Return of more than 5.5 million rubles of overpaid taxes

“Successful VAT Refund is a Great Success”

Unicon Outsourcing successfully completed a VAT refund for a provider of IT and geoscience services and solutions for RUB 2,667,182. Svetlana Polshina, Head of the Accounting Practice Department, shared the details of this case.

As part of our work with this client, we have already completed two VAT refunds from the budget. The company received its first refund in 2021. The second refund request was for Q3 2021. The refund decision has already been made, the funds will be credited to the company’s settlement account within a month.

Difficulties of Refund

Due to the tax laws, we are entitled to deduct agent VAT only if several conditions are met simultaneously. That is, the services must be accounted and paid for. The tax authority must make sure that the foreign supplier has received its income and paid VAT on that amount to the budget. The inspectorate also makes sure that the company requesting the return is real. Before making a refund from the budget, the tax inspectorate conducts a thorough check. To do this, they send a fairly voluminous request, according to which a lot of documents must be provided. These are waybills, certificates, invoices, contracts with suppliers and buyers. In addition, the staffing table is requested, the availability of assets on the balance sheet of the company is clarified. The request is aimed at making sure that the company is real and the refund is not a grey fraud scheme. The company is then called in for interrogation. Since we provided the “Director General” service for the client, an employee of Unicon Outsourcing went to the interrogation as a representative of the company. If the tax office has no questions about the set of documents confirming that the company is real, they refund VAT.

Successful VAT refund is a great success, because in addition to the requests we answer with explanations and documents, there are also sudden phone calls. There is a kind of feeling that the inspectors are trying to catch by surprise, to ask a question indirectly. For example, they can ask: “Why are you requesting the deduction?” or say: “Let’s carry over this deduction.” And this must not be done. The input VAT deduction that we receive from ordinary suppliers may be deducted by taxpayers within three years. While the agency VAT, I am talking about, may be deducted only once, when all conditions are met in accordance with the tax code, and it may not be carried over. The tax authorities are either pretending that they are not aware, or there is another reason why they propose a carry-over. Then we have to explain why we may not do it. Besides, inspectors can say that the invoice numbers do not match, although they are all right.

If, hypothetically, the inspection finds grounds and refuses to make a deduction, there will be arrears, which will have to be paid to the budget. Penalties are charged for a delay in payment. And provided that it was found by the tax authorities, they can also charge a fine. Even if we have a complete set of documents that confirms that the contractors and counterparties we cooperate with are bona fide companies, while the tax authority has evidence that this is not the case, they may refuse to make a deduction. The taxpayer is also responsible for checking counterparties and those we collaborate with.

Our client received a refund of 3 million for the first time, and more than 2.5 million for the second time. Formally, this is a simple document check, but many companies cannot boldly defend their position, according to the tax code. In this case, we have already done it twice.