Physical inventory in special cases - part 2

Service-Tax

Inventory problems today affect a large group of entrepreneurs. Situational doubts do not only depend on the quantity of goods or their diversity, but also on the circumstances of purchasing the goods and materials in question. Sometimes doubts arise in connection with the planned strategy of transforming the company, bringing in an organized part of the enterprise or restructuring the plant. Some of these problem postulates have been answered in this publication. Check when the inventory is made!

An inventory of nature in business

Inventory in business activities is not only the determination of the quantity and value of inventory, work in progress, semi-finished products or finished products, and even waste at a specific moment.
The inventory is also a cost adjustment in terms of the annual settlement of income from business activities.
The variety of problem cases prompts more and more taxpayers to read more intensively the solutions to situations that do not always occur on a daily basis, for one simple reason, namely the possibility of including in the company's costs or not inventory differences in special cases.

Physical inventory and no evidence of the acquisition of commercial goods

Many people who pursue their interests prepare for many years to start a business. Others, after several years of professional work, decide to register their own company for various reasons. For many years, even before opening a business, it happens that these people buy various types of items (commercial goods) in various places, i.e. at fairs, auctions, bazaars, city markets and others. When it comes to registering the company, taxpayers do not have all the proofs of purchase of these goods. Then the question arises whether the taxpayer can, immediately after opening the company, register the previously purchased commercial goods in the above circumstances?

Example 1

A natural person who did not run a business for several years purchased photographs and other items documenting the history and condition of major European cities from the pre-war period. Things were purchased, incl. at auctions, marketplaces, exchanges and from people who do not conduct any business. For many goods, the taxpayer has no proof of purchase. The total value of possessed items is PLN 45,000. He will open an online store at any moment and he would like to inventory all his items. How to solve this problem?
Always the basic issue for the possibility of including a given expense in the company's costs is to achieve a profitable effect within the company, but also to secure the present and future income from the activity. Another aspect is proper documentation and the absence of an expense in the catalog of costs that do not constitute company costs.
Bearing in mind § 24 para. 1 of the regulation on the operation of PKPiR, taxpayers are obliged to prepare and enter in the book an inventory of the nature of commercial goods, basic and auxiliary materials (raw materials), semi-finished products, work in progress, finished products, shortages and waste, e.g. on the day of commencement of operations during the tax year.
In the above circumstances, if the taxpayer does not have proof of purchase of some items constituting future commercial goods, he should evaluate them as at the date of drawing up the inventory at market prices. Such a physical inventory will be recognized by the taxpayer on the first day of commencement of business activity as the first position in PKPiR.

Physical inventory and bringing in an organized part of the enterprise

Every year, taxpayers running a business analyze the results and effects that their company brings them, primarily in terms of profitability and profitability of the venture. After the above-mentioned analyze whether or not they make different strategic moves aimed at increasing or reorganizing the generated profit. One of the steps to achieve these goals is the taxpayer's decision to bring in an organized part of the enterprise. However, before the taxpayer goes in this direction, he should analyze the possible tax consequences of implementing a given operation.

Example 2
An active VAT payer purchased goods for his business activity. He recorded them on the column 10 of PKPiR. Due to a change in strategy, it did not sell its inventory by the end of the year. In the next calendar year, the taxpayer took advantage of the proposal of his future partner and made a contribution (based on a notarial deed) of part of his enterprise (organized part of the enterprise) to the newly registered limited partnership. ZCP is also to contain the full value of the inventory of goods held so far in the taxpayer's company. However, the current activity will remain active. Does he prepare an inventory in connection with the above?

Yes, in the case of transfer of part of the enterprise (goods and materials), it is necessary to prepare a physical inventory at the end of the month in which the transfer took place.