Why does a payment to the right account of a contractor matter?

August 26, 2019

Amendments to the provisions of the Tax Code

Pursuant to the amended provision of the Tax Code, art. 117ba (joint and several liability of taxpayers), if a taxpayer makes a transfer in an amount exceeding PLN 15,000 to an account that has not been included on a list of the Ministry of Finance, the taxpayer will be jointly and severally liable for tax arrears of a contractor (up to the amount of tax related to a given transaction). At the same time, the taxpayer loses the right to include an amount resulting from the payment as tax deductible costs.

Updated contractor data in the list submitted to the Tax Office

Let’s start at the beginning. Shortly, new tax changes will take effect. They will have a significant impact on how tax costs and input VAT are registered.

In order for the tax authority to recognize the validity of VAT deduction, we will have to prove that our contractor is an active VAT payer. Before making a money transfer, a contractor’s account which is included on an invoice must be checked whether it is consistent with an account number placed on the list. Transfering money to an account different than the one reported to the tax office will block the possibility of qualifying the expense as a tax deductible cost.  Therefore, an update list of data on business partners becomes a crucial issue when it comes to IT systems of the Central Statistical Office and data reported on NIP-2 and NIP-8 forms. The compatibility of these data will allow to retain due diligence and, thus, to avoid many problems with taxing authorities. At the moment a date, from which the obligation to verify the bank accounts of contractors will enter into force, is not known.

Taxpayer’s responsibility when a contractor’s account number differs from a number reported to the tax authorities

From September 1, 2019, Art. 96b of the VAT Act, pursuant to which the Head of the National Court Register will maintain an electronic list of taxpayers who have been removed from the register of VAT payers (the so-called „black list of VAT payers”) and also taxpayers who were first removed from the register and then restored to the register of active VAT payers (the so-called „white list of VAT payers”). The amended Goods and Services Tax Act, issued on April 12, 2019 assumes that the taxpayer will not be able to classify expenses, that are credited to bank accounts other than those reported to tax authorities, as tax deductible costs.

The taxpayer’s liability may be disabled if he/she makes a payment to another account, but he/she notifies the tax office appropriate for a contractor – seller, about a payment to this bank account within 3 days of the day the transfer is made or if he/she makes a payment using the split payment mechanism.

It can also happen that someone pays a contractor for an invoice to a correct account but in a database of an tax office there is an incorrect or outdated bank account of the contractor. Then the payer will be exemped from consequences and will be able to include the expense as tax deductible costs and deduct VAT.

Reasons for the taxpayer register will be created

The reason for keeping taxpayer registers is to help entrepreneurs in attaining due diligence in verifying information about their contractors. Another important reason are actions taken to seal the tax system. Taxpayers who will verify contractors with whom they cooperate by the use of this electronic register will have the chance to minimize the risk of participation in VAT missing trader fraud.

The assumption of this protection is that while the taxpayer is checking the transfer order whether the contractor’s account is on the list, the taxpayer receives information about the date and time at which the check was made and if the date of the transfer order is in line with the date of checking the account on the list. Then the taxpayer will be sure that he/she has made the transfer to the correct and current account. The list is to be updated on weekdays, once a day, and access to it will also be possible via the ICT system of the Central Registration and Information on Business.

Such a system will allow the control of the source of money and its flow between companies as well as the flow of money between the company’s internal accounts.

Author: Agnieszka Grabowska

Tags active VAT taxpayer Poland, bank account of the contractor, taxpayers register Poland