Business documents destroyed due to shelling: Supreme Court makes important finding on taxes

A company does not lose its right to special tax rules just because it continued to submit reports or conduct an audit after the original documents were destroyed. The Supreme Court overturned the decision of two previous instances in case No. 520/7998/24 and explained which edition of the Tax Code should be applied if the documents were lost due to hostilities.

It is about the application of subsection 69.28 of clause 69 of subsection 10 of chapter XX of the Tax Code of Ukraine. This norm establishes special rules for taxpayers who, due to the war, cannot present original documents or have lost them.

The documents were burned after the rocket attack

According to the case file, on May 3, 2022, a fire broke out in the administrative building of the enterprise in the village of Dokuchaevske, Kharkiv district. The company linked its occurrence with a missile attack.

As a result of the fire, as claimed by the payer, the primary documentation was destroyed.

On January 18, 2023, the company informed the tax authority about the loss of documents and asked to apply the special rules provided by the Tax Code.

In order to confirm the circumstances, the company provided a report on the fire, an extract from the ERA, photographic materials, a conclusion of the Chamber of Commerce and Industry, real estate documents, room plans and registers of destroyed accounting, technical and project documentation.

However, the DPS refused.

The tax office paid attention to reporting after the fire

One of the arguments of the tax authority was that after the fire, the company continued to submit tax and financial statements and even conducted an audit of financial statements.

In addition, the DPS saw inconsistencies between the fire report and the expert opinion as to where exactly the documents were stored.

Courts of first and appellate instances supported the tax authority’s position. In their opinion, the company did not provide sufficient evidence that the original documentation was destroyed during the fire.

However, the Supreme Court identified a fundamental problem in the approach of previous instances.

The courts applied the wrong version of the Tax Code

The key date was the date of the company’s appeal to the DPS — January 18, 2023.

It is on this date, the Supreme Court emphasized, that it is necessary to determine the wording of subsection 69.28 of the Tax Code, which is subject to application.

At that time, the norm applied to payers who carried out activities in the territories where hostilities were or were being conducted, as well as in temporarily occupied territories.

Only on May 6, 2023, after the changes introduced by Law No. 3050-IX came into force, the wording was changed — it was already about territories of active hostilities and temporarily occupied territories.

The Supreme Court emphasized: later legislative changes cannot be applied to previous legal relations if they worsen the taxpayer’s position.

Law No. 3050-IX had no retroactive effect.

The territory of “possible hostilities” was also important

Separately, the Supreme Court analyzed the status of the village of Dokuchaevske.

In the corresponding period, the settlement was included in the list of territories of possible hostilities.

At the same time, according to the legislation that was in effect at the time of the company’s appeal to the DPS, the concept of territories where hostilities are being or were being waged covered not only the territories of active, but also the territories of possible hostilities.

Therefore, the conclusion of previous courts about the impossibility of applying a special rule due to the fact that the settlement does not have the status of a territory of active hostilities, the Supreme Court recognized as wrong.

Reporting does not mean that the original documents could not be destroyed

Another important conclusion concerns the various tax obligations of businesses.

The Supreme Court distinguished the provisions of paragraphs 69.1 and 69.28 of the Tax Code.

Clause 69.1 regulates the ability to fulfill current tax obligations during wartime.

Instead, clause 69.28 refers to a different situation — when the original documents for past tax periods are physically destroyed or lost due to hostilities.

Therefore, the very fact that the enterprise could submit current tax or financial statements after the fire does not resolve the question of whether its original documents were destroyed.

The case will be reconsidered

The Supreme Court annulled the decision of the Kharkiv District Administrative Court dated May 22, 2024 and the decision of the Second Appeal Administrative Court dated October 15, 2024.

Case No. 520/7998/24 was referred to the court of first instance for a new hearing.

Now the court must establish in detail:

whether the original documents were kept in the damaged or destroyed premises;
which specific documents were lost;
whether there is a causal connection between the fire and their destruction;
whether documents could be stored electronically or backed up;
whether reporting and conducting an audit after the fire really refute the fact of the loss of primary documentation.

Thus, the Supreme Court did not recognize the fact of the destruction of the company’s documents as automatically proven, but pointed out the mistakes of the previous courts and formulated an important approach for businesses that lost documentation due to the war: evaluate the right to special