Due Diligence
An increasing number of legal disputes related to ownership and contesting transactions; an increasing amount of additional tax charges; a large number of bankrupt companies and the dishonesty of a number of firms require thorough comprehensive verification.
NAFCO provides assistance in assessing the purchase or sale of assets by conducting financial, tax and legal Due Diligence, which allows you to prevent possible risks of a future transaction and adequately assess its investment attractiveness.
The company's Due Diligence was carried out in situations:
  • Investing in business
  • Reorganization of a legal entity in the form of merger or accession
  • Changes in the management of the organization
  • Buying and selling business shares
  • At the request of interested third parties, for example, credit institutions from which a loan is planned
  • In other cases, at the initiative of the owner in order to determine the presence/absence of violations of the law, settlement of disputes
Financial expertise includes the following sections:

  • Analysis of the availability of assets and liabilities
  • Analysis of financial performance
  • Analysis of working and non-working capital
  • Debt capital analysis
  • The procedure for organizing financial accounting

  • Tax expertise includes the following sections:

  • Tax risk analysis
  • Analysis of the history of tax audits and court proceedings
  • Analysis of tax assets and liabilities
  • Analysis of tax aspects of activity, tax status;
  • Legal expertise includes the following sections:

  • Analysis of corporate structure and management
  • Analysis of authorized capital
  • Analysis of essential contracts
  • Analysis of real estate objects
  • Analysis of intellectual property objects
  • Analysis of litigation
  • Analysis of employment contracts

  • What common mistakes do we see when conducting tax audits and DD that are dangerous for any business?

  • Cooperation with unscrupulous counterparties
  • Artificial business fragmentation without taking into account the criteria that must be met for a group of companies
  • Incorrect execution of transactions, which leads to their retraining. For example, a contract with a self-employed person is reclassified into an employment contract, an agency contract into a purchase and sale contract, a loan agreement into an investment
  • Incorrect accounting of standards for expenses normalized for income tax. For example, advertising expenses, representation, travel expenses, interest on loans, provisions for doubtful debts, loss on assignment of the right to claim debt and other
  • Lack of justification for the business purpose of the transaction or only a formal justification without digital indicators
  • Errors related to the write-off of accounts receivable and accounts payable
  • Lack of proper justification for the payment of bonuses. The presence of "golden parachutes" in contracts with top management
  • Lack of separate VAT accounting
  • And many other errors
  • The report on the results of Due Diligence includes:

  • Description of the approaches to the verification
  • Regulatory framework in terms of identified risks
  • The amount of risks (if it is possible to determine it)
  • Expert conclusions and recommendations on risk leveling
  • The cost of conducting financial, tax and legal Due Diligence

    The total cost of the service depends on:
  • Specifics of the activity of the audited company
  • Verification period
  • The cost of the service is significantly less than possible losses, for example, in comparison with the volume of possible tax surcharges.
  • Project experience
  • Representing the interests of an energy marketing company when appealing the results of a desk tax audit in court. The result of the project was the recognition of additional charges by the tax authority as illegal in full.
  • Representation of the interests of Mosenergosbyt PJSC when appealing the results of an on-site tax audit in court. Within the framework of this dispute, for the first time, the claims of the tax authority against the company financing the activities of R&D funds on accounting for such expenses for profit taxation purposes were considered.
  • Participation in the implementation of the project to identify the energy company's tax reserves for property tax (clause 11 of art. 381 of the Tax Code of the Russian Federation), within the framework of which the taxpayer's right to apply the specified benefit in the amount of more than 670 million rubles is confirmed.
  • Representation of the interests of JSC "VTI" (the defendant in the case) in the framework of the judicial process on the recovery of debts under the contract under the writ of execution. In the court of cassation instance, the specialists of "NAFCO - Consultants" achieved the cancellation of judicial acts rendered not in favor of the client and the referral of the case for a new hearing, within which the courts of all instances (up to the supervisory one) refused to satisfy the claim. Measures were also taken to reverse the execution for the entire amount recovered from JSC "VTI".
  • Clients of the practice