Tax inspectors charged our client, an owner of commercial property, with evasion of VAT and profit tax. Allegedly, the lessees of the property acquired the maintenance services or the property from straw persons, thus withdrawing funds intended for payment of the contracting parties’ services. The claims against the property owner were based on the argument that the lessees were controlled and their operations were ‘technical’ in nature.
In substantiation of its claims, the tax authority submitted dozens of interrogation file volumes, bank statements and other documents to evidence that the property maintenance services had not been provided to the lessees. Having reviewed the documents, the AGP attorneys pointed out that the link between the taxpayer and the revealed ‘tax scheme’ was not proved. Their position was based on the argument that the taxpayer cannot be held liable for tax violations of its lessees, especially as they were its buyers and not suppliers, so its relationships with them did not create any deductibles for its VAT purposes. The tax authority failed to produce any undisputable evidence that the taxpayer had derived any tax benefit.
The court accepted the arguments submitted by the AGP attorneys and declared the tax authority’s order invalid. AGP attorneys Valentin Moiseev and Dmitry Yakushev represented the client.
