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Administration of VAT. What is the threat of non-registration of a tax invoice by a counterparty?

All accountants, lawyers and auditors were 100% likely to face problems that arose as a result of the administration of value added tax.

Moreover, it can be very diverse, including untimely registration of tax invoices, stoppages or blocking of their registration, incorrect determination of tax obligations, non-registration of tax invoices by the counterparty, and many others.

All this testifies to the fact that value added tax has turned into a heavy one, from the point of view of use and administration, out of all the existing ones provided for by the Tax Code of Ukraine. Quite frequent situations when the supplier has taken all the actions to sell a product or service, that is, he actually delivered it, but he simply does not register a tax invoice.

Therefore, what threatens or is an unpleasant situation when a counterparty does not register a tax invoice?

Everything is very simple, your company simply will not receive a tax credit for a certain delivery, and therefore will not be able to reduce the amount of tax liabilities for value added tax at the end of the reporting period. And all is well if there is a surplus of tax credits on the firm’s “electronic account”. However, otherwise, you will be forced to pay real funds to the state budget of Ukraine. And all is well if there are free funds on the company’s current account, because otherwise you will receive a tax message, a decision and the accrual of penalties.

⟪How to avoid such unpleasant situations?⟫

Our company uses the already established practice of “foresight” in the contracts of accounting clauses in this area. An accounting caution is a common penalty that is stipulated in an agreement in an amount that actually corresponds to the amount of value added tax under this agreement and is charged if your supplier does not register a tax invoice within the time frame established by law.

That is, you actually insure the company against damage in the amount of 20% with this provision.

In practice, this provision is extremely effective, since in a short period of time you receive a court decision of the economic court with the obligation to collect these penalties from the defendant, which, as a rule, are paid, because otherwise the state executive service bodies or a private contractor will arrest bank the accounts and property of such a defaulter. This is why anticipating accounting caveats is extremely important in today’s environment to keep your business profitable.

Prikhodko & Partners Law Firm provides comprehensive business accounting support and implements the necessary rules for the financial protection of its clients.

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