Tax law principles matter! Winning a dispute with the tax authority

In 2016, the Head of the Tax Office initiated a tax inspection against our Client-Entrepreneur whose business was trading in goods. In the course of the inspection, some of the purchase and sales invoices issued by him documenting transactions connected with to the subject of his business were questioned.

Our Client did not agree with the findings of the inspection of the Head of the Tax Office; therefore, tax proceedings were initiated in this case, which ended in 2021 with a decision against the Taxpayer. The findings presented by the tax authority of the first instance were of a fragmentary nature. The Head of the Tax Office, when determining the VAT liability, relied on the results of the proceedings conducted against our Client’s business partner. Consequently, he breached the principle of active participation of the parties in the proceedings and the principle of conducting proceedings in a manner inspiring trust in the tax authority.

As a result of an appeal prepared by barrister Krzysztof Topolewski and Wojciech Jankowski from the Tax Advisory Department, the Head of the Revenue Administration Chamber in Poznań overturned the decision of the tax authority of first instance. The appellate authority agreed with the argument presented in the appeal that the evidence gathered by the tax authority of the first instance did not explain all the issues that gave rise to doubts and was therefore insufficient to issue a ruling on the merits of the case. Having regard to the applicable principles of tax law and the above-mentioned actual circumstances, the tax authority of first instance could not properly determine the VAT liability.