Responsibility of the former director for non-payment of taxes

In Moscow, an on-site audit of a company in almost 100% of cases ends in the initiation of a criminal case for a tax crime against the director. Why is this happening?

Starting around 2021 in Moscow, all materials based on the results of on-site tax audits are sent to the Main Investigation Department of the Investigative Committee for Moscow. The State Tax Administration analyzes the results of the on-site tax audit. After this, they give specific instructions on initiating a criminal case, carrying out the necessary investigative actions, the timing of their implementation, and send all materials to the investigative committees for the districts of Moscow.

Of course, district investigators report to their superiors from the Main Investigation Department and initiate criminal cases. Thus, local investigators are deprived of the procedural opportunity to refuse to initiate a criminal case.

Note that from October 2014 to 2021 the situation was different: investigators much more often decided not to initiate criminal proceedings under tax articles.

For what and for how long can directors be imprisoned?

This is an exhaustive list of tax structures in the Criminal Code of the Russian Federation. However, the directors of the company can be prosecuted not only under these articles, but also under Article 159 of the Criminal Code “Fraud”.

Fraud is charged, for example, when refunding VAT from the budget if this refund was declared illegal.

Criminal liability of the former general director

For a director, whether former or current, criminal liability arises if he commits offenses that entail a violation of the rights of citizens or serious economic consequences for the company. Such acts are punishable by prison terms and large fines. The list of acts of the director for which criminal liability is provided is contained in the Criminal Code of the Russian Federation. One of the most pressing issues remains such an act as tax evasion from an organization , in particular, using various illegal schemes, liability for which is provided for in Art. 199 of the Criminal Code of the Russian Federation. More information about liability for committing a crime under Art. 199 of the Criminal Code of the Russian Federation, read the article: “Article 199 of the Criminal Code of the Russian Federation – Evasion of taxes and fees payable by the organization.”

In addition, the director may be subject to criminal liability:

• for an unjustified refusal to hire or an unjustified refusal to hire or unjustified dismissal of a pregnant woman or a woman with children under three years of age (Article 145 of the Criminal Code of the Russian Federation);
• for delay of wages for more than two months for mercenary purposes (Article 145.1 of the Criminal Code of the Russian Federation);
• for copyright infringement (Articles 146-147 of the Criminal Code of the Russian Federation);
• for exceeding his official powers (Article 201 of the Criminal Code of the Russian Federation);
• for commercial bribery (Article 204 of the Criminal Code of the Russian Federation).

At the end of the topic under consideration, I would like to emphasize once again that the director of the company signs tax returns and other documents for calculating taxes. Therefore, he bears personal responsibility for their non-payment, including criminal liability. The period of prosecution depends on the severity of the tax crime. If we are talking about non-payment of taxes on a large scale (Part 1 of Article 199 of the Criminal Code of the Russian Federation), then the statute of limitations is 2 years. If the amount of unpaid taxes is particularly large, or the crime was committed by a group of persons (Part 2 of Article 199 of the Criminal Code of the Russian Federation), then the period for prosecution increases to 10 years (Part 1 of Article 78 of the Criminal Code of the Russian Federation).

Thus, the conditional exit from the business or the dismissal of a director does not relieve the owners and such director from liability. The period of liability of a director after dismissal or liability of an owner after leaving the LLC's membership can, in some cases, reach 10 years.

How exactly are tax crimes committed?

Article 199 of the Criminal Code specifies exactly how companies evade paying taxes:

• They do not provide tax returns, calculations or other documents that they must provide in accordance with the Tax Code of the Russian Federation.
• Include knowingly false information in a tax return or calculation.

What are other documents? These are extracts from the sales book, from the book of income, expenses and business transactions, calculations of advance payments, annual reports on the activities of a foreign organization, documents confirming the right to tax benefits.

What is knowingly false information? For example, if a company performs any work on its own, but indicates in the primary documents that this work was performed by a counterparty. This means that the company can deduct VAT and take expenses into account when calculating corporate income tax. This is deliberately false information.

Payers – individuals, including individual entrepreneurs

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How does the tax office detect tax evasion?

During desk and field tax audits. We will not go into these details now. Let's pay attention to the timing. If arrears are identified, inspectors make demands for payment of taxes:

• two months are given to the business to pay upon request from the inspectorate;
• 10 days to transfer information to the investigative committee if the company has not paid the arrears;
• a month to conduct a pre-investigation check and decide whether to initiate a criminal case;
• two months to investigate the criminal case. However, in practice, these deadlines are not observed and the investigation of the case can take six months or a year.

