conflicts and court disputes arise.

Typical tax claims to tax credit: counterparty has fictitious signs (absence of personnel, fixed assets, mass registration address), absence of economic transaction reality due to document inconsistencies, impossibility of transaction execution due to counterparty’s lack of necessary resources, payer bad faith (knew or could have known about counterparty violations).

The Supreme Court has repeatedly emphasized that a payer cannot bear responsibility for counterparty actions if acting in good faith. Tax authorities must prove precisely payer bad faith, not just counterparty problems.

For successful tax credit defense, transaction reality must be proven: presence of goods and their movement (transport documents, warehouse cards), use of goods/services in own activities, payment for services, due diligence when choosing counterparty (verification of registration data, licenses).

The lawyer collects evidence of transaction reality, engages independent experts to confirm goods quality and use, prepares legal position referencing Supreme Court practice, proves payer good faith.

VAT Refund: Legal Support and Disputes

VAT refund from budget is one of the most complex procedures, almost always accompanied by claims from tax service.

Refund right arises for export operations (0% VAT rate), when tax credit exceeds tax liabilities during reporting period, when conducting operations exempt from taxation giving refund right.

Tax authorities especially thoroughly verify refund grounds due to automatic documentary unscheduled audit appointment when submitting refund application. Decision period is 60 calendar days, but in practice the process can drag on for months.

Typical grounds for refund refusal: doubts about export operation reality, work with risky counterparties in supply chain, inconsistency of customs declarations and invoices, absence of currency receipts or their delay, inconsistency of purchase volumes with export volumes.

The lawyer supports refund procedure from application preparation to funds receipt, represents interests during documentary audit, appeals refund refusal, seeks court recovery of VAT amount from budget, recovers penalty for late refund.

Inclusion in Risky Taxpayers List: How to Exit

Getting into the VAT risky taxpayers list leads to automatic blocking of all tax invoices and actual company operations stoppage.

Criteria for risky taxpayer classification: tax debt exceeding 500 thousand hryvnias, non-submission of reporting for two consecutive periods, absence at registration address, failure to pass transaction risk criteria check, presence of information about fictitious signs.

Exit algorithm from risky list depends on inclusion reason. If the reason is tax debt, debt must be repaid or its existence appealed in court. If the reason is non-submission of reporting, all declarations must be submitted and fines paid. When absent at registration address, actual presence must be confirmed.

Tax authorities are obliged to exclude payer from list within 3 working days after elimination of grounds. If this doesn’t happen, the lawyer goes to court with claim to mandate exclusion from list and damages compensation.

VAT and Fictitious Operations: How Payer Defends

Accusation of transaction fictitiousness is the most serious tax claim, which can lead not only to tax assessments but also criminal liability.

Operation fictitiousness signs according to tax authorities: absence of business purpose (transaction has no economic sense), absence of real goods or money flow, coordinated scheme participant actions to obtain tax benefit, impossibility of transaction execution due to resource absence, contradictory or unreliable documents.

Defense against fictitiousness accusations is built on proving transaction reality. Must prove business purpose presence (transaction economic feasibility), goods movement reality (transport documents, warehouse accounting, employee testimonies), service provision reality (acts, reports, use results), good faith when choosing counterparty (document verification, reputation).

The Supreme Court consistently supports the position that counterparty formal defects (absence of personnel, fixed assets) by themselves don’t prove transaction fictitiousness if goods were actually received and used in activities.

The lawyer collects evidence of transaction reality, prepares witnesses for fact confirmation, engages experts (commodity experts, technologists), formulates legal position based on Supreme Court practice.

Appealing VAT Tax Notice-Decisions

Following VAT audits, tax authorities issue notice-decisions on tax, fine and penalty assessments. Amounts can reach millions of hryvnias, making appeal critically important.

Appeal periods are 10 calendar days from notice-decision receipt date. Missing deadline leads to automatic collection from accounts.

Payer can choose administrative appeal (complaint to State Tax Service of Ukraine) or judicial (claim to administrative court). Administrative complaint automatically suspends decision execution, giving preparation time.

Effective appeal includes analysis of procedural violations (deadline exceeding, audit subject), appealing assessed amounts calculation methodology, judicial tax examination appointment, proving transaction reality and payer good faith, using positive Supreme Court practice.

The lawyer prepares substantiated complaint or claim, collects evidence base, represents interests in tax authorities and courts of all instances, seeks complete or partial notice-decision cancellation.

Judicial Practice in VAT Disputes

The Supreme Court has formed a clear legal position in VAT disputes protecting good faith taxpayer rights.

Payer good faith principle – payer has no obligation to control counterparty tax legislation compliance. If payer acted in good faith, they cannot bear responsibility for counterparty violations.

Transaction reality more important than formal defects – even if counterparty has fictitious signs, payer retains tax credit right if proves actual goods or services receipt and their use.

Presumption of payer action lawfulness – if documents are properly executed, tax authorities must prove their unreliability or transaction fictitiousness. Assumptions and guesses are not evidence.

Burden of proof lies with tax authorities – precisely the tax authority must prove violation fact, document unreliability, payer bad faith. Payer is not obliged to prove innocence.

These principles allow the lawyer to successfully defend VAT payers in disputes with tax service.

Why Choose Dextra Law

Dextra Law legal company specializes in VAT-related tax disputes. We handle dozens of cases monthly and know all tax service work nuances.

Our advantages:

• Narrow VAT specialization – we know all nuances and current judicial practice
• Quick response – we act within hours when invoices are blocked
• Comprehensive approach – from blocking appeal to Supreme Court defense
• Experience in multi-million cases – successfully defend large companies
• 98% of court cases end in our clients’ favor

If your tax invoice registration was blocked, tax credit or VAT refund was refused, tax was assessed – contact Dextra Law. We know how to protect your business!