What happens if we don't post the invoice?
In business practice, it often happens that a taxpayer, intentionally or completely unaware, does not include a sales or cost invoice in the accounting records. Depending on the type and subject of the transaction, such a procedure has certain consequences. Check what will happen if we do not post the invoice!
What happens if we don't post the purchase invoice?
Entrepreneurs may include as corporate costs only those expenses that meet the definition of tax deductible costs. Pursuant to Art. 22 sec. 1 of the PIT Act, tax deductible costs include expenses incurred in order to achieve income or to maintain or secure a source of income, with the exception of the costs listed in art. 23 (i.e. the catalog of expenses strictly excluded from tax costs).
The moment of posting the invoice in KPiR
As a rule, the recognition of expenses in the KPiR is possible in accordance with the cash or accrual method, and the choice of the method of accounting for costs should be consistently applied in a given tax year.
Settlement of costs with the cash method
The cash method assumes that expenses are recognized on the date they are incurred, which is:
the date on which the invoice, note or bill is debited
the date of the actual expenditure.
On the actual date of the expense, employees' salaries, social security contributions, and interest are posted.
In November, Bożena bought an insurance policy for a company car for 12 months. In what period should it include the expenditure in the KPiR, assuming that it settles costs using the cash method?
As the costs are settled using the cash method, the policy should be presented in the month of issue, i.e. in November. It does not matter at this point that the insurance covers a longer period in excess of a given tax year.
When recording costs using the cash method, they should be included in the KPiR in the tax year in which they arose. In the case of the accrual method, the indirect costs should be divided in proportion to the length of the periods to which they relate.
Settlement of costs using the accrual method
According to the accrual principle, the taxpayer divides tax deductible costs into two groups - into direct costs related to specific revenues (purchase of goods, materials) and indirect costs related to the taxpayer's revenues in general (other expenses, such as utilities), where:
- direct costs are classified as tax deductible costs in the tax year;
- indirect costs are classified as tax deductible costs in the year they are incurred.
Revenues from the sale of goods and services are posted to the KPiR on the date of their sale, which is usually the same as on the date of invoice.
Mr. Łukasz settles costs using the accrual method and in September 2020 he took out an insurance policy of his company for the amount of PLN 1,500. The insurance period is 10 months. How should the expense be booked in the KPiR?
Recognition of the policy in costs should be made in proportion to a given tax year:
for 2020: 4/10 * PLN 1500 = PLN 600 - for September - December 2020
for 2021: 6/10 * 1500 = 900 PLN - for January - June 2021.
Failure to post an invoice for the purchase of goods and materials and the reliability of KPiR
In the case of other expenses related to running a business, invoices for the purchase of goods and materials must be included in the KPiR on the date they are received, and at the latest before being transferred to the warehouse, processing or sale. Otherwise, the book may be considered unreliable, because the entries in it do not reflect the actual course of economic events. If the entrepreneur does not include in the tax costs invoices documenting other expenses, other than those related to the purchase of commercial goods and materials and labor, there is no basis for considering the book as unreliable. As you can read in the judgment of the Provincial Administrative Court in Szczecin of October 19, 2016, I SA / Sz 911/16:
„[...] in a situation where it is found that the books are unreliable (i.e. the books are kept in a way that does not reflect the economic reality) or they are significantly defective (i.e. they are found in a way that deviates from the applicable rules) - then such books lose the assumed value of presuming their compliance with the truth. The tax authority cannot recognize as evidence [...] of tax books that are kept unfairly or in a defective manner ".
This is also confirmed by the judgment of the Supreme Administrative Court of October 17, 2018, II FSK 847/18:
“The special evidential value of tax books [...] should be interpreted as a prohibition on determining in tax proceedings elements affecting the amount of tax, without prior reference in a manner regulated by law to keeping the books in an unreliable or defective manner. The possibility of adopting a state other than that resulting from tax books as the basis for the decision only arises when the presumption of the reliability of the books is rebutted in the manner prescribed by law. [...] In the report on the examination of books that turned out to be unreliable or defective, indicate what are possible formal shortcomings proving their defectiveness or what is unreliability, and specify the period for which and in what part they are refused special probative force. For the assessment of whether the book is reliable, it is decisive whether the correct tax base can be determined on the basis of the entries resulting from it, and therefore whether it contains correct entries for all events affecting its determination ”.
It is worth adding that recognizing other expenses in the KPiR is a privilege of the entrepreneur, not his obligation. Failure to disclose other expenses as tax costs will result in overstating the tax base and paying a higher tax, but the legislator did not mention their recognition in the KPiR as mandatory.
As a rule, the condition of the reliability of the KPiR is the recognition in the records of all expenses related to the purchase of commercial goods and materials as well as invoices documenting labor costs. If the tax books are kept in an unreliable manner, the taxpayer commits a prohibited act and is punishable by a fine.