In practice, approximately 2.5–3 years pass from the start of an on-site tax audit to the verdict.

Responsibility of the former director of the LLC for the company's losses

If, as a result of the actions of the former manager, the company suffered damage, then the new manager or owners can go to court and recover the appropriate amount from him. The financial liability of the general director of the LLC in this case is provided for in Art. 44 of the Law of 02/08/1998 No. 14-FZ “On Limited Liability Companies”.

This normative act does not divide the responsibility of the former or current manager, and also does not contain instructions on the timing of its application. Therefore, in this situation, the general limitation period established by Art. 196 of the Civil Code of the Russian Federation, i.e. three years.

We invite you to familiarize yourself with: Measures of liability of employers and employees for violation of labor laws - Articles || Administrative criminal liability

For what amount can directors be held criminally liable under a tax article?

Let’s imagine that the company transferred 8 million rubles to a shell company. with VAT for certain services. At the same time, the company:

• counted these 8 million as expenses when calculating income tax;
• applied a deduction from input VAT.

What additional amount will the tax office charge based on the results of a tax audit if it is discovered that the counterparty is a shell company?

• VAT for RUB 1,220,338. (8,000,000/118 * 18). After all, the operation in connection with which the company applied a VAT deduction did not actually take place.
• Income tax - 1,355,932 ((8,000,000 - 1,220,338) * 20%).
• Fine: 1,030,508 - ((1,220,338 + 1,355,932) * 40%). We add up the amount of VAT and income tax paid and subtract 40% from it.

A fine of 40% of unpaid taxes is imposed if the non-payment was intentional - this is a prerequisite for initiating a criminal case. If a company did not pay taxes because the accountant made a mistake or did not know that the company should pay them, then there is no crime.

Intent for non-payment is the most important condition for initiating a criminal case against the director

All tax crimes are committed with direct intent. This is when the company's top managers:

• realized that they were not paying taxes, although they were required by law to do so;
• understood that they were breaking the law;
• carried out actions aimed at non-payment of taxes.

What are actions aimed at non-payment of taxes? Creation of one-day companies and subsequent work with them, artificial fragmentation of a business without a business purpose, failure to register some employees as employees so as not to pay insurance premiums for them, and so on.

The Investigative Committee and the Tax Service are faced with the task of proving that taxes were not paid intentionally. In this case, the tax office will be able to impose a fine of 40%, and the Investigative Committee will have the opportunity to initiate a criminal case. How is intent proven in practice? Using the procedures described in the Code of Criminal Procedure and the Tax Code, such as:

• taking testimony;
• search of the office;
• notch;
• requesting documents from the company itself and its counterparties;
• requests to the bank;
• conducting financial and accounting examinations.

A classic example: the tax office or investigators seized the company’s computer and found documentation there on behalf of a disputed counterparty. The properties of the file indicate that it was compiled by employees of the company being audited, which means that the counterparty is fictitious and taxes were not paid intentionally. After all, fictitious document flow is created only intentionally.

Back in 2021, the Tax Service and the Investigative Committee issued a joint letter dedicated to proving intent to commit a tax crime.

Responsibility of a manager in bankruptcy

Bankruptcy legislation provides for the possibility of applying subsidiary (i.e. additional) liability to the manager for the organization’s debts.

We invite you to familiarize yourself with: Sample message on concluding an employment contract with a former civil servant

The head of the company is recognized as a controlling person and can be held liable if he held this position less than three years before signs of bankruptcy arose (Article 61.10 of the Law of October 26, 2002 No. 127-FZ “On Insolvency (Bankruptcy)”).

The transactions carried out on his instructions caused significant damage to the interests of creditors.

Accounting and other documents required by law of the company are missing or distorted.

The claims of third-priority creditors arising as a result of the offense exceed 50% of the total amount of such claims.

The state registers do not contain the necessary information about the legal entity or its activities.

The liability of the director in the event of bankruptcy of an LLC does not apply if he proves that he acted in good faith and within the framework of civil customs (Clause 10, Article 61.11 of Law No. 127).

Is the director always liable if the company fails to pay taxes?

No not always.

The director has his own responsibilities, and the chief accountant has his own. If the director is not involved in accounting and, due to his official duties, did not choose contractors who turned out to be dubious, then it is very difficult to accuse him of tax evasion.

