A win against a tax authority that did not make the necessary findings of fact in the case

In 2017, the Head of the Tax Office initiated tax proceedings against our Client engaged in production, service, and trading operations. As part of the pending proceedings, irregularities were found in the settlement of VAT and PIT. The authority of the first instance did not gather complete evidence, instead it applied the institution of estimation and consequently obtained only results approximating the actual ones, not the actual ones. 

Our Client did not agree with the outcome of the proceedings, so they decided to file an appeal against the unfavourable decision in their case. It turned out that the Head of the Tax Office had challenged the invoices issued by our Client to their contracting parties without sufficiently clarifying the facts of the case.

Contrary to the findings of the authority of first instance, the evidence collected in the case, in particular the testimony of the counterparties, confirmed the genuineness of these transactions. Moreover, in a situation where the tax authority is able to determine the actual volume of turnover by establishing the true volume of individual transactions, then the estimation of the tax base is without legal basis. Meanwhile, the authority of first instance actually estimated the Taxpayer’s turnover, even though in its decision it indicated that it abandoned the determination of the tax base through estimation. As a result, the authority of first instance violated the rules of tax law by conducting proceedings in a manner that did not inspire confidence in the authority of first instance, in particular by assessing evidence in a manner that corresponded to a preconceived decision.

As a result of an appeal prepared by attorney Krzysztof Topolewski and tax advisor Iwona Jacieczko from the firm’s Tax Department, the Director of the Treasury Administration Chamber in Poznań revoked the decision of the tax authority of first instance and referred the case for re-examination. 

The appellate authority shared the arguments put forward in the appeal, holding that the necessary findings of fact in the case had not been made at the stage of proceedings before the authority of first instance. Deficiencies in this respect made it impossible to examine the case on its merits and therefore it had to be repealed and remitted for re-examination.