Plenipotentiaries submitting VAT-R will answer jointly and severally

Accounting Offices

In 2017. there have been many changes concerning the taxpayer of value added tax, but not only. A number of novelties initiated by the Act amending the Value Added Tax Act of December 1, 2016. should be well known by masses of taxpayers, as well as representatives submitting VAT-R should be familiar with them. One of these changes is the introduction of joint and several liability of the attorney for the tax arrears of the reported taxpayer.

As it was before January 1, 2017.

By the end of December 2016. in a situation where the taxpayer:

  1. has only imported into the territory of the country goods whose destination was the territory of a Member State other than the territory of the country and the export from the territory of the country is carried out by the importer of these goods as part of an intra-Community supply of goods, and

  2. was not registered as an active VAT payer

- then the tax representative performed, on his own behalf and for that taxpayer, the obligations of that taxpayer, such as:

  1. obligations of this taxpayer in the field of tax settlement, including the preparation of tax returns, summary information and national summary information, as well as the keeping and storage of documentation, including records, for tax purposes,

  2. other activities resulting from the provisions on tax on goods and services, if authorized to do so in the contract.

- the tax representative was jointly and severally liable with the taxpayer for the tax liability settled on behalf of and for the benefit of the taxpayer.

As can be seen in the previous legal status, there was no question of the liability of the attorney making the registration application in terms of liability for the tax liabilities of the reported taxpayer.

Plenipotentiaries submitting VAT-R - responsibility since 2017

As of January 1, 2017, in accordance with Art. 96 sec. 4b of the VAT Act, the representative submitting registration applications on behalf of the taxpayer shall be jointly and severally liable for the arrears of that taxpayer. The plenipotentiary's joint and several liability applies to:

  1. tax arrears of the reported taxpayer arising from activities performed within 6 months from the date of registration of that taxpayer as an active VAT taxpayer,

  2. the amount of PLN 500,000.

However, it should be emphasized that the representative's joint and several liability will not arise if the occurrence of tax arrears was not related to the participation of the taxpayer in unreliable tax settlement in order to obtain financial benefits.

Decision of the tax authority

As regards joint and several liability of the attorney, it should be taken into account that the attorneys are not automatically liable for the tax arrears of the taxpayer reported and may be held liable only as a result of a ruling issued by the tax authority in the form of a decision of that authority, which may be issued if 3 years have not elapsed (i.e. no the tax liability for receivables resulting from business activity is time-barred) starting from the end of the calendar year in which the six-month period will expire, counting from the date of registration of the taxpayer as an active VAT payer.

Responsibility of accounting offices

In connection with the above-mentioned changes, which were brought about by the amendment to the VAT Act in 2017, representatives may be held liable for the tax liability of the taxpayer reported in a situation where the representatives submit a notification using the VAT-R form.

It should be emphasized that in Polish reality it is the accounting offices that will suffer the most from the above regulation, because often the owner of such an office or a person authorized by him, on the basis of a concluded contract for the provision of financial and accounting services and powers of attorney, reports the client depending on tax affiliation to the VAT register of active or exempt taxpayers, to the tax office using the VAT-R form.

The assumption of the Ministry of Finance was the elimination of fraudulent activities by newly registered business entities. Indeed, the liability of the representative will only apply to the tax arrears of the reported taxpayer arising only in the first 6 months from the moment of registration of that taxpayer in the active VAT register. If the tax arrears arose in other circumstances, then the representative will not be subject to this liability.

Moreover, if the taxpayer conducting business activity leads to unreliable tax settlement in order to gain financial benefits, the attorney will not be held liable in such a situation.

The Ministry of Finance has forgotten a bit about the essence of the work and the limited scope of information available to the accounting office. A number of data on the company's future assumptions, operating strategy, goals that will follow registration for VAT and the possible imminent change of these goals should be mentioned here. Unfortunately, in every accounting office there is a certain group of clients who do not provide this information or do not want to provide it for some reason. In such a situation, the representative may be completely unaware of the situation that may happen to him shortly after registering the serviced taxpayer in the register of active VAT employees. The representative also has no power over the actions of the served client, who may perform various actions without any agreement with the representative and the latter may find out about it at the end, which is decidedly too late.

In view of the above threats, accounting offices will probably decide to prepare a VAT-R form reporting the taxpayer to the VAT register, although they will not submit it themselves and will make a bow to the taxpayer to whom they will pass the above form in order for the taxpayer to submit it himself.