26.10.2017

Changes Regarding On-Site Audits

At the end of July, the Supreme Court of the Russian Federation issued a Ruling in case No. A19-916/2016, which put an end to the issue of tax authorities competence to check the working computers and software of legal entities during the on-site audits. Now, tax authorities can check the contents of taxpayers' computers during audits.
Previously, the limits of the competence of FTS staff were subject to discussions, and there was an opinion, according to which tax inspectors in the course of on-site audit can only review documents related to the calculation and payment of taxes, as well as accounting and tax registers, while the right to check computers was only recognised under Article 89.13 and Article 92 of the Tax Code. However, examination and 'retrieving information' from computers were not synonymous.
Now, the Supreme Court of the Russian Federation has indicated the legality of these actions, therefore, taxpayers are not allowed to impede these actions within the on-site audits.
The ground for the seizure of objects is the auditors' need to obtain these objects to detect the facts of committing offences by the taxpayer.
However, the removal of hard disks is rare. It often happened when there is reason to believe that the legal entity maintains double-entry bookkeeping or uses documents of its affiliated fly-by-night companies.
Nevertheless, the actions of the FNS officers can be further invalidated. To do this, a special attention shall be given to the audit procedure and the following actions: check the sufficiency of data on documents or seized computers or disks (serial number, release date) indicated in the protocol (inventory thereto). If errors or insufficiencies are discovered, it gives an opportunity to challenge both the seizure itself and the further decision to audit.