The court overturned the fine of UAH 1,000,000 for the Yabko store due to mistakes by the tax authorities

The court overturned the fine of UAH 1,000,000 for the Yabko store due to mistakes by the tax authorities

The Eighth Administrative Court of Appeal annulled the tax notice-decision in the amount of over 1 million hryvnias for individual entrepreneur Olha Mykytyn (owner of the “Yabko” store). The court found that the tax authorities committed critical violations when issuing the inspection order, rendering the entire control process unlawful.

This is reported by the Telegram channel “Sudom po skhemam” with reference to case No. 140/1671/25.

Essence of the conflict

In 2024, tax officials conducted an on-site inspection of the “Yabko” store in Ternopil. Based on the inspection results, the controlling authority claimed a violation of the inventory accounting procedure. The inspection report stated that goods worth over UAH 1 million were not recorded, resulting in financial sanctions of UAH 1,031,708 being imposed on the entrepreneur.

Why the court sided with the business?

During its review of the case, the appellate court identified several gross violations by the fiscal authorities:

• Identification error: The inspection order listed only the commercial name — the “Yabko” store — as the object. The court emphasized that the store name is not a subject of tax legal relations and that the order must be directed specifically at the individual entrepreneur. Such generalized identification violates the principle of individuality of an administrative act.

• Ignoring evidence: The entrepreneur provided all necessary documents (commission agreement, acceptance-transfer acts, accounting form) already during the inspection. The tax officials ignored these documents and did not evaluate them in the report.

• Incorrect subject of the inspection: The court stressed that an on-site inspection has a different subject (settlement transactions, cash register, licenses) than a documentary one. The tax authority’s attempts to verify the reality of business transactions within the framework of an on-site inspection exceeded the inspectors’ powers.

On July 1, 2026, the appellate court overturned the first-instance court’s decision and issued a new ruling: the tax notice-decision in the amount of UAH 1,031,708 was canceled. In addition, the tax authority was ordered to reimburse the entrepreneur UAH 20,634.25 in court costs.