There is a mechanism few business owners know about, and it can be worth the entire amount of a reassessment. A ruling by Türkiye's Council of State (Danıştay), dated 28 January 2025, has explicitly declared unlawful a practice the tax administration used for years to work around the five-year statute of limitations on audits.
How the statute of limitations works
Under Article 114 of the Tax Procedure Law (VUK), a tax obligation expires if the tax is not assessed and served on the taxpayer within five years, counted from the start of the year following the year the obligation arose. For 2020 transactions, for example, the five-year period expires at the end of 2025.
There is an exception: if a case is referred to the Appraisal Commission (Takdir Komisyonu) to determine the tax base, the limitations clock is suspended while the referral is pending. This mechanism exists for genuine cases where the base truly cannot be determined through ordinary means, for example when records are lost or bookkeeping is absent.
The scheme
In practice, a recurring pattern emerged, one tax defence practitioners have fought for years. An audit begins several years before the deadline. Close to that deadline, with only days or weeks left before the five years run out, the inspectorate, instead of concluding the audit, formally refers the case to the Appraisal Commission, even though no real grounds exist: the records are there, and the base is determinable through ordinary procedure. The formal referral stops the clock. Later, after the original five-year period would have expired on its own, the Commission issues a decision that simply repeats the inspector's report without independent assessment, and the reassessment is served on that basis.
What Danıştay ruled
In a case heard by the 7th Chamber of the Council of State (ruling of 28 January 2025, case E.2024/1041, K.2025/246), exactly this scheme was applied to 2014 transactions: the audit began in 2017, and just days before the statute of limitations expired, on 26 December 2019, the case was referred to the Appraisal Commission. The Commission's decision and the reassessment arrived in 2020, outside the original five-year window.
The court of first instance and the appellate court both ruled for the taxpayer without addressing the limitations question at all. The Council of State reviewed the case specifically through that lens and set out two principles:
A referral to the Appraisal Commission cannot be used as a tool to artificially stop the limitations clock. The mere fact that an inspector has the authority to determine the base by estimation is not, by itself, grounds for a referral if there is no genuine need for one.
The Appraisal Commission must conduct an independent assessment, not mechanically adopt the inspector's figures. The court's decision states plainly that the Commission simply confirmed what was already in the inspector's report, which contradicts the very reason the body exists.
The court also cited an earlier Constitutional Court ruling (2009), which had already held that using a Commission referral solely to suspend the statute of limitations is incompatible with the principles of legality, legal certainty and the prohibition of arbitrariness.
How settled is this practice
It is worth being precise: the decision was adopted by majority vote within the chamber, which itself shows the issue remains contested within the judiciary. But it is not an isolated finding: earlier practice from a different Danıştay chamber (2015), following similar logic, had already found referrals to the Appraisal Commission improper where no genuine basis existed, particularly in VAT deduction disputes. That points to an emerging line of case law rather than a one-off, which is why the 2025 ruling is worth treating as an important marker going forward.
What this means for businesses
If you have received a reassessment, and its history shows the case was referred to the Appraisal Commission at some point shortly before the ordinary five-year period would have expired, that is reason to examine the case through the lens of limitations, not only on the merits. Worth checking: whether there was a genuine basis for the referral (lost records, inability to determine the base through ordinary means) or whether the referral was formal and suspiciously close in timing to the deadline; and whether the Commission conducted its own assessment or simply duplicated the inspector's figures.
If both signs point to misuse, there are grounds to challenge the reassessment on limitations alone, regardless of whether it holds up on the merits. This is a separate, independent line of defence that Danıştay's case law now supports.
Received a reassessment from a years-old audit where a referral to the Appraisal Commission featured in the timeline? We will review the case history for statute-of-limitations abuse. Contact us.