The Constitutional Court condemns the Treasury for using electronic notifications only
The highest court upholds a company prosecuted by the tax authorities for a notification of which it was not even aware.
A new judicial blow to the Tax Agency’s procedures. In this case, it has been the Constitutional Court that has condemned the Treasury for a practice that affects thousands of self-employed workers and companies: using only the electronic channel to notify VAT review processes.
In a ruling issued by the court on 29 November, the Constitutional Court ruled that the Tax Agency has violated the right to effective judicial protection through its system of telematic notifications, and now requires the department headed by María Jesús Montero to use an alternative channel if the taxpayer does not access their digital mailbox.
The case
The decision stems from a long court battle between an SME and the tax authorities. It all began in 2014, when the Tax Agency asked the taxpayer company for extra documents on the VAT return for 2012. But this request was made through the electronic headquarters, and the taxpayer was unfamiliar with the system, so it was unable to comply with the requests. After 10 days without a response, the tax authorities understood, in application of the regulations, that the SME had been duly notified, even though it had not accessed the notice.
Since the taxpayer, in the eyes of the tax authorities, could not justify what was requested, a parallel assessment was initiated, which was also sent electronically. When the SME finally realised the problem, its accounts had been blocked and its receivables seized, so it asked the tax office to carry out a new inspection. But the AEAT rejected the request, and the affected company was forced to appeal through the courts.
However, the courts ruled in favour of the Tax Agency: both the Central Contentious-Administrative Court, in the first instance, and the Contentious-Administrative Chamber of the National High Court, in the second. For its part, the Supreme Court rejected the company’s cassation appeal, and the case then ended up in the Constitutional Court.
Well, after studying the case, the highest court has found that the attitude of the Treasury was not correct, as it made a “rigorous application” of the regulations. The Constitutional Court understands that, despite the fact that the electronic notification complies with the law, the Treasury violated effective judicial protection – a right enshrined in the Magna Carta – in its administrative aspect. This right stipulates that citizens have the right “to be informed of the accusation made against them“, which the Tax Agency failed to comply with.
In this way, the TC annuls the first and second instance sentences, and condemns the Treasury to cancel the settlements it made for the process, as well as to return the seized money (70,000 euros) with interest. Likewise, so that these abuses do not happen again, the court urges María Jesús Montero’s department to modify the notification system so that alternative means of communication are used if the affected party does not have access to the digital mailbox.
As a result of this lawsuit, the affected company has kept its operations on the ropes because of a notification of which it was not even aware. Eight years have passed since the tax authorities sent the first notification. An extremely long period of litigation for which many other companies or freelancers could have been forced to close down.
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