Bankruptcy of the company was inevitable, but we helped avoid it by identifying tax risks

Situation:

In 2022, a large construction company received a significant contract that involved working with numerous new counterparties. It was planned to sign a substantial volume of work completion agreements every quarter. The client was focused on timely fulfilment of the work plan rather than on search for tax risks.

Solution:

After a tax check-up, it was discovered that a major new contractor was withdrawing a significant portion of money from circulation without any counter-execution, thus converting money into cash. The client was likely to be deemed a beneficial owner in these transactions, resulting in potential liability.

Result:

We promptly noticed the issue and required the founders of the contractor to assume the tax risk as individuals (via surety agreements). We implemented the ongoing monitoring of all the counterparties and established control over the payment of value-added tax on the part of the client.