Ukraine Supreme Court Says Tax Audit Cannot Start Before Proper Notice

Ukraine’s Supreme Court said on September 17 that the State Tax Service cannot begin a documentary unscheduled desk audit before the taxpayer has been properly served with the audit order and written notice of the date and place of the audit. In the case before the court, that procedural defect was enough on its own to support canceling the resulting tax notices-decisions, according to Судово-юридична газета’s report on the ruling.

What Changed

The decision arose from a lawsuit by a company against the Main Department of the State Tax Service in Kyiv. The dispute centered on a documentary unscheduled desk audit and the tax notices-decisions issued after that audit. The company argued that the audit began in violation of the required procedure because, before the audit started, it had not been properly served with both a copy of the order to conduct the audit and written notice of the audit’s date and place.

The tax authority argued that it had sent the required documents by registered mail. Lower courts sided with the company, and the Supreme Court dismissed the tax authority’s cassation appeal, leaving those lower-court decisions in place.

What the Court Said

According to the court’s reasoning as described by Судово-юридична газета, paragraphs 78.4 and 79.2 of the Tax Code of Ukraine require that a documentary unscheduled desk audit may begin only after the taxpayer has been served, in the manner prescribed by Article 42, with the audit order and written notice of the date and place of the audit.

The report says paragraph 42.2 provides that a document is considered properly served if, among other methods, it is sent to the taxpayer’s tax address by registered mail with a delivery receipt.

That timing mattered in this case. The audit order and notice were sent by registered mail, but the postal item was returned on August 28, 2020, marked as undelivered. The tax authority began the audit on August 27, 2020. The Supreme Court concluded that, at the time the audit started, the authority did not yet have confirmation of proper notification.

Starting the audit before proper service was a significant procedural violation.

Why the Dates Mattered

The court treated the notice problem as more than a technicality. Судово-юридична газета reported that the Supreme Court viewed the defect as an independent and sufficient ground for canceling the tax notices-decisions issued from the audit.

In practical terms, the sequence looked like this:

Because the audit began before the point at which service was treated as established under the facts of the case, the audit itself was considered procedurally flawed. That, in turn, undermined the legal footing for the tax notices-decisions that followed.

Who Is Affected

The ruling concerns taxpayers facing documentary unscheduled desk audits by Ukraine’s tax authority, as well as the officials conducting those audits. For taxpayers, the decision reinforces that the government must meet procedural requirements before moving ahead. For the tax authority, the ruling underscores that mailing documents is not enough if the audit begins before proper service can be established under the applicable rules.

The article identifies the case as ruling 140/2750/24 and says the dispute involved the Main Department of the State Tax Service in Kyiv. The court’s position, as reported, is that the controlling authority must ensure all legally established conditions for conducting the audit are satisfied before the audit starts.

What to Watch

The immediate takeaway is procedural rather than financial: the Supreme Court tied the validity of the audit process to proof of proper notice. The report does not provide any dollar amounts, tax rates, or assessed liabilities tied to the underlying audit, so the financial size of the dispute has not been published in the cited source.

What may matter next is whether tax authorities adjust audit timing and documentation practices to avoid starting reviews before service is complete. Taxpayers and companies following audit disputes may also watch whether lower courts continue to treat notice defects as a stand-alone basis for canceling tax notices-decisions when the service record is incomplete at the time an audit begins.

This development is outside U.S. federal and state tax law, but it is a reminder that audit procedure can be outcome-determinative when courts require tax authorities to follow statutory notice rules before an examination starts.

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