How Businesses Lose Tax Disputes Due to Procedural Mistakes

Most business owners are accustomed to assessing the prospects of a tax dispute through the lens of substantive law: whether the tax authority applied the provisions of the Tax Code correctly, whether the available evidence is sufficient, and whether there is case law supporting the taxpayer’s position. However, the practice of the Supreme Court increasingly demonstrates a different trend. Even a strong legal position does not guarantee success if a procedural mistake was made at the outset.

Procedural discipline often determines whether the court will proceed to consider the merits of the dispute at all. Missing the deadline for filing a claim, choosing an inappropriate remedy, submitting evidence too late, or changing the legal position during the proceedings may be sufficient grounds for dismissing the claim, regardless of how well-founded the taxpayer’s arguments may be.

Missing the Deadline for Filing a Claim

One of the most common procedural mistakes remains the failure to apply to the administrative court within the prescribed time limit.

In its judgment of 3 July 2025 in case No. 500/2276/24, the Grand Chamber of the Supreme Court finally clarified the approaches to calculating the time limits for bringing tax disputes before the courts.

In particular, where a decision of the tax authority has not been challenged through the administrative appeal procedure, the six-month time limit established by part two of Article 122 of the Code of Administrative Procedure of Ukraine applies.

Where an administrative appeal has been lodged against decisions unrelated to the assessment of monetary liabilities, the three-month time limit under part four of Article 122 of the Code of Administrative Procedure applies.

For tax assessment notices challenged through the administrative appeal procedure, the special time limit is only one month, in accordance with paragraph 56.19 of Article 56 of the Tax Code of Ukraine.

At the same time, the Supreme Court emphasises that a procedural deadline may be reinstated only where there are objective and insurmountable reasons for missing it. Errors in the organisation of a company’s operations, delays in receiving postal correspondence, or internal administrative failures are not recognised as valid grounds.

The Supreme Court’s judgment of 9 April 2026 in case No. 380/17493/24 is particularly illustrative. Even the fact that the company’s director was serving in the military was not, in itself, considered sufficient grounds for reinstating the deadline, since the court established that he had continued to manage the company’s activities in practice.

Similarly, in case No. 580/10785/25, the Supreme Court held that the return of a registered letter due to the expiry of its storage period did not mean that the taxpayer had not been duly notified of the relevant decision.

Choosing the Wrong Judicial Remedy

Another common mistake is filing a claim seeking the annulment of a decision that, by itself, can no longer restore the infringed right.

In its judgment of 14 May 2026 in case No. 560/3732/25, the Supreme Court confirmed the legal position previously expressed by the Grand Chamber of the Supreme Court in its judgment of 8 September 2021 in case No. 816/228/17.

According to that position, if a taxpayer has allowed the officials of the controlling authority to conduct an audit, the order authorising that audit is deemed to have been implemented. Its separate challenge can therefore no longer be regarded as an effective remedy.

In such circumstances, the subject matter of the judicial dispute should be the tax assessment notices issued as a result of the audit.

The Supreme Court applied a similar approach in case No. 520/14108/24. In that case, the taxpayer challenged a decision of the central-level commission, although the taxpayer’s rights had been directly affected by the initial decision of the regional-level commission refusing to register the tax invoices.

The Court stressed that correctly identifying the subject matter of the dispute is one of the key elements of effective judicial protection.

Evidence Should Be Submitted During the Tax Audit

A widespread belief among businesses is that all relevant documents may be submitted directly to the court. However, judicial practice demonstrates that such an approach may cost a taxpayer the case.

In its judgment of 9 June 2026 in case No. 160/25879/24, the Supreme Court upheld the penalties precisely because the documents confirming the lawfulness of the taxpayer’s actions had been submitted only during the court proceedings. They had not been provided to the controlling authority during the audit or attached to the taxpayer’s objections to the audit report.

This approach once again confirms that a tax audit, an administrative appeal, and judicial proceedings should not be treated as entirely separate stages. They form a single process in which the evidentiary record should be developed as early as possible.

If the documents supporting the taxpayer’s position already exist at the time of the audit, withholding them until the court proceedings creates a serious procedural risk. The court may conclude that the controlling authority could not have taken those documents into account when adopting the disputed decision and that the taxpayer failed to use the available mechanisms for presenting its objections in due time.

The Legal Position Should Be Defined Before the Claim Is Filed

Another serious mistake is attempting to substantially change the grounds of the claim after the court proceedings have already been opened.

The Code of Administrative Procedure allows the subject matter or grounds of a claim to be amended only within the procedural time limits established by law. Once those limits have expired, new arguments may remain outside the scope of the court’s consideration.

This is confirmed, in particular, by the Supreme Court’s judgments in case No. 480/4896/24.

In one case, the court refused to take new circumstances into account because the taxpayer’s legal position had been inconsistent. In the other, the court noted that the new arguments could have been presented when the claim was initially filed, but the claimant had failed to exercise its procedural right to amend the grounds of the claim within the prescribed time.

This means that the preparation of a tax claim should not be limited to setting out the most obvious arguments against the tax authority’s decision. Before filing the claim, the business must determine the complete factual and legal basis of its position, assess all available evidence, identify the proper defendants and formulate a remedy capable of genuinely restoring the infringed right.

Otherwise, arguments that appear decisive at a later stage may no longer be admitted by the court for purely procedural reasons.

Conclusions

The practice of the Supreme Court increasingly demonstrates that the outcome of a tax dispute depends not only on the correct application of the provisions of the Tax Code.

The timeliness of procedural actions, the proper choice of judicial remedy, the early development of the evidentiary record, and the consistency of the taxpayer’s legal position are equally important.