Court supported position of tax authorities regarding the tax debt repayment at the expense of debtor's propertyChapter: News

Decision of the Supreme court as a part of the judicial chamber for consideration of cases regarding taxes, levies and other mandatory payments of the Cassation administrative court as of 28.03.2023 supported position of Main Directorate of the State Tax Service in Poltava region in case № 440/11471/20 on granting permission to repay entire amount of the tax debt at the expense of debtor's property.

Presence of the defendant's tax debt determined the plaintiff's appeal to the court with a claim for permission to repay tax debt at the expense of property that is in a tax lien.

In order to ensure unity of judicial practice in resolution of disputes regarding granting of permission to repay entire amount of the tax debt at the expense of payer’s property, which is in a tax lien, by decision as of 01.03.2023, the Supreme court, as a member of panel of judges of the Cassation administrative court, referred case to the judicial chamber for consideration of cases regarding taxes, levies and other mandatory payments on the basis of Articles 346 and 347 of the Code of Administrative Procedure of Ukraine.

Obligatory conditions, presence of which in their entirety determines emergence of the controlling body's right to appeal to the court with this claim, are: the taxpayer has debt for non-payment of taxes (levies, mandatory payments); amount of the taxpayer's debt at the time when controlling body applies to the court with a claim for granting permission to repay debt at the expense of taxpayer's property must be agreed according to procedure established by the law; lack of funds in the taxpayer's accounts in banks that service such taxpayer; presence of property of the taxpayer-debtor in a tax lien.

Totality of the specified circumstances gives a right to the controlling body to apply to the court with a claim for permission to repay entire amount of the tax debt at the expense of taxpayer's property.

Supreme court as a part of the judicial chamber for consideration of cases regarding taxes, levies and other mandatory payments of the Cassation administrative court in case № 440/11471/21 departed from conclusions of the Supreme court set forth in Decisions as of 25.03.2021 in case № 806/1453/17, as of 11.02.2020 in case № 818/1604/16, as of 31.03.2020 in case № 818/2857/14, as of 19.01.2021 in case № 808/3932/15, according to which in disputes about granting permission to repay entire amount of the tax debt at the expense of payer’s property, which is in a tax lien, making decision on the tax debt repayment, provisions of the Law of Ukraine "On the introduction of moratorium on the forced sale of property" have prerogative over norms of the Tax Code of Ukraine , which established moratorium on the use of forced sale of property of state enterprises.

Court came to the conclusion that in case of tax authority applying to the court for granting permission to repay entire amount of the tax debt at the expense of taxpayer's property, which is in a tax lien, the Tax Code of Ukraine must be applied, which establishes mechanism and procedure for such repayment and norms of the Law of Ukraine "On the introduction of moratorium on the forced sale of property" applies to mechanism of foreclosure on the debtor's property based on decisions that are subject to execution by the State Executive Service, not by the tax authority.