Revocation of the security decision and the unblocking of funds in the bank account

In today’s world of finance and tax law in its broadest sense, entrepreneurs and their advisors face numerous challenges that require them not only to have extensive knowledge but also to be ready to react quickly to changing conditions and regulations. Just such a challenge is posed when dealing with the revocation of a security decision and its consequences for blocked funds in a bank account.

Fiscal did not want to unblock funds

A recent decision by the Provincial Administrative Court in Poznań is an important contribution to the discussion on the conduct of tax authorities. This is especially true in situations where a taxpayer seeks to unblock funds despite the fact that the tax authorities no longer have a legal basis for blocking them.

As was highlighted in the case decided by the Poznań court, the customs and tax authority issued a collateral decision to assess the tax liability owed to the state, which then led to the seizure of the company’s assets. Further, difficulties arose when, although this decision was revoked and the next decision had not yet been issued, the authorities refused to revoke the safeguards, including the blocking of funds in bank accounts.

The fiscal’s argument was that despite the revocation of the security decision, the safeguards already made remain effective if another decision is issued within six months. Here there is an interpretive problem and an inquiry into the limits of such practice – where is the line separating the effectiveness of administrative action from the protection of taxpayers’ rights and interests?

The court agreed with the taxpayer

In a judgment dated February 25, 2021 (ref. I SA/Po 720/20), the administrative court took a step toward confirming the protection of the taxpayer’s interests. As the securing decision was revoked, the foundation for further securing of assets collapsed. According to the court, the security proceedings in this configuration should be discontinued and the taxpayer’s funds released.

The ruling in question is of considerable practical significance; it sheds a clear light on the conduct of tax authorities, who are sometimes oversensitive about securing the interests of the taxpayer, which sometimes leads to abuse.

The ruling also demonstrates the importance of adequate legal representation and the need for entrepreneurs, lawyers and all those involved in the tax law field to monitor the dynamically changing legal reality.

Every decision can be crucial to a company’s or branch day-to-day operations and finances, and quick and effective handling can turn an uncomfortable situation into a procedural and financial success.

Lessons learned for practitioners:

• The basis for security is an effective security decision; its absence or revocation should result in the release of funds.
• Prompt action is key; in the event that the tax authorities make a hedging decision, prompt analysis of the legality of such action can save the entrepreneur from serious financial consequences.
• The correct interpretation of the legislation; the ruling of the WSA in Poznań emphasizes that formal prerequisites for taking collateral are not enough, but each case requires an individual and detailed approach with respect for the rights of economic agents.

The correct interpretation of the legislation; the ruling of the WSA in Poznań emphasizes that formal prerequisites for taking collateral are not enough, but each case requires an individual and detailed approach with respect for the rights of economic agents.