Editor's Note: Value-added tax is a "chain tax". If the drawer or the drawee is suspected of falsely making out, the risk of falsely making out may be transmitted through the invoice chain, which may lead to administrative and even criminal risks of the other party. In general cases of illegal invoices, enterprises may face procedures such as self-examination, tax investigation, tax inspection, and criminal transfer. It is of great significance to clarify the possible trends and favorable space for each stage to prevent and control criminal risks and prevent further losses. In addition, in practice, there are cases where public security organs file cases first based on case clues. In this case, it is particularly important to understand and respond to the convergence of execution. This paper, from the perspective of the drawee, analyzes the key points that enterprises should pay attention to at all stages in the case of suspected fraudulent opening.

I. Enterprise self-inspection or tax investigation: actively cooperate and strive to control risks at the front end.

For cases where the drawee is suspected of illegal invoices, the tax authorities mainly find tax-related problems in two ways in practice. First, the local tax authorities find that there are some doubts in the enterprise's tax supervision, such as mismatched sales, "two ends are out" and the invoice is issued with serial numbers, and carry out risk assessment and self-examination on the enterprise; Second, clues from outside, for example, the upstream tax authorities sent a Letter of Investigation on Tax Illegal Cases, asking local tax authorities to assist in verifying related issues. In the case of tax investigation, according to the Administrative Measures on Invoice Investigation of Tax Illegal Cases (Trial) (No.66 [2013] of the Tax Administration Department), the local tax authorities shall reply to the conclusion or result of the investigation within the specified time limit after receiving the Letter of Investigation on Tax Illegal Cases. If the invoice-receiving enterprise can strive for the local tax authorities to determine that the business involved is true and there is no false opening at this stage, it can effectively prevent and control risks.

Specifically, in the process of self-inspection or investigation, the payee can pay attention to two main points: on the one hand, the payee can sort out the business information, clarify the specific situation of contracts, goods or services, funds and invoices, and communicate with the tax authorities on the authenticity of business development. On the other hand, the drawee enterprise should cooperate with the investigation work of the tax authorities. According to the provisions of Article 54 of the Law on the Administration of Tax Collection, the tax authorities have the right to inspect taxpayers by means of collecting account books, on-the-spot inspection, inquiry and inquiry of deposit accounts. After receiving the notice of collecting account books and other documents issued by the tax authorities, they should truthfully submit relevant materials.

II. tax inspection: clarify the scope of responsibility and prevent and control criminal risks.

According to the Measures for the Administration of Tax Inspection Sources (Trial) (No.71 [2016] of Tax Administration), tax inspection sources come from many aspects, including risk information identified in the risk management process of tax authorities, tax illegal clues formed by entrusted investigation matters, tax illegal clues provided by external units such as public security, and tax illegal clues provided by supervision or tasks assigned by higher-level governments. In practice, based on the risk transmission of the invoice chain, the tax inspection risk of the invoice-receiving enterprise mostly comes from the Notice of Confirmed False Issuance sent by the upstream tax authorities. According to the provisions of Circular No.66, if the entrusting party (namely, the upstream tax authorities) has issued the Notice of Confirmed False Issuance, the entrusted party (namely, the local tax authorities of the downstream enterprises) shall file an inspection in accordance with the Provisions on Procedures for Handling Tax Inspection Cases. After filing the case, the inspection bureau conducts tax inspection on the drawee by means of on-the-spot inspection and obtaining account books in accordance with legal authority and procedures, and collects evidence materials. After the inspection, it enters the trial stage to review whether the facts of tax violations are clear, whether the evidence is sufficient, whether the data is accurate, whether the applicable laws, regulations and rules are appropriate and whether the nature is accurate. After trial, if there is no tax violation, a tax inspection conclusion will be made, and if there is tax violation, a tax treatment decision will be made.

From the above tax inspection process, it is not difficult to see that the result orientation of tax inspection includes two types: one is that the drawee has no tax violations; Second, the drawee has tax violations. Besides paying taxes and charging late fees, it may also involve false issuance or tax evasion, and face the problem of adding fines, which constitutes a crime. According to the requirements of execution convergence, the drawee enterprise also faces the risk of being transferred to criminal investigation. Therefore, the conduct of tax inspection procedures and the results of the inspection have an important impact on administrative and criminal responsibilities. Then the drawee enterprise should grasp the following points in the tax inspection procedure, actively state its defense and submit relevant materials:

On the factual level, as mentioned above, the drawee should sort out the evidence to prove the authenticity of the transaction and explain the "doubts" existing in the business processes such as the rationality of the transaction, the delivery of goods and the circulation of funds. On the qualitative level, on the one hand, the Notice of Confirmed False Issuance is only a clue for the competent tax authorities of the drawee to carry out tax inspection, and the tax authorities should make an objective and independent judgment on the business involved by combining the collected evidence materials; On the other hand, in view of the provisions of the current tax law that enterprises obtain false invoices under different circumstances, the drawee can strive for favorable characterization in combination with the actual situation of the case, such as normal deduction, determination of bona fide acquisition and VAT input transfer, determination of non-compliant invoices and VAT input transfer, and additional fines. In view of the prevention of criminal risks, the drawee can actively communicate with the tax authorities on whether it has the purpose of defrauding the tax, whether the tax is defrauded because of the deduction, and strive not to transfer it.

