Supreme Court Rules Tax Agency Cannot Resume Inspection Too Early

The Supreme Court’s order of 18 July 2025 upheld an application to annul a decision, in a ruling that could mark a turning point in the relationship between tax inspections and criminal proceedings. The case is emblematic: the administration resumed a tax inspection after a criminal court had acquitted the taxpayer, but before the finality of that judgment had been formally notified.

The Supreme Court was unequivocal: that decision breached the fundamental right to effective judicial protection (Article 24.1 of the Spanish Constitution). The initial refusal to hear the appeal was arbitrary and inconsistent, particularly because months earlier, on 19 June 2024 (appeal 6502/2023, concerning VAT), the same Court had admitted another appeal that was materially identical, involving the same parties and a closely connected legal issue.

The core of the dispute

The key provision is Article 251.2 of the General Tax Law (formerly Article 180.1):

• When criminal proceedings are underway, the tax inspection must be suspended.
• While it is suspended, administrative actions are legally non-existent.
• Administrative action may resume only after the criminal decision is final and has been notified.

In this case, the Tax Agency acted too soon, resuming the inspection without waiting for formal notice that the acquittal had become final. This raises the question: is everything done from that point onwards—including the tax assessment—invalid?

A Supreme Court more protective than the administration

The Court took an important step by recognising that the refusal to hear the appeal was harmful and inconsistent. This was not only because it had admitted the earlier VAT appeal, but also because the underlying issue in both taxes (VAT and Corporation Tax) was the same: an alleged improper deduction of invoices that the criminal judge ultimately rejected when acquitting the company director.

This approach is consistent with the doctrine in Supreme Court judgment of 21 November 2016 (appeal 1889/2015), which held that inspection records and assessments issued during a suspension were non-existent.

Criticism of the administration’s approach

The concerning point is that this was not an isolated episode, but a recurring practice by the tax administration:

• It disregards the suspension required by the General Tax Law.
• It effectively forces proceedings to resume too early.
• It creates void acts that force taxpayers into lengthy court proceedings.

The result is twofold: legal uncertainty and violations of fundamental rights, with the associated financial and time costs for businesses.

Conclusion

The Supreme Court is sending a warning: anything does not go in a tax inspection. The administration must respect deadlines and constitutional safeguards. Resuming a suspended procedure too early not only undermines legal certainty; it can ultimately invalidate all subsequent actions.

The underlying point is clear: the public Treasury cannot ignore the rules, even in the name of collection efficiency. Effective judicial protection and tax limitation periods are not mere formalities; they are constitutional limits that the Supreme Court has once again reminded the administration to respect.

Read the original article in Spanish