Backward VAT registration in practical situations (part II)


Natural persons running a business are often busy or busy with a multitude of matters related to running a business. Due to the numerous obligations of the entrepreneur, and also the tax settlement and documentation obligations, they forget about important deadlines in the maze of tasks. However, it also happens that despite the fact that the deadline is met and the documentation is submitted, the matter is not resolved. Is registration for VAT purposes backwards possible?

Registration for VAT purposes backwards in the light of input and output tax

The taxpayer planned to start operating in January 2017. as an active VAT payer. Earlier, he found an offer from a tax office. At the request of the taxpayer, the law firm started keeping tax books. The taxpayer registered from January 1, 2017. business activity consisting in the sale of workwear. Moreover, he submitted the appropriate UPL-1 form for the electronic sending of the declaration. The law firm sent the VAT-R application to the competent tax office with the date from the beginning of the registration of the activity, i.e. from January 1, 2017.
When running a business, the taxpayer issued sales invoices and made purchases for the purposes of the business from which he deducted VAT. In turn, the law firm submitted VAT declarations every month. In May 2017. It turned out that the taxpayer received a letter from the tax office informing that he is not an active VAT payer, i.e. the VAT-R registration application has not been sent. The taxpayer was surprised because earlier the VAT declaration was submitted electronically.
From the beginning of the business opening until receipt of a letter from the tax office, the activities of an active VAT payer were performed, consisting of:

  1. issuing sales invoices subject to VAT with VAT due at the rate of 23%,
  2. deducting input VAT from invoices documenting the taxpayer's purchases for the purposes of the business,
  3. keeping the VAT register of purchase and sale,
  4. monthly submission of a VAT declaration, which included all purchase and sale transactions occurring in the kept VAT registers.

Every month from January to May 2017. in the taxpayer's activity:

  1. there was a tax obligation in VAT due to the issued sales invoices,
  2. there was an acquisition documented by received invoices.

Taxpayer in 2017 he was not yet obliged to submit the JPK_VAT file due to the taxpayer's status. In this case, the taxpayer intensively considers how he should proceed and what the tax consequences of the above situation may occur. At all times, the taxpayer performed all activities just like an active VAT payer. Income tax was also settled as for active VAT payers, i.e. taking into account the net amounts and possible VAT without the right to deduct.
The taxpayer decided to file on May 22, 2017. VAT-R registration application. In addition to submitting the form, the taxpayer provided explanations of the situation. However, the tax office entered him into the register of active VAT payers with the date from June 1, 2017. and not from January 1, 2017.
In this situation, it should be noted that the taxpayer has the right to register as an active VAT taxpayer with the date from January 1, 2017. due to the fact that from the beginning he actually conducted sales subject to VAT and made deductions from the purchase related to the taxable activity.
In the period of January - May 2017.and further, sales invoices documenting the sale of workwear were issued, as well as purchased goods and other materials for taxable sale. The taxpayer submitted a monthly VAT declaration and paid the VAT being certain that he was an active VAT payer due to the VAT-R registration application submitted by the law office.
In this situation, the taxpayer may therefore submit a VAT-R update notification indicating the date from January 1, 2017. In addition, it has the right to deduct VAT for the months January - May 2017.
The foundation for the deduction of VAT is the taxpayer's basic right contained in Art. 86 of the VAT Act, i.e. to the extent that goods and services are used to perform taxable activities, i.e. activities subject to VAT, the taxpayer has the right to deduct input VAT (resulting from the sum of the amounts shown on purchase invoices for a given settlement period) from the amount of output VAT (resulting from the sum of the amounts shown on sales invoices for a given settlement period).
It is also worth emphasizing that the legislator only indicates that the taxpayer already has the right to deduct VAT upon receipt of the purchase invoice (subject to the previous conditions), and that the taxpayer can exercise the right if he is an active VAT payer. Therefore, the taxpayer is obliged to submit the VAT-R registration declaration before making the first VAT taxable sale, if, of course, he wants to be an active VAT taxpayer. If, on the other hand, he has to be a VAT payer from the beginning, then from the moment the company is registered.
It is also worth mentioning that the taxpayer has re-reported the VAT-R, yet the tax office registered it on May 22, 2017. However, he should still submit the VAT-R update and indicate the date of commencement of taxable activities as January 1, 2017. Because this date will oscillate as the date of resignation from the use of the VAT exemption.
Thus, the taxpayer had the right to deduct VAT and correctly reported the VAT due on sales. However, it should be noted that the VAT deduction will be made when the taxpayer updates the VAT-R declaration, indicating the date of January 1, 2017. as the date from which the taxpayer became an active VAT payer.
On the other hand, the second issue is the invoices issued and the tax due on them. It is worth quoting Art. 108 of the VAT Act, in which the legislator indicates that in a situation where a legal person, an organizational unit without legal personality or a natural person issues an invoice in which it shows the amount of tax, it will be obliged to pay it. The taxpayer acted correctly in paying VAT to the tax office for the period January - May 2017. On the other hand, the exercise of the right to deduct input VAT on these purchases could (for the above period) arise at the time of sending the VAT-R update application with the date of resignation from the VAT exemption from January 1, 2017.

In summary, registration for VAT purposes backwards is possible depending on the situation.