At the end of last year, the official website of the State Tax Service of Ukraine published a schedule of documentary scheduled inspections of taxpayers for 2021. To avoid negative consequences, Crowe Mykhailenko's tax practice partner Vitalii Smerdov advises farmers to prepare carefully.

"Nowadays, the moratorium on scheduled inspections has not been called off. However, we have information that it is planned to be cancelled. Considering this, we recommend to be prepared for such an audit - in order to reduce tax risks and the amount of tax surcharges on its results," the expert said.

Priority steps:

1. Based on the start date of the inspection, which is specified in the schedule, it is necessary to determine the list of employees who will guide the process. In particular, make sure that there are enough staff during the audit to prepare explanations and/or copies of documents, and that key staff responsible for accounting and tax accounting are not on vacation/business trip;
2. Determine of the inspection support tactics. In particular, whether to allow inspectors to inspect in case of defects in the documents provided by them (as practice shows, inspectors often provide an incomplete set of documents, which is a formal reason for their non-admission), and/or properly record such deficiencies and refer to them as a reason for the results of the tax audit cancellation.
3. Carry out a pre-audit analysis of the farm's activities - in order to improve/supplement the documents that will be audited at this stage, and (if it is necessary) make changes to the tax report. According to the practice of inspections in the agricultural sector, during inspections of agricultural enterprises, the tax authorities pay attention as usual to the following issues:
   • write-off of grain, plant protection products. In particular, within/outside the natural loss (during transportation, preservation, etc.);
   • crops failure: namely, whether VAT was charged on such transactions and if not - a documentary justification for this issue;
   • supply of agricultural products below the usual price. As a rule, the tax authorities use the average indicators in the respective region as a guide to the normal price. In order to challenge this approach effectively, auditors should prepare a pricing justification in advance;
   • write-off of fuels and lubricants for transport used by the farm. In particular, the correctness of the documentation of such operations (waybills, etc.);
   • the correctness of determining the cost criterion for being on the 4th group of the single tax. In particular, the operations that are taken into account in determining the criterion. And it should be remembered that income from the provision of tillage services should not be taken into account in determining this criterion;
   • repairs and improvements of fixed assets (own and leased), in particular, vehicles, premises;
   • availability and documentation of transactions with individuals - entrepreneurs;
   • the reality of transactions, primarily with counterparties, which in accordance with the databases of the State Tax Service, defined as risky (assigned risk status for the purposes of tax invoices registration, do not file tax returns, existing tax debt and so on);
   • the correctness of the definition of personal income tax and military duty on land lease transactions;
   • availability and timeliness of obtaining fuel storage licenses;
   • excise tax on operations for refueling agricultural machinery.

Agricultural producers can prepare for inspections on their own, or entrust it to specialists, in particular, tax consultants of the UAC.

In case of any questions regarding the support of the tax audit, please contact the managers of UAC immediately just calling +38 093 111 27 22