The courts take this point into account and examine whose responsibilities include the preparation and submission of declarations, as well as the selection of counterparties.

In our practice, there are cases when the tax office came with an on-site audit to a company and assessed an additional amount of more than 50 million rubles. A criminal case was opened against the director under Part 2 of Article 199 of the Criminal Code of the Russian Federation. The reason is the company’s connection with shell companies, which is why, according to investigators and the tax office, the taxpayer did not pay additional taxes.

However, we managed to prove that the director was not guilty and got the criminal case dismissed. Previously, he had already contacted us for comprehensive director protection services, thanks to which the company had:

• Regulations on contractual work.
• Due diligence clause.
• Regulations on the selection of counterparties and other documents.

In our case, the director did not select counterparties. He had contact only with counterparties-customers, and not with suppliers. Suppliers were searched and verified by other company employees. Therefore, the director could not bear any responsibility for the fact that some contractors turned out to be dubious.

Responsibility of the General Director for LLC debts from 2021

A feature of the management of the LLC is that neither the manager nor the founders are liable for the debts of the Company (clause 1 of Article 87 of the Civil Code of the Russian Federation). The only thing they risk is the assets they contributed as a share in the management company.

However, it is worth distinguishing between debts resulting from the influence of the business environment and debts to creditors that arose due to the intentional introduction of the LLC manager into a state of bankruptcy, for the repayment of which the legal entity does not have enough assets (and, according to Article of the Civil Code of the Russian Federation, it is liable for all debts your property).

In the second case, from 2021, the general director of the LLC is held vicariously liable as part of a bankruptcy case of a legal entity and repays debts to counterparties from his own funds (but only if the court decides that their amount should be collected from him into the total bankruptcy estate).

However, for the following property defined in Art. 79 Federal Law No. 229 dated October 2, 2007, the penalty is not applied.

• 
  the only dwelling and the land below it;

• personal items not related to luxury items;
• means of carrying out professional activities;
• other property specified in Art. 446 Code of Civil Procedure of the Russian Federation.

The direct involvement and interest of the LLC director in bankruptcy will be proven if at least one of the conditions listed in paragraph 4 of Art. 10 Federal Law No. 127 of October 26, 2002, in particular:

• the execution or approval by the manager of transactions that infringe on the property rights of creditors of the bankrupt LLC;
• damage to financial and reporting documentation, making it impossible to carry out procedures provided for by bankruptcy legislation

Also, the basis for bringing the general director to such liability will be his ignoring the procedure and deadlines for filing an application for financial insolvency (clause 2 of article 10 of Federal Law No. 127).

If the submitted application is unfounded, then the manager is also responsible for the damage caused to creditors by the initiation of bankruptcy proceedings (Clause 3 of Article 10 of Federal Law No. 127).

Since July 1 last year, creditors have the right to bring the general director to subsidiary liability after the completion of the bankruptcy case, provided that their claims have not been satisfied, as well as without initiating it, if the reason for non-initiation was the lack of funds for the procedure.

Thus, the general director is responsible for causing damage not only to the LLC, but also to third parties.

What to do if a criminal tax case has already been initiated against the director?

If a criminal case has already been initiated, then it is necessary to involve experienced lawyers specializing in taxes to protect your interests. They are the ones who must analyze the situation, assess the risks and work out further tactics and line of defense.

To do this, witnesses may be questioned, documents may be presented, including those confirming the reality of the transaction, due diligence and commercial diligence may be exercised, a financial analysis of the results of controversial transactions may be carried out, and procedural grounds may be used to deem a number of evidence inadmissible. As practice shows, these actions can only be carried out by a lawyer practicing in this area.

conclusions

Almost any on-site tax audit leads to the initiation of a criminal case against the director of the company.
The Criminal Code contains several elements of tax crimes. In case of VAT refund from the budget, the case may be initiated under Art. 159 of the Criminal Code of the Russian Federation - “Fraud”.

Tax crimes fall under the jurisdiction of the Investigative Committee. This authority may receive information about a tax crime from various sources, but usually from the tax office, which conducted a tax audit and identified violations. Information may also come from the police or citizens who have filed a statement about tax violations by the company.

If a criminal case has already been initiated or a pre-investigation investigation is underway, then it is better to hire an experienced lawyer who will help you choose defense tactics and knows the nuances of procedural law.