Blocking of tax invoices / risky taxpayer status

Blocking of tax invoices and the “risky taxpayer” status have long become a routine operational threat rather than an exception for Ukrainian businesses. The system for monitoring risky VAT operations and taxpayers works automatically based on criteria approved by the government, while decisions are formally taken by regional and central commissions of the State Tax Service. For a company this means that a single technical step — suspension of tax invoice registration — instantly turns into a real business problem: the buyer loses the VAT credit, tension with counterparties grows and entire supply chains may be blocked.

Despite the tax authorities’ statements that the share of suspended invoices is decreasing, the mechanism itself remains complex and the risks tangible. In reality, entrepreneurs formulate the issue simply and emotionally: “our tax invoice was blocked — what do we do?” or “we were listed as risky — how do we get out?”. The legal answer is multi‑layered: you need to understand the algorithm for unblocking a specific TI/ADJ, the logic behind recognising a taxpayer as risky and the available appeal routes — both administrative and judicial.

Blocked tax invoice: what it means and first steps

When a taxpayer receives a receipt stating that registration of a tax invoice or adjustment calculation has been suspended, it means that the monitoring system has identified a risk either in the transaction itself or in the status of the taxpayer or its counterparty. The blocking does not cancel the VAT liability to the budget but deprives the buyer of the right to a tax credit, which inevitably creates conflict between the parties.

The first step is to carefully read the receipt and the decision of the regional commission. These documents specify the ground for suspension (risk criterion of the transaction or taxpayer), the proposal to submit explanations and the list of documents that, in the tax authority’s view, are missing. It is essential to record the date on which the decision was received, since all deadlines for submitting explanations and for further administrative appeal are calculated from this date.

Next, a package for unblocking must be prepared: written explanations and copies of primary documents confirming that the transaction is real. Typically, this includes the contract and annexes, delivery and transport documents, acts of acceptance for works or services, payment orders, warehouse documents, quality certificates, accounting policy orders, staff lists, documents confirming fixed assets, warehouse lease agreements and similar items — depending on the business model. All this is submitted via the electronic taxpayer’s cabinet together with a narrative explaining the transaction and its economic rationale.

If the regional commission refuses to register the TI/ADJ, the next step is administrative appeal: a complaint to the central commission of the State Tax Service must be filed within 10 business days from the date the regional decision takes effect. This deadline is strict; missing it deprives the taxpayer of the right to administrative appeal and effectively forces them to go straight to court. Waiting in the hope that “they might reconsider” is therefore a highly risky strategy.

“Risky taxpayer”: why it is worse than blocking a single invoice

While blocking of a single TI/ADJ can still be treated as a “point issue”, inclusion in the list of risky VAT payers is a systemic blow to the business model. Risky status means that the monitoring system perceives the company as potentially fictitious or involved in tax minimisation schemes, so invoices issued by such a taxpayer are blocked almost automatically.

The risk criteria are set out in the procedure approved by Cabinet of Ministers Resolution No.1165 and include, among other things, a lack of sufficient assets or personnel, inconsistency between transaction volumes and resources, problematic counterparties and inconsistency between tax behaviour and the declared types of activity. In 2025 these criteria and the approach to assigning risky status were further refined, while the possibility of both automatic and “manual” inclusion remained.

In practice, decisions on compliance with risk criteria are often very generic, with template references to the procedure and no detailed description of actual grounds. This makes it difficult to understand why exactly the business has been “punished” and explains why clients seek clear, practical advice: what exactly the STS is unhappy about, which documents should be provided, whether it is possible to be removed from the risky list without going to court and within what timeframes.

How to be removed from the risky list: step‑by‑step

The algorithm for leaving the list of risky VAT payers, although bureaucratic, is already well‑tested in practice. The first and key task is to identify the specific reason for being classified as risky. To do this, you must carefully analyse the regional commission’s decision and, if it is unclear, request clarification through the communication platform or via a formal written inquiry to the tax office.

The second step is to prepare a document package to rebut the risk status. A typical set includes contracts with key counterparties, acts, invoices, transport documents, payment orders, proof of warehouses or production premises (lease agreements, acceptance acts), information about staff, fixed assets and stock, internal regulations, licences, certificates and similar documents. It is important not just to “dump all papers”, but to link them logically to the wording of the risky‑status decision and demonstrate that the company has real resources to perform the declared transactions and does not meet the specific risk criterion.

The third step is to submit Notification J(F)13149 via the electronic cabinet, with structured explanations and scanned documents within the allowed format and size. Explanations should briefly describe the business activities and, criterion by criterion, show why the taxpayer should not be treated as risky, with cross‑references to supporting documents. It is common to receive a first refusal to remove risky status; in such cases it is worth submitting a second notification with additional evidence.

If all administrative efforts fail, the next tools are a complaint to the Business Ombudsman Council and a lawsuit challenging the decision on risky status. Court practice contains many examples where such decisions have been cancelled due to insufficient reasoning, lack of analysis of real business operations or failure by the tax authority to consider documents submitted by the taxpayer. However, litigation takes time, so businesses usually try to exhaust administrative remedies first.

Why clients want fast, practical solutions

From a business perspective, blocked tax invoices and risky‑taxpayer status are not seen as “tax technicalities” but as a direct threat to liquidity and relationships with key partners. When a buyer cannot obtain a tax credit, they put pressure on the supplier, demand discounts, delay payment or terminate cooperation altogether. Clients therefore formulate their request in very pragmatic terms: “what exactly must we do to unblock the invoice and leave the risky list as soon as possible?”.

For lawyers, this means the most in‑demand services are those with a clear algorithm and predictable outcomes: rapid analysis of blocking reasons, preparation of explanation letters and supporting documents for unblocking TIs/ADJs, handling correspondence with regional and central commissions, and designing a “roadmap” for exiting the risky list. Preventive services are also highly valued: risk audits, counterparty checks, adjustment of business activity codes and fine‑tuning internal documentation procedures.

The strength of such services lies in their measurability. The outcome can be described in simple terms: “we prepared the package, submitted it and obtained registration of the invoice / removal from the risky list, or we clearly understand the next steps in court”. Unlike general tax consulting, here businesses see a direct link between legal actions and financial results: unblocked tax invoices mean preserved contracts, avoided penalties and a stable cash flow.

Ultimately, the earlier a company starts acting after receiving receipts on suspended registration or a risky‑status decision, the more tools it has — from timely explanations to administrative and judicial appeals within statutory deadlines. Delay leads to an accumulation of blocked invoices, increased tension with counterparties and loss of procedural opportunities.

If you are facing issues with blocked tax invoices, inclusion in the risky‑taxpayer list, preparation of explanations for unblocking or appeals against STS decisions, you should promptly seek professional tax support from WINNER Law Firm to protect your business and maintain operational stability.

Author: Ihor Yasko, Managing Partner at WINNER Law Firm, PhD in Law.