SFS will no longer fine companies over arithmetic errors

Tax issues: Inspections by state tax and fiscal agencies Kharkiv region

Subject of complaint: State Fiscal Service (SFS), Kharkiv Oblast Main SFS Office (Kharkiv SFS) 
Complaint in brief: On January 30, 2018, a company based in Kharkiv Oblast addressed the BOC about an SFS fine worth UAH 540,000 that the Complainant wanted to challenge.
When filling out its declaration, the company had made a mistake by adding too many digits although it paid all the taxes owed on time and in full. However, the electronic administration system automatically charged an erroneous amount in tax liabilities. According to the automated calculation, the Complainant owed an extra UAH 540,000. The company appealed against the decision, but the SFS insisted that the fine be paid. 
Such a debt was a huge burden for the Complainant’s small business and deprived the company of the right to apply the simplified tax to its agribusinesses: the penalties meant that the company could not extend the simplified tax regime. 
Actions taken: The BOC investigator drew the SFS’s attention to the fact that the company’s misprint in the declaration had not affected the timely receipt of taxes by the budget. He also noted the Complainant’s impeccable tax history. For similar situations with misprints and arithmetic errors, the inspector suggested not to fine honest taxpayers and to treat such cases at the systemic level. The Council also sent a separate request to the national SFS office and the Kharkiv SFS regarding the inconsistency in the tax liability with a requested the relevant information to be adjusted on the taxpayer’s record. This allowed the Complainant to extend the simplified tax regime to 2018. 
Result achieved: The SFS accepted the Council’s arguments and changed its overall approach to arithmetic errors. After an administrative appeal and confirmation of an arithmetic error, the SFS will not penalize the taxpayer. The fine of over half a million hryvnas against the Complainant was dropped and the simplified tax regime was extended.

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