Recently, businesses have been suffering from the tax authority blocking tax invoices, and such cases are not isolated.
Blocking of tax invoices (TI) in Ukraine is a problem that can have serious consequences for taxpayers.
Unblocking of tax invoices is a procedure carried out if a tax invoice/adjustment calculation (hereinafter – TI/AC) was suspended in the Unified Register of Tax Invoices (URTI) through the automated system for monitoring compliance (ASMC) with risk criteria (so-called “block”) according to the requirements of the Tax Code of Ukraine.
Reasons for blocking
A tax invoice can be “blocked” if:
- The taxpayer is included in the list of risky;
- The nomenclature of the goods or operation matches “risky”;
- The amount exceeds certain thresholds;
- Discrepancies exist in reporting;
- Mismatch of product or service codes;
- There is a mismatch between supply volumes and tax reporting data.
Action algorithm for unblocking
- Receive a receipt on registration suspension.Usually, this is Receipt No.1 indicating the reasons.
- Prepare explanations and documents.
This may include:- Tax invoices from previous periods;
- Contracts, invoices, acts of acceptance-transfer;
- Waybills, quality certificates;
- Bank statements;
- Warehouse documents, acts of completed works, etc.
- Submit explanations through the Taxpayer’s Electronic Cabinet.
In the section “Suspension of TI/AC registration”.
It is important to meet the deadline of 365 calendar days from the date the TI/AC was issued. - Wait for the decision of the State Tax Service (hereinafter – STS) commission.
Within 5 working days, the tax authority makes a decision: to unblock or to refuse.
The result is received as Receipt No.2 via the Electronic Cabinet. - Appeal in case of refusal.
Through administrative procedure (appeal to STS of Ukraine) — within 10 days.
Or through court procedure — within 3 months from the day of receiving the response to the appeal (refusal decision).
We recommend to our readers:
- Regularly check the taxpayer’s status in the list of risky (through the Electronic Cabinet or request to the STS).
- Submit documents in advance regarding suspicious transactions to reduce the risk of blocking.
- Keep a complete set of primary documents for each transaction.
A successfully registered tax invoice has a direct impact on the formation of tax credit.
Let us consider the main consequences of “blocking” tax invoices for both the supplier and the buyer:
- Financial consequences
For the supplier:- Payment delay: buyers may refuse to pay invoices until the TI is unblocked.
- Loss of business reputation: counterparties may avoid cooperation.
- Administrative expenses: costs for lawyers, tax consultants, preparation of explanations and appeals.
For the buyer:
- Loss of VAT tax credit: the buyer cannot include the TI in the tax credit until its registration.
- Disruption of cash and financial plans.
- Legal consequences
- Legal disputes: if the STS refuses to unblock the TI, the company may go to court.
- Appealing actions of the STS: tax invoices can be unblocked through administrative appeal (appeal to the STS) or a court claim.
- Temporary consequences
- Suspension of TI/AC registration in URTI: the TI is considered “unregistered” until a positive decision is made.
- Time loss for preparation of documents and explanations: the company must prove the reality of the business transaction.
- Business consequences
- Decrease in company liquidity.
- Risk of contract termination with partners due to lack of trust.
- Impact on accounting reporting — distortion of tax and financial information.
- Loss of tax credit.
By contacting us, you can receive comprehensive support of the case in court in Ukraine regarding “unblocking” of tax invoices, preparation and submission of an administrative claim, as well as cancellation of the decision to recognize the company as one that meets the criteria of “riskiness”, which includes all necessary measures for effective resolution of the mentioned issues.
We do not limit ourselves to the above-mentioned, already known categories of disputes and are ready to thoroughly study your specific problem or issue and select the necessary legal tools to achieve the desired result.
The list of our services presented on the page is not exhaustive and is indicative in nature!
For more detailed legal advice on challenging the actions of tax authorities and unblocking tax invoices, we recommend contacting the professionals of the law firm in Ukraine “First Legal”, who will help you!
Fill out the application form on the website right now or call one of the numbers: +38 (044) 35-35-164, +38 (067) 306-89-89, +38 (063) 45-85-448, +38 (099) 367-89-89.