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The right to deduct VAT from the purchase invoice - when is it due?
As for VAT, the taxpayer has the right to deduct the input VAT from the purchase invoice during the period of receipt of the invoice or one of:
- two consecutive billing periods (in the case of quarterly settlements),
- three consecutive billing periods (in the case of monthly settlements),
provided that the purchased goods and services are used to perform taxable activities. However, if the taxpayer does not deduct VAT within this period, then in accordance with the amendment to the VAT Act implemented by SLIM VAT 2, he may do it by correcting the JPK_V7 file for the month / quarter, when he still had such a right.
Julia accounts for the costs using the cash method and the VAT on a monthly basis. In July, she received an invoice for corporate expenses, but did not include it in the tax records until September. Can Mrs. Julia deduct VAT from this invoice?
Yes, if you receive your invoice in July, the last month for VAT deduction is September.
Entrepreneur Adrian settles VAT on a quarterly basis. In February, he received a cost invoice. Will I be able to deduct VAT in October?
No, because when you receive the invoice in February (Q1), the VAT deduction deadline is in Q3 (July, August or September). If the entrepreneur wants to deduct VAT from this invoice, the entrepreneur should include it in the JPK_V7K correction for Q1 or Q2 or Q3.
The deduction of VAT on cost invoices is the entrepreneur's right, not his obligation. However, if it voluntarily decides not to deduct it, the non-deducted VAT in this situation does not constitute a tax cost.
Mr. Adam settles VAT on a monthly basis. Due to an oversight, he did not enter the invoice received in June, it concerned other expenses. Is it possible to include an invoice in costs despite the expiry of the VAT deduction period without the need to prepare a correction?
As the deadline for deducting VAT expired in August, if you want to include an invoice in company costs, you should post an accounting in the net amount, with the restriction of recognizing the expense in the tax year in which the cost was incurred.
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What happens if we don't post the sales invoice?
The situation is different in the case of failure to register sales invoices, because it has different effects in terms of VAT and PIT.
Tax obligation in VAT
The trader is required to record each sale on the date when the goods are delivered or the service is performed. If all or part of the payment is received prior to the delivery or performance of the service, the VAT obligation will arise upon receipt of the payment.
Mr. Bartek sold commercial goods and delivered them on November 26. He was paid for the delivery on December 10. In the described situation, the tax obligation in VAT at the entrepreneur will arise on the date of delivery - November 26, because it took place before the payment was received.
Mr. Mariusz received the payment for the goods on November 29, but he did not deliver it until December 9. In this case, the tax obligation in VAT will arise on the day of receipt of payment - November 29, because it took place before the delivery.
Tax obligation in PIT
As a rule, the date on which the income arises on the basis of income tax is the date of delivery of the item, sale of the property right or performance of a service or partial performance of the service, but not later than on:
issuing an invoice
payment of receivables.
If the invoice from the previous period is not booked, the type of correction made depends on the time when the error was detected, as well as the frequency of VAT and PIT settlements.
An entrepreneur settling monthly payments in November found an unposted income invoice from September. The previously unpaid invoice should be entered into the KPiR in September, and in addition, the advance payment should be converted into income tax for September.
The taxpayer settling quarterly accounts in November realized that he had omitted the sales invoice from October in the records. The entrepreneur is obliged to present the invoice by correcting the registration part of the JPK_V7K structure. VAT on a forgotten invoice will be settled in the declaration part submitted after the end of the quarter. On the other hand, posting the invoice in October will not have any consequences in terms of income tax.
In the event of a possible additional payment of VAT and PIT, one should take into account possible interest on late payment, which is not paid up to PLN 8.70. Their calculation can be made in the tax interest calculator.
However, in the case of detecting an unposted invoice from the previous year, you need to correct the error in the revenue and expense ledger (or the revenue record - for lump sums). Otherwise, the KPiR will reflect the company's untrue situation, which may later be verified during the inspection of the office. Then the tax office will request the due tax together with the interest charged by imposing an additional penalty on the entrepreneur.
Posting a forgotten cost invoice in the wFirma.pl system
In order to post a forgotten cost invoice in the wFirma.pl system, go to the EXPENDITURE »ACCOUNTING» ADD »VAT INVOICE tab, where, after completing the contractor's data and selecting the appropriate type of expenditure, the following dates must be adopted:
- INVOICE ISSUE DATE - in accordance with the date of issue;
- ACCOUNTING DATE TO KPiR - the current date, limited to the tax year in which the cost was incurred;
- VAT ACCOUNTING DATE - the first day of the month according to the possible date of VAT deduction;
- PAYMENT DEADLINE - according to the date of issue. If there has been a prepayment, the date of issue should be used for technical purposes.
As a result, the cost will go to the appropriate column of the KPiR on a possible date, and to the VAT register of purchases - taking into account the possibility of the date of VAT deduction.