Allegations made against a taxpayer of lack of due care and diligence when choosing a counterparty is one of the most common claims made by tax inspectors. To recognise company expenses under a transaction as undocumented, tax authorities only need to suspect its counterparty of dishonesty.
As part of tax risk identification and analysis, BGP Litigation lawyers check first-order counterparties for signs of unscrupulous organisations, analyse counterparty chains (second and subsequent order) to identify “fly-by-night” organisations, and assess tax risks in relations with disputed organisations, as well. If signs are identified of bad faith on the part of counterparties and presence of associated risks, the lawyers work out recommendations for further work with such counterparties and a roadmap for subsequent tax risk mitigation.