An attempt to reimburse VAT turned into criminal prosecution.

A small construction company, OOO Rosvolgasservis, signed a contract with an HOA to build a gas pipeline in the settlement in order to subsequently charge private homeowners for connecting to it. Due to design irregularities, the pipeline could not be put into operation immediately, but the contractor did its job and issued invoices for payment. Litigation began with the district administration over the legal registration of the constructed facility. Meanwhile, the contractor sued the client to collect debts.

In order to pay off the debts, the director of the developer decided to try to reimburse the VAT charged to him by the contractor without showing the revenues in the tax returns.

To confirm the right to reimbursement, the director of Rosvolgasservice submitted to the tax inspectorate the purchase books and primary accounting documents on the costs incurred. However, during a cameral audit the inspectors discovered transfers from individuals to the organization’s bank account. When questioned, they explained that they had paid the director of the organization for connecting to the gas pipeline under construction. These transactions on the receipt of money from citizens, in accordance with paragraphs. 1 п. 1, Art. 146 of the Tax Code were subject to VAT, but in fact LLC Rosvolgasservice “tax is not calculated and did not pay to the budget.

Since transactions for the sale of services have not been reflected in the company’s tax return, the tax office denied a VAT refund and sent the inspection materials to the police to assess the actions of the director in terms of the Criminal Code.

The law enforcers established that the director of OOO Rosvolgasservice, using his official position, had committed an attempt to steal money from the budget of the Russian Federation by fraud on a large scale, but his actions had been stopped by the tax authority.

The court of the first instance convicted the director of OOO “Rosvolgasservice” and sentenced him to 2 years imprisonment conditionally.

Conclusion. If you have decided to file a declaration with the claimed VAT refund, in the accounting and tax reporting should be perfect, because even for the attempt to illegally refund money from the budget may be followed by criminal liability.