In addition, if the drawee obtains a false invoice and is falsely invoiced or evaded taxes, according to the Administrative Punishment Law and the Provisions on Handling Procedures of Tax Inspection Cases and other relevant regulations, the tax authorities need to make a Notice of Tax Administrative Punishment to the enterprise before making the final punishment document to inform the relevant illegal facts and basis, and inform the taxpayer of the right to state, defend and apply for a hearing. The drawee may file an application for hearing within the prescribed time limit, and fully state and defend his own legitimate rights and interests through procedures such as marking papers, cross-examination and giving evidence.

III. reconsideration or litigation: make full use of the right of relief and safeguard their legitimate rights and interests.

After receiving the Decision on Tax Treatment and the Decision on Tax Administrative Punishment, the drawee can make relief through reconsideration and litigation if there is any objection to the relevant treatment and punishment. In view of the Decision on Tax Treatment, which requires the drawee enterprise to transfer out the VAT input, pay late fees, adjust income tax, etc., the drawee enterprise may file a reconsideration after paying the tax and late fees or providing corresponding guarantees within the prescribed time limit, and may bring a lawsuit to the people's court if it refuses to accept the reconsideration decision; For the Decision on Tax Administrative Punishment, the drawee enterprise can bring relief through reconsideration or litigation.

In view of the relief channel of the drawee when the upstream sends the Notice of Confirmed Falsification, there are two recent trends in judicial practice that deserve attention: First, whether the drawee can file a lawsuit on the Notice of Confirmed Falsification, in the "Administrative Trial Lecture Hall" held in the Supreme People's Court in March this year, the judge of the the Supreme People's Court Administrative Trial Chamber pointed out that "the lawsuit filed against the Notice of Confirmed Falsification issued by the tax authorities is only used as a clue of tax violation cases in the trustee. If the trustee takes it as the main basis for making a decision on treatment or punishment, and it has external effect, it should decide whether to include it in the scope of accepting the case according to the circumstances, such as the directness and economy of the right relief. That is to say, if the competent tax authorities of the drawee mainly require the drawee to pay back the tax according to the Confirmed False Notice, and the notice has external effect, the drawee can file a lawsuit accordingly. Second, in February this year, Shanghai Railway Transport Court tried a case in which the drawee was suspected of falsifying. The Shanghai Railway Court innovated the trial mode of invoice-related cases, and added the upstream tax authorities to participate in the litigation for the third party, so that the upstream and downstream tax authorities could jointly identify the facts of falsifying, effectively breaking the information barrier caused by the tax authorities' segmented jurisdiction and law enforcement, and solving the circular dilemma of the parties' rights relief in such cases.

IV. the prevention of criminal risks: actively defend in combination with the constitutive requirements and the provisions of the crime.

According to the Provisions on the Transfer of Suspected Criminal Cases by Administrative Law Enforcement Organs, if the administrative law enforcement organs find the amount, circumstances and consequences of illegal facts in the process of investigating and handling illegal acts, they must transfer them to the public security organs according to the provisions of the criminal law and judicial interpretation, which are suspected of constituting a crime and need to be investigated for criminal responsibility according to law. At present, in practice, some local tax authorities mainly judge whether to transfer or not based on the amount standard, that is, if the tax amount of falsely issuing special tickets reaches more than 100,000 yuan, it will be transferred to the public security organs, and the enterprises involved and related personnel will face the risk of criminal responsibility. As a matter of fact, the fraudulent act recognized at the administrative level does not necessarily lead to the fraudulent crime at the criminal level, and the judicial organ should also consider whether the perpetrator has the intention to defraud the tax, whether it causes the result of tax fraud, etc. If the judicial organ determines through examination that the enterprise does not constitute a crime of falsely opening, it shall refer the case to the tax authorities through the reverse connection procedure of execution. Therefore, if enterprises and related personnel are transferred to judicial organs because of false opening, they should actively communicate with judicial organs to prove that it does not constitute a crime of false opening around subjective intent and loss of results, so as to prevent and control criminal risks.

In practice, there are still cases where the public security organ first files the drawee with the crime of falsely issuing special VAT invoices according to the clues transmitted by the public security organ of the drawer, and the inspection bureau files an inspection on the enterprise according to the clues of the public security organ. In this case, the drawee should pay attention to the tax inspection procedure, strive for good characterization, and prevent and control criminal risks as much as possible; At the criminal level, we should actively communicate with the case-handling organs on crime and non-crime, this crime and that crime in combination with the facts of the case and legal provisions.

V. Summary

From risk assessment and self-examination, tax investigation to tax inspection, reconsideration or litigation relief, each stage has a clear time limit. The drawee should pay attention to the time limit for exercising the right, grasp the right of relief, actively communicate with the case-handling organ on the facts of the case and the application of the law, properly handle it, and prevent and control criminal risks.