Invoice cancellation - when is it possible?


Every entrepreneur sometimes makes a mistake when issuing an invoice. Such a mistake is then corrected by drawing up a specific document - correction. In some situations it is possible to cancel an invoice. Find out under what circumstances this can be done and when a correction is required.

By what document to correct errors on a VAT invoice?

Errors appearing on invoices are corrected by means of an appropriate correction document. In a situation where the error in the invoice concerns its descriptive part, and does not change the transaction amount, as a rule, a correcting note or an invoice correcting formal data is issued. In this case, the error may concern:

  • date of issue,
  • the names and addresses of the seller and buyer,
  • NIP number of both taxpayers,
  • the date of the completion or completion of the delivery of goods or the performance of the service or the date of receipt of payment,
  • the name of the good or service.

The correcting note is issued by the buyer of the goods or service, and then forwarded to the seller. The latter accepts the changes, signs both copies of the corrective note and one of them returns the note to the issuer. On the other hand, when an error is found in the invoice, the seller issues an invoice correcting the formal data in order to correct it - it can be used to make changes to the descriptive part of the original invoice. The invoice correcting the formal data allows, for example, to make a complete change of the data of the buyer of the goods or service.

However, if the error in the invoice concerns the invoice value items, e.g. the net amount, VAT rate or gross amount, the seller will have to issue a correcting invoice. Pursuant to Art. 106j. paragraph 1 of the VAT Act should also be drawn up in a situation where:

  • discount was granted,
  • discounts and price reductions were granted,
  • goods and packaging have been returned,
  • all or part of the payment has been refunded,
  • the price has been increased or there has been an error in the price, rate, tax amount or any other item in the invoice.

When can I cancel an invoice?

Cancellation of an invoice is possible after two conditions are met:

  • the transaction was not completed,
  • the VAT invoice did not enter the legal circulation, i.e. the recipient did not receive it.

The cancellation of an invoice usually takes place when making a cash on delivery mail order sale. Then the seller sends the invoice together with the goods. However, if the recipient does not accept the shipment and does not pay for it, the goods are returned to the seller along with the invoice. As a result, there is no sale, and consequently no tax obligation (which arises at the time of sale) is not created. Because if the transaction is successful, it is not possible to cancel the invoice.

No payment and cancellation of the sales invoice

As already indicated, an invoice can be canceled only in the event that the recorded sale would not take place and the invoice would not enter legal circulation (it has not been transferred to the buyer). Otherwise, the invoice cannot be canceled. However, many sellers often wonder whether it is possible to cancel an invoice if the buyer evades the obligation to pay the invoice or refuses to accept it at all. It should be noted that the lack of acceptance of the invoice or the payment of the amount due by the buyer does not allow the invoice to be canceled. If the service or delivery of the goods actually took place, this means that the invoice documents the incident and therefore cannot be canceled. Such a position was confirmed by the Director of the National Tax Information in the individual tax ruling issued on March 21, 2019, 0111-KDIB3-1.4012.12.2019.2.RSZ, in which he specified that:
Invoice cancellation should be treated exceptionally and only used when necessary. In addition, the taxpayer should exercise due diligence when documenting economic events that have occurred. In the event of cancellation of the invoice, the seller (invoice issuer) should have in his documentation both a copy and the original of the sales document with an annotation invalidating the invoice that will prevent their re-issuance and use. Therefore, the cancellation of the invoice applies only to those cases when the invoice documents the activity that was actually not performed”.

Therefore, the performance of a service or delivery of goods to the contractor must be documented with an invoice, while the lack of payment does not constitute grounds for its cancellation.

Invoice cancellation - how to do it correctly?

An entrepreneur who wants to cancel an invoice must take into account the need not to disturb the chronology of the numbering of sales documents. To cancel an invoice:

  • cross out both copies of the canceled invoice,
  • attach a description to the invoice that says that the invoice has been canceled along with the date and signature of the person authorized to issue invoices.

You can also provide a reason for canceling the invoice.

The cancellation of an invoice, although it is not subject to accounting records, must be kept with the company's accounting records. Start a free 30-day trial period with no strings attached!

Inclusion of the canceled invoice in the VAT declaration

In a situation where the canceled invoice was included in the VAT return, the taxpayer is obliged to submit a correction of the VAT return, thus changing the overstated amount of tax due. It is worth noting that this situation is also connected with the obligation to submit a JPK VAT correction.

However, the taxpayer must bear in mind that the cancellation of an invoice is possible only in exceptional circumstances. The tax authorities consent to the cancellation of invoices, but it should only take place in special cases.

Cancellation of an invoice in the system

Taxpayers who use the system, issue sales invoices and keep accounting through it, can quickly and easily cancel an issued sales invoice. To cancel the issued invoice, click on its number in the REVENUE »SALE tab and in the window that opens, select the MODIFY» CANCEL INVOICE option from the top menu.

The invoice canceled in this way will not be included in the KPiR and the sales VAT register.