A victory for our tax advisors! We have successfully defended a client against VAT fraud charges.
The case involved a client of ours who was unwittingly involved in a VAT carousel fraud. But the authorities claimed the client’s participation in the scheme was fully deliberate, challenging the client’s nearly PLN 6 million VAT recovery.
It is extremely hard to prove innocence in such cases. You need to demonstrate that the company acted with “due diligence” and “good faith” in an environment where the authorities keep trying to prove there is none. Unfortunately, the taxman does not understand (or does not want to understand) that certain industries have their specificities, and sometimes treats what are otherwise typical transactional circumstances as those that precisely indicate “lack of good faith”.
It was four years since the client was audited by the authorities, during which time we have been arguing against the successive taxman’s claims one by one. Finally our case, laid out on dozens of pages and additionally supported by plenty of evidence, persuaded the higher authority, which agreed with our defence that the client’s decision was based on circumstances reasonably specific to the industry while the evidence on record did not support the lower authority’s claims. The client’s actions did not in any way show lack of good faith or due diligence. In effect, the higher authority overturned the decision of the lower authority and required it to reconsider the case, this time on the basis of the above facts.
The case was handled by Szymon Karpiński , partner and tax advisor, and Adam Wnuk, tax advisor. Congratulations on the huge success!
VAT carousel fraud is a crime that involves illegally obtaining a VAT refund. The scheme is called “VAT carousel” because of the specific flow of goods and invoices among different firms, creating an illusion of legitimate business. To successfully defend a company, such as our client, which has been inadvertently entangled in this fraud, it will be extremely important to obtain the assistance of experienced counsel who will help to carefully analyse all the dimensions of the matter and prepare a robust defence argument.