How to record the return of the advance payment at the cash register? Good to know!
Advances are a standard form of transaction security used by entrepreneurs. They apply not only to transactions to which two companies are the parties, but may also be paid by natural persons. Sales to natural persons who do not have business activity should, as a rule, be recorded at the cash register. The taxpayer is therefore obliged to pay for the advance payment received from a private individual at the cash register. It may happen that the sale does not take place. How should the return of the advance payment be recorded at the cash register then?
Advance payment from a private person and a register on the cash register
Pursuant to Art. 19a paragraph. 8 of the VAT Act, if all or part of the payment was received before the delivery of goods or the service, in particular: prepayment, advance payment, advance payment, installment, construction or housing contribution prior to the establishment of a cooperative right to a dwelling or premises for another purpose, the obligation to tax arises upon its receipt in relation to the amount received.
There are exceptions to this rule, e.g. with regard to utilities or rental services (Article 19a (5) (4) of the VAT Act).
The entrepreneur should, as a rule, purchase the received advance payment for the future delivery of goods or the future provision of a service from a natural person at the cash register. This obligation occurs upon receipt of all or part of the payment. The type of transaction for which the advance was paid determines the VAT rate on a given advance payment. The receipt should include the name of the goods or service to which the given advance payment relates. In addition, it is worth bearing in mind that the tax obligation on advance payments arises only when they are paid towards a specific transaction.
Art. 3 sec. 2 of the Regulation of the Minister of Finance on cash registers:
"Receipt of all or part of the receivable (payment) before the sale is subject to recording upon its receipt".
Refund of the advance payment at the cash register from a private person
The cash register does not allow you to correct already recorded transactions. Moreover, the regulations in force in Poland do not explicitly refer to the way in which you can document the return of an advance payment at the cash register, received from a natural person not conducting business activity. There is no doubt, however, that the reimbursement of the advance payment received from a private individual should be shown, thanks to which the entrepreneur "recovers" the VAT paid earlier. The entrepreneur should take care to confirm that the customer has received the advance payment. In order to determine the procedure of the taxpayer in the case of a return of an advance payment from a private person who was previously registered at the cash register, it is worth referring to the individual interpretation of July 26, 2013, IPPP2 / 443-471 / 13-2 / RR, issued by the Director of the Chamber Skarbowa in Warsaw.
The subject of the interpretation is the question whether the money returned to a natural person should be included in the register of returns and accepted complaints about goods and services or in the register of obvious errors, and the situation concerns an applicant running an online store, to whom customers pay money to a bank account. Transactions are registered using a cash register, but sometimes transactions do not take place. The customer then receives a refund for that part of the order that cannot be fulfilled or for the entire order.
The Director of the Tax Chamber in Warsaw states as follows:
"Referring to the circumstances indicated in the application, it should be noted that the above-mentioned regulation states that returns of goods and accepted complaints about goods and services, as well as the occurrence of an obvious mistake should be recorded in separate records. It should be noted, however, that in practice situations may arise that are not provided for in the above-mentioned records, i.e. the situation of the Applicant himself. In such circumstances, it is permissible to make a refund for the lack of goods - in a separate from the above-mentioned records provided for in the provisions of § 3 section 4-6 of the Regulation on cash registers, which will be the basis for the correct preparation of the declaration. Thus, the Applicant, due to the need to return the money to a natural person for all or part of the order, is obliged to include in the register of corrections, separate from the register of returns of goods and accepted complaints about goods and services and the register of obvious errors, it should be indicated that the method its conduct is not conditioned by the regulations resulting from the provisions of § 3 para. 4-6 of the Regulation on cash registers ”.
On the basis of the cited interpretation, we can therefore conclude that the return of the advance payment on the cash register should be included in a separate record of adjustments for sale formulated on the cash register, which will be the basis for the correct preparation of the declaration. Start a free 30-day trial period with no strings attached!
Corrections records - advances returned
The records showing the reimbursement of the advance payment at the cash register have not been regulated in the regulation on cash registers or in the VAT Act. This means that the taxpayer has some freedom in the manner of keeping such records, but it must be borne in mind that the scope of data contained in the register of corrections, in which the taxpayer shows the return of the advance payment at the cash register, should not only allow for the correct preparation of the JPK_7 file, but also unequivocally identify the events indicated in it.
Records of adjustments for sale recognized on the cash register, in particular the return of advances documented on the basis of receipts, should contain the following elements:
the date of receipt and return of the advance payment;
name of the good or service;
the amount returned (gross) and the corresponding value of VAT;
the reason for the return of the advance payment;
date of drawing up the register of corrections;
signature of the person drawing up the records.
Advances documented with an invoice - how to record them on the cash register?
Entrepreneurs selling to natural persons recorded with the help of a cash register are often asked to issue an invoice for a receipt. Therefore, it may happen that an invoice has also been issued for the advance payment recorded on the cash register. The return of the advance payment at the cash register, documented with both the receipt and the invoice, requires the incident to be included in the appropriate correction records (described in the previous paragraph).
Return to the invoice for the receipt and JPK_V7
The new, mandatory from October 1, 2020 structure of the single control file in the form of the JPK_V7 file, introduced the obligation to mark invoices issued to the fiscal receipt with the FP symbol. Invoices issued for the receipt with the designation FP are shown only in the record part of the file, which means that they do not affect the values included in it. In the case of a return made to the invoice to the receipt, the Ministry of Finance indicates two possible ways of correcting the sale:
- issuing a correcting invoice with the tag "FP" and recognition of a decrease / increase based on the correction of the total value of the cash register report,
- issuing a correction invoice without the tag "FP" and not including in the total value of the cash register report, if the correction is decreasing. In the case of an increasing correction, it is necessary to impose it on the cash register.
Records of advance payments at the cash register - examples
Mrs. Magdalena runs a footwear store - stationary and online. When booking goods, customers are required to pay an advance payment for the order. Magdalena charges paid advances to the cash register on the date of their receipt. The remaining part of the amount can be paid by customers when collecting shoes. It happens that the sale does not take place due to, inter alia, lack of appropriate size or change of customer's decision. In this case, the consumer receives a refund of the advance payment. How should Ms Magdalena record the return of the advance payment on the cash register, documented by the receipt?
The return of the advance payment at the cash register should be recorded by drawing up additional records of the returns of the advance payments. The records may be kept in any form (paper or electronic), but should contain data allowing for unambiguous identification of the transaction.
How should Ms Magdalena from example 1 show the reimbursement of the advance payment from a natural person documented with both a receipt and an invoice?
In a situation where the received advance has been documented with both a receipt and an invoice, Ms Magdalena may issue corrective invoices (with the designation FP in the JPK_V7 file) and additionally reduce the cash register report by the value of the refund.
Summing up, it should be said that advances received from natural persons usually have to be recorded at the cash register. However, the tax obligation arises only when advance payments are made on account of a specific transaction.