Tax Partner at RSM Poland
The waiter grabs the sleeve of the honest – i.e. the disappearing taxpayer vs. collective responsibility (part 2)
Let's go back to the restaurant scene - it's obvious that if we were to experience such a startling and unpleasant situation, we would have paid for the non-cultural guest to save ourselves from shame. The problem, however, is that when we think of a similar situation in the context of taxes, it makes us doubly uncomfortable. Firstly, the amounts at stake are usually much higher than the cost of even the most sophisticated dinner in a good restaurant. Secondly, paying for someone will not protect us from losing our reputation. Even if we assume that we will carry an additional unexpected tax burden, it is very difficult to estimate the measurable losses due to a serious scratch on the image. Fiscal confidentiality? That’s a good one! Just browse through the latest proposals of the Ministry of Finance. The so-called planned VAT list will publicize enough. Some taxpayers reveal their troubles with the treasury voluntarily - because they have to explain to the shareholders. In other cases, the good contractors will help - when they themselves find out about the problem, when they are visited by the officials under the so-called cross-check.
Therefore, at once we can clearly say - if we step down, it is as if we practically pleaded guilty. Not only can you, but you need to defend yourself. But how?
Before we start the battle of the tax audits, customs and fiscal checks, or at the stage of tax proceedings, it is worth reviewing your ammunition and dusting it off in advance. Much has been said recently about the need for security procedures that would guarantee the status of taxpayers in good faith towards their contractors. The problem is that with such a procedure it is like choosing a representative company car. Driving a battered Opel station wagon to the customer parking lot brings shame. A shiny Porsche immediately suggests expensiveness. Something in between? By all means – one cannot overdo it one or the other way. In every extreme case one can be accused of complicity in tax fraud.
Consultants frequently discuss their proposals in the field of protective procedures at the various training courses. Because, in principle, this is the easiest. One does not need to refer to the details of a particular case. However, it is precisely these details that are important to capture the golden mean - an optimal solution, giving the greatest possible protection against accusations of complicity in VAT fraud. Hence, the construction of such an individual procedure is usually laborious and costly. But only the first time. Once a "good" engine is in place, the improvements or current updates are no longer a nuisance.
Let's start by verifying the contractors - who they are, what they do, or if they need a closer look. Every serious entrepreