Court Defines the Limits of Tax Authority’s Powers in VAT Desk Audits: Documents That Inspectors Cannot Request

During a desk audit of a VAT declaration, tax authorities requested several documents from a company, including:

• Staffing schedule
• Employment and civil-law contracts with employees
• Lease agreements for vehicles and construction equipment

The company challenged the request, leading to judicial review. Although the initial ruling upheld the tax authority’s demand, the appellate court later ruled that some of the requested documents were beyond the tax authority’s legal right to demand.

The court determined that the following documents should not be requested during a VAT audit:

• Staffing schedule
• Employment and civil-law contracts
• Lease agreements for vehicles and specialized equipment

The court ruled that these documents:

• Are not primary accounting documents
• Do not serve as a basis for recognizing goods, works, or services in accounting records
• Do not determine the taxable base
• Do not affect the legitimacy of tax deductions
• Cannot confirm or refute the reality of transactions with counterparties

At the same time, the court upheld the tax authority’s right to request other documents that are necessary under tax law for:

• Verifying the legitimacy of transactions with counterparties
• Checking compliance with deduction procedures
• Determining eligibility for tax deductions

It is important to note that court practice on such disputes remains inconsistent. For instance, the Arbitration Court of the Moscow District issued an opposite ruling, upholding the tax authority’s request for a company’s staffing schedule. This highlights that the outcome of such disputes can vary significantly depending on the specifics of the case and regional judicial practices.

Document: Ruling of the 13th Arbitration Appellate Court, dated February 1, 2025, in case No. A56-56020/2024.