VAT reduction in the absence of a signature on the goods return protocol
Entrepreneurs selling goods must take into account that the buyer has the right to return or make a complaint about the goods. In such a situation, the buyer should sign the return protocol. This enables the trader to reduce the VAT that has been paid in connection with the sale. Is it possible to reduce VAT in the absence of a signature on the protocol? Check it out by reading our article!
The sale is recorded at the checkout and the goods are returned
In the case of selling to natural persons who do not conduct business activity or flat-rate farmers, entrepreneurs are generally obliged to record the sale at the cash register and to issue a receipt for each transaction. The exemption from recording sales at the cash register is granted only in exceptional circumstances. In the case of returning the goods, the buyer should also return the receipt along with the goods. Entrepreneurs are additionally obliged to keep separate records of returns, which later - like periodical reports from the cash register - are included in the settlements. One of the elements of the records of returns is the goods return protocol.
Goods return report
In the case of returning the goods, it is necessary to draw up a report of acceptance of the return of the goods. It must be drawn up if all or part of the obligation has been reimbursed.
This type of document should contain the signatures of both the person returning the goods and the person receiving the return. The regulations do not clearly define its elements, but it has been assumed that it should contain:
the number of the receipt to which the return relates,
reasons for the return,
information whether the goods have been accepted by the seller,
signatures of the parties to the transaction - this element is required.
The form of the report is also not specified in the regulations. However, there is a noticeable use of the paper form by stationary stores and scans of documents or their electronic version in the case of stores selling by mail order.
Is it possible to reduce VAT in the absence of a signature on the protocol?
In order to reduce the tax due in the case of sales recorded in the cash register, it is generally necessary to have the signatures of the parties to the transaction on the return report. However, is it possible to reduce VAT in the absence of a signature on the protocol? According to the judgment of the Supreme Administrative Court of 10 December 2015, reference number I FSK 1511/14, in the absence of signatures on the protocol the return was not properly documented, and thus - the company did not have the right to reduce the tax base and output tax, if the lack of the buyer's signature was due to the negligence of the store employee. However, that position was annulled by the Court of first instance. The court also noted the situation in which retail sales were recorded using cash registers, the return of goods requires two elements to be documented:
return of goods,
The court also indicated that in the case of retail sale, the delivery of the goods and the payment are confirmed by the receipt. However, it does not contain information about the buyer that would allow him to be identified. In the case of returning goods purchased with a payment card, the lack of a signature on the protocol does not constitute an obstacle to reducing the tax due. However, if payment is made in cash, it is not possible to reduce the tax due.
Mr. Leon runs a stationary store selling toys for children. One customer returned a plastic guitar because one component responsible for producing the sound was broken. The money was returned and a protocol was drawn up, on which the client forgot to sign. The payment for the guitar was made in cash.
In such a situation, it is not possible to reduce output VAT, as it is not possible to identify the entity returning the toy. If the payment was made by card or bank transfer, it would be possible to reduce the output VAT, as the details of the entity returning the defective goods would be known.
To sum up, in the case of a return of goods and a reduction of VAT in the absence of a signature on the protocol, it is possible provided that the entity returning the goods can be clearly identified. It is possible if the payment for the goods was made by card or by transfer to the seller's bank account.