Andriy Levkovets, a partner at Barristers JSC, explained the specifics of investigating tax crimes to the LHS audience

Andriy Levkovets, a partner at Barristers JSC, explained to students at the Legal High School’s Tax Practice School how preliminary investigation authorities operate in criminal proceedings involving tax evasion.

Article 2 of the Criminal Procedure Code of Ukraine, in defining the main objectives of criminal proceedings, stipulates that investigations and court proceedings must be conducted in such a way that anyone who has committed a criminal offense is held accountable. At the same time, this provision also contains three important principles. Specifically, a person must be held accountable in proportion to their guilt; no innocent person should be charged or convicted; and no one may be subjected to unjustified procedural coercion.

The lecturer emphasized that the issue of the tax police’s powers is a matter of debate. Currently, there is formally no legal basis for the activities of the tax police.

Andriy Levkovets is convinced that, for the most part, investigators abuse their powers. The lecturer listed the most common violations, including violations of jurisdictional authority, the ordering of tax audits based on rulings by investigating judges, the artificial “aggravation” of the classification of an offense, “splitting” of proceedings, treating all collected materials as physical evidence, biased expert opinions, groundless denial of motions, misleading investigative judges, and the use of materials from other proceedings in criminal proceedings.

Regarding the violation of procedural sequence, the Grand Chamber issued a decision in Case No. 243/6674/17-k dated May 23, 2018, in which it noted the following: the legislature not only stripped investigators and prosecutors of the authority to “order audits and inspections,” but also established that an investigating judge’s order to conduct an inspection exceeds his or her jurisdiction; therefore, any evidence obtained as a result of such inspections or audits is inadmissible.

In the event of a notice of suspicion against a taxpayer, as follows from Resolution No. 15 of the Plenum of the Supreme Court of Ukraine dated December 8, 2004, if the taxpayer challenges the decision of the tax authority in court, the charge of tax evasion against the individual may be based on such a decision only until a final ruling is issued. only if the charges are proven on the basis of additional evidence collected in accordance with the requirements of Ukraine’s criminal procedure legislation (and not merely based on the decision). However, in the event of an appeal against a tax assessment notice, the tax liability is considered settled as of the date the court issues its decision; therefore, the possibility of establishing intent in criminal proceedings when the suspect appeals the tax assessment notice is highly doubtful.

Andriy Levkovets considers the admission of any materials as physical evidence not so much an abuse as a general and systemic error, since examining the content of documents—if they have been admitted as physical evidence—is unlawful.

A particular issue in tax crimes is the bias in expert examinations. Such violations are possible when an investigator needs to prove the circumstances required for their case. Therefore, after an expert examination is ordered, investigators either provide a limited set of documents or pose inappropriate questions. This is illustrated by the judgment of February 17, 2017 (Case No. 176/1868/13-k), in which the court found that the expert was not provided with all the necessary documents during the examination and relied solely on what was provided to him by the investigator; accordingly, the court did not take the expert’s conclusions into account.