From Establishing Business Purpose to Supreme Court Victory: Comprehensive Success of The Attorneys’ Association “Bauman Kondratyuk” in a Dispute with the State Tax Service
·9 November 2025
Case Summary
Following a scheduled on‑site audit, the Kyiv office of the State Tax Service assessed nearly UAH 2.7 million in additional liabilities (corporate income tax: UAH 2,301,203; VAT: UAH 287,586) and issued two Tax Notices and Decisions.
The Attorneys’ Association “Bauman Kondratyuk” team — Yurii Bauman (Managing Partner) and Maria Koshova (Attorney) — delivered a dual success: they defeated the allegations of unreal transactions on the merits and stopped further appeal through precise procedural work, bringing the dispute to finality at the Supreme Court.
Facts of the Case and the SFS Position
The tax authority challenged the reality of consulting and information‑service contracts with a sole proprietor executed in 2018 and 2020, invoking clause 44.1 of Article 44 of the Tax Code and Law No. 996‑XIV (Accounting and Financial Reporting Law). It argued that the primary documents did not prove actual service delivery and that the contractor allegedly lacked the capacity to perform the work.
- Tax Notice: corporate income tax — UAH 2,301,203;
- Tax Notice: VAT — UAH 287,586;
- Total additional assessment with penalties — nearly UAH 2.7 million.
Victory on the Merits: Reality of Operations and Business Purpose
The defence shifted the focus from formal assumptions about the contractor to the real‑world facts of the client’s operations — the delivery of services, their use in business, and economic rationale.
- Actual provision: financial‑economic analysis, tax‑planning consulting, business‑development strategy, legal advice.
- Use in activity: documented links to management decisions and business processes.
- Business purpose: economic justification and real effect, aligned with contemporary case law.
On 25 April 2025, the Kyiv District Administrative Court (case No. 320/54***/2*) fully upheld the client’s claim.
The court found the SFS conclusions unfounded and held that the primary documents confirm both the provision of services and their connection to the taxpayer’s commercial activity.
Procedural Victory: Halting the Appeal
Disagreeing with the first‑instance decision, SFS Kyiv appealed to the Sixth Administrative Court of Appeal. The Bauman Kondratyuk team’s procedural precision prevented delay tactics.
- 25 Jun 2025 — the appeal was returned (likely for unpaid court fee and/or missed deadline).
- 19 Aug 2025 — the renewed appeal was left unprocessed due to deficiencies; 10 days allowed for correction.
- 18 Sep 2025 — the court refused to restore the deadline and declined to open appellate proceedings.
Principles applied: equality of arms, good governance, and legal certainty (res judicata). The argument of “no budget appropriations” is unacceptable.
Supreme Court Finality
Unable to proceed on the merits in the appeal, SFS Kyiv filed a cassation appeal against the Sixth Administrative Court of Appeal’s ruling of 18 September 2025. On 3 November 2025, the Cassation Administrative Court of the Supreme Court (Judges: Shyshov O.O., Zheltobriukh I.L., Yakovenko M.M.) refused to open cassation proceedings in case No. 320/542**/2* (proceedings No. K/990/42***/25). This sealed the victory: the 25 April 2025 first‑instance judgment cancelling the Tax Notices became final and not subject to further appeal.
Business Implications
- Comprehensive approach: merits (reality/business purpose) plus procedural discipline.
- Practical outcome: not merely a “paper win” — legal finality.
- Recommendation: build evidence beyond primary documents to include proof of performance, use, links to decisions, and economic rationale.
Representation: Yurii Bauman and Maria Koshova, Bauman Kondratyuk Law Firm.
Frequently Asked Questions
Are primary documents alone sufficient?
No. Courts also evaluate actual performance, use in business activity, and business purpose.
Can SFS cite lack of budget appropriations to restore deadlines?
No. Case law rejects this: the state bears the same procedural obligations as taxpayers.
Which evidence best counters allegations of unreal transactions?
A holistic set: contracts, acceptance acts, proof of performance, links to business decisions, and economic justification.
Related Reading
Need counsel in a tax dispute?
Contact us — we respond within one business day.
Office: 39/41 Shota Rustaveli St., Office 814, Kyiv · Email: office@bkadvisers.com.ua