The letter of the Federal Tax Service (FTS of the RF) №ED-5-9/547@ «On the Identifying Circumstances of Unjustified Tax Benefit» from 23.03.2017 provides recommendations on the implementation of tax control in order to identify facts of receiving of unjustified tax benefit by taxpayers.

Legal, economic or other forms of the controllability of counterparties, including mutual dependence of taxpayer’s counterparties, can be regarded by tax authorities as willful acts of such taxpayer in order to obtain unjustified tax benefit. Conducting transactions with a troubled counterparty or organizing a formal document flow of the chain of dependent counterparties can be recognized as methods of obtaining of such benefit.

If the taxpayer's control over its counterparties is not proven, tax authorities will examine the actions of the taxpayer himself for good faith when choosing counterparties.

At the same time, the denial by an authorized person of the fact of signing the documents on behalf of the counterparty cannot be regarded as the fact that the taxpayer doesn’t use caution when concluding a transaction.

This also cannot be the reason for recognizing of the tax benefit as unjustified.

When analyzing the rationale for choosing of one or another counterparty, tax authorities are instructed to study such questions as:

• how different was the choice of a counterparty from conditions of the normal course of business or the practice of choosing counterparties that was established by the taxpayer himself;
• as the taxpayer has assessed:
  • conditions of transactions and their possible commercial results,
  • business reputation and solvency of counterparties,
  • the risk of non-fulfillment of obligations by counterparties,
  • the availability by contractors of necessary and sufficient resources (production facilities, manufacturing equipment, skilled staff) and relevant experience in the performance of work or services;
• whether the taxpayer has given the priority to counterparties, which do not fulfill their obligations to pay taxes and fees. The tax authorities are required to request from taxpayers documents and information on their actions when choosing a counterparty.

Previously, following regulatory documents of the Federal Tax Service of RF were devoted to this topic:

The letter №3-7-07/84 from 11.02.2010 determines that in order to exercise «due diligence and caution» taxpayers can apply to their counterparties, with whom it is planned to enter into contractual relations with a request to provide copies of a number of documents.

The letter №ED-4-2/4124 from 16.03.2015 recommends at the stage of choosing counterparties to check their legal status and business reputation, thereby exercising «due diligence». At the same time, the availability of an extract from EGRUL by a counterparty confirms only the fact of its state registration in accordance with the established procedure. Its obtaining cannot automatically be considered as the confirmation of exercising «due diligence and caution» of a taxpayer when choosing a counterparty. At the stage of selecting suppliers the FTS of the RF recommends taxpayers to study the combination of signs that indicate a high degree of risk of cooperation provided for by the Order of the FTS of the RF № MM-3-06/333@ from 30.05.2007.

To carry out a comprehensive verification of counterparties in an automatic mode and in accordance with the requirements of the FTS of the RF and other authorities, is allowed by the Information and Analytical system Globas-i® The System help realize in practice the concepts «compliance» and «due diligence».

Validation of data included in the Unified State Register of Legal Entities (EGRUL) was mentioned briefly in the publication from 23.07.2015 “Changes in state registration procedure of legal entities”.

For the reference: according to the Federal Law as of 30.03.2015 N 67-FL “On introducing amendments to certain legislative acts of the RF in terms reliability of data filed under the state registration of legal entities and sole entrepreneurs”, validation should be conducted through:

• Study of documents and data on registering authority, including objections of parties concerned, documents and commentaries of an applicant;
• obtaining commentaries from persons potentially acknowledged about information on circumstances being significant for validation, as well as documents and data on the subject of validation;
• inspection of real estate;
• involving specialists or experts in validation.

Order of the Federal Tax Service No. MMV-7-14/72@ of February 11, 2016 “On the endorsement of the grounds, terms and methods to implement the measures specified in Item 4.2 of Article 9 of the Federal Law on the state registration of legal entities and individual entrepreneurs, procedure for use of results of these measures, form of written appeal against anticipated state registration of changes in the charter of legal entity or anticipated entry of information in the Unified State Register of Legal Entities, form of application of the natural person challenging incorrect information about him in the Unified State Register of Legal Entities” ,develops and specifies the procedure of identification of unreliable information on legal entities in EGRUL and carrying out inspections.

The following circumstances may be grounds for such inspections:

• written reasoned and documented objections of parties concerned against registration of amendments in the charter of a legal entity or entering other data in EGRUL;
• distinctions between information in the documents filed for registration and data already containing in the tax authorities;
• registration at addresses of mass registration (5 or more companies at one address);
• demolished real estate objects at the registration address, or lack of possibility to use addresses for communication with legal entities (for example addresses of state authorities, military units, etc.);
• objections of property owners against registration in the address;
• inclusion in EGRUL of information on new addresses with further change in the location of organizations being subjects of on-site tax audits in progress (the entry into force of the act on the audit results is considered as the end of the audit), as well as legal entities having debts on taxes, fines and penalties;
• availability of information regarding persons with the right to act without a power of attorney (for LLC members) on entries made earlier in EGRUL on unreliability of information about them, on bringing to administrative responsibility for the failure to file or provide false information to the registering authority and with unexpired term of bringing them to responsibility;
• filling of applications for withdrawal of participants from LLC registered before 01/01/2016, without notarial certificates;
• participation of two or more persons in the reorganization of legal entities;
• on-site tax inspections in progress regarding the termination of activities after reorganization of legal entities or having tax arrears by such organizations;
• applications filed by parties concerned about unreliability of the information already containing in EGRUL.

Measures to verify the reliability of information are carried out by the registering authority, with the involvement of the territorial offices of the Federal Tax Service. In case of necessity in additional documents and information, as well as inspection of real estate, specialists and experts are involved.

Verification of the information reliability has be carried out within the time limits of registration. Otherwise, the verification period may be extended, but not more than for 2 months, or registration is suspended.

Inspections at initial registration in EGRUL are conducted only through studying the documents and data, including objections of parties concerned; requests for clarifications and additional documents from applicants are acceptable. The order determines the legal form of such clarifications. Moreover, tax authorities have right to request explanations (including with summons to the registering authority) from persons potentially having information being significant in decision-making. In case of initial inspection, the registration cannot be suspended.

If there is unreliable information provided for EGRUL, the decision to refuse the state registration is made.

In case of unreliability of data already containing in EGRUL detected during the inspection (about address; shareholders or participants; shares or their charging; shareholders register keepers; manager of stakes included in the estate; persons having the right to act without a power of attorney (name, patronymic, passport number, INN), the registering authority gives the legal entity, its shareholders or participants a notice to provide reliable information. It should be done no longer than in 30 days from the date of the notification. In case of failure to provide reliable information within the specified period, the registering authority enters a record about unreliability of data in EGRUL.

If the inspection was conducted upon the person concerned about the unreliability of data already available or re-included in EGRUL, the applicant should be informed of the results no more than 10 days after the completion of the verification procedures.

The following forms of applications are attached to the order: P34001 - on unreliability of information in EGRUL for individual, P34002 - on unreliability of information included in EGRUL from the person concerned, P38001 - on objection of the person concerned regarding the forthcoming state registration of amendments to the charter of the legal entity or in EGRUL.

Since September 1, 2017 it is sufficient to have a record in EGRUL about unreliability of data within 6 months for the compulsory liquidation of the company.

Subscribers of the Information and Analytical system Globas-i® can look through records about unreliability of data in EGRUL. Using the “Monitoring” service, it is possible to monitor changes occurring with counterparties, including in registration documents.