The right to deduct VAT from an invoice with an incorrect company name

Service-Tax

In business practice, mistakes often occur, whether it is the documentation itself or the goods. The rush and tight schedule of the entrepreneur may result in the acceptance of documents with incorrect data. Does receiving an invoice with errors in the name of the buyer allow the entrepreneur to include the cost in the records and deduct VAT on its basis?

A minor mistake in the name of the company and the possibility of VAT deduction

The answer depends on whether the remaining data of the buyer can be clearly identified. Art. 88 sec. 3a of the VAT Act specifies the cases in which the taxpayer has no right to deduct VAT - however, it does not follow from this provision that the buyer's incomplete data included in the invoice disqualifies the taxpayer from the right to deduct VAT included therein. This is due to the fact that the mistake in the name of the buyer is a formal error and does not affect the validity of the invoice, provided that other elements included in the invoice clearly identify the parties to the transaction.

Therefore, if only the name of the buyer is mistaken in the buyer's data, and the NIP and the address are correct, then it is allowed for the entrepreneur to include such documented expenditure as tax costs and to deduct VAT.

For example, when an invoice for a purchase has changed the order in the name of the company - instead of "Zakład Chemiczny KOT", the invoice shows "KOT Zakład Chemiczny", the entrepreneur does not have to correct the document in order to qualify the expenditure as costs. Also, if an abbreviation is used in the name instead of the full name, which is Przedsiębiorstwo Produkcyjno-Handlowo-Usługowe SAM, PPHU SAM will be included, this error will not deprive the entrepreneur of the possibility of deducting VAT on the purchase and including it in the tax book.

A significant mistake in the name of the company and the possibility of VAT deduction

However, if errors in the name make it difficult to determine the identity of the buyer, i.e. when the name applies to a completely different entity or is incomplete (eg DANTE instead of DANTE Jan Nowak), the buyer should issue a corrective note, changing the data to be correct. The note should be provided to the issuer of the invoice, and the buyer should have proof of acceptance of the document by the seller. Another option is to issue an invoice correcting formal data by the seller. Only then will the buyer be entitled to a deduction of the VAT included in the invoice.

Errors in the business name of the entrepreneur on the received purchase invoice do not have to mean that the expenses cannot be recognized as costs or that VAT cannot be deducted. If the remaining data clearly shows that the given entrepreneur is the buyer, the mistake can be considered insignificant and the invoice can be entered in the tax records and in the VAT register.