Court supported position of tax authorities regarding legality of charging company with fines in the amount of almost 1.7 million UAH

Cassation court supported position of the controlling body regarding the plaintiff's actual non-fulfillment of the contracts terms with entrepreneurs to carry out intermediary activities in the insurance sphere, as a result of which fines in the amount of almost 1.7 million UAH were accrued.

In particular, ruling of the Supreme court as a part of the panel of judges of the Cassation administrative court as of 20.07.2023 in case №280/5316/21 supported position of Main Directorate of the State Tax Service in Zaporizhzhia region and concluded that it is not legitimate to include cost of individuals-entrepreneurs’ services as expenses intermediary activities as insurance agents (insurance procedures were actually performed by the plaintiff’s full-time employee, there is no evidence of participation of individual-entrepreneur in concluding agreements or attracting policyholders - acts of acceptance and transfer of policy forms, acceptance of insurance payments; individual-entrepreneur does not have office premises and employees; explanation was received from the insured individuals on concluding contracts directly with the plaintiff without participation of individual-entrepreneur).

Court also stated that violation by the controlling body of norm of Paragraph 52-2 of Sub-section 10 Section XX "Transitional provisions" of the Tax Code of Ukraine (conducting audit during the moratorium established for the quarantine period) was not the basis for a lawsuit in the Court of first instance. Plaintiff did not use right to change grounds of the claim before the first court session of the Court of first instance, but in fact set forth in the cassation complaint new justification that existed at the time of filing the claim, but was not defined as a basis of the claim.

Taking into account above specified, the Court rejected argumentations of the cassation appeal, which refer to violation of the audit procedure by the controlling body, since the lawsuit was not filed based on these circumstances.

Therefore, ruling of the Supreme court as a part of the panel of judges of the Cassation administrative court as of 20.07.2023 in case №280/5316/21, dismissed the plaintiff’s cassation appeal and left unchanged decision of the Zaporizhzhia District administrative court as of 04.11.2021 and decision of the Third administrative court of appeal as of 21.07.2022 in case №280/5316/21.