'Discrepancies' in VAT: Effective Elimination Practice

Safonova Olga

This article will consider the concept of "discrepancy" for VAT. We will look at such questions as the VAT “discrepancy” arises? How to act in this situation?

Contents:

What are VAT “discrepancies”?

VAT “gaps” are often referred to as VAT “gaps”. For the most part, the "discrepancies" on VAT relate to those who apply the general taxation system (GTS). Under the simplified taxation system, VAT “discrepancies” arise as an exception.

If you have chosen the method of organizing your business with the help of a "Company" or "Individual Entrepreneur" with a common taxation system, then you are VAT payers, and you are also responsible for submitting VAT returns.

VAT, as a kind of margin, is 0%, 10% or 20% on the cost of goods sold, work performed or services rendered. An organization or an individual entrepreneur must pay this amount of tax to the budget. The tax is paid along the entire supply chain: from both sellers and buyers.

It is possible to reduce the amount of VAT on goods, services or works sold by the amount of VAT, this is called a tax deduction. A tax deduction can be made when purchasing goods, services, works or in the form of a paid duty at customs when importing goods.

Content of the VAT declaration

VAT payers are required to submit a VAT return, which contains 12 sections. The formation of sections from 1 to 6 occurs on the basis of sections from 8 to 12:

Sections 1 - 7 reflect the total amounts of goods, services, works sold. Also includes tax amounts on these goods; tax amounts that reduce the amount of VAT payable; • Sections 8 - 12 include information about each transaction for the sale of goods, services or works. The sections also contain the details of the counterparties.

It is worth noting that the tax authority in the АСК НДС-2 program sees your IP address and the IP address of your counterparty. Therefore, if they match, then it is immediately visible to the tax authorities carrying out the audit.

What does Purchase Book Details and Sales Book Details include?

Section 8 of the VAT return is entitled “Information from the purchase book”, and section 9 - “Information from the sales book”. "Information from the purchase book" must be reflected in section 9 of the seller's VAT declaration. At the same time, the buyer himself can, but is obliged to, reflect the "Information from the sales book" in his book of purchases.

Information from the purchase ledger and the sales ledger contains lists of invoice details. An invoice is a document of a strictly defined form, which includes: number, date; operation type code (simple sale of goods, advance payment, etc.); parties who entered into the transaction; the subject of the transaction, the amount of the transaction, the amount of tax on the transaction, the volume of goods, etc.

Example of "discrepancy"

It often happens that a customer's Purchase Ledger Information does not match the vendor's Sales Ledger Information. Also, sometimes the opposite situation occurs, when the "Information from the sales book" of the supplier does not match the "Information from the purchase book" of the buyer. In this case, there is a "discrepancy".

For clarity, let's look at the following example. Let us assume that a demand for a “discrepancy” has come from the tax office. What should be done in this case?
First, you need to find the invoice where the discrepancy is found. Then you need to check and compare all the details of this document with the details specified in the VAT declaration in sections 8 and 9.

How to send an updated declaration?

If you have filled out sections 8 and 9 incorrectly, having made some mistake, then you should, in order to avoid annoying calls from the tax office, send an updated declaration. There are two effective ways to do this:

The first method provided by law: to reflect in section 8 and 9 an additional sheet, in which you need to indicate the invoice information again, but put “-” in front of the amount of goods and tax, canceling them in this way. After that, you must provide the revised invoice information. It is necessary to make sure that the new information does not contradict sections 1 - 7 of the declaration. Then an updated declaration should be provided.
The second method, not provided for by law, but often used in practice, is simply to change the incorrect information in sections 8 and 9 - to the correct ones. It is necessary to make sure that the new information does not contradict the information specified in sections 1 - 7 of the declaration, then also provide an updated declaration.

If there are no errors in filling out sections 8 and 9 of the VAT declaration, and the seller simply did not display the invoice in section 9, then the solution to this problem is legally difficult, but provable. In this case, the strategy for solving the problem is to prove the following:

all transactions reflected in accounting and tax accounting are correct, there are no distortions of information;
all actions stipulated by the contract were actually carried out by the parties. Third parties not provided for by the contract did not participate in them;
there is no intent aimed at tax evasion;
the seller simply did not pay VAT through no fault of the buyer.

Thus, "discrepancies" are inconsistencies between sections 8 and 9 of the VAT declarations submitted by the supplier and the buyer. If the "discrepancies" have arisen due to an error in the invoice details, then this can be eliminated by submitting a revised declaration. When "discrepancies" arose due to the fact that the seller did not reflect the information in section 9 of the declaration, then it is necessary to prove the reality of the transaction being made: that the buyer in this case is not to blame, and the seller simply did not pay taxes. When the "discrepancy" does happen, then you should contact specialized lawyers who can defend your position before the tax authority and help you avoid further claims.

How to avoid "discrepancy"?

In order to avoid "gaps", it is necessary to check its conscientiousness in various available resources before concluding a deal with a counterparty. In some of these resources, each legal entity is assigned a certain color, by which it already becomes clear: is it conscientious? Is it included in the group of tax risks?

For example, if the counterparty is assigned a green color, then you can “go to the green light” and conclude a deal. It is important to take into account that yellow is not recommended, red is absolutely not allowed.

Before entering into a transaction, it is also important to obtain from the counterparty a commercial proposal and the necessary accounting documents to exercise due caution. The received documents, if necessary, will become proof that "discrepancies" or "gaps" are on the conscience of only your counterparty, and cannot be imputed to your company.

In this article, we have looked at the "discrepancies" in VAT. Follow these recommendations, and let the tax authorities never raise claims against you. The specialists of the A4 Law Firm (https://a4lawfirm.ru) in partnership with the team of the DOVOD Legal Agency (https://getdovod.ru) will help you to understand the resulting “gaps” and fight off the claims of the tax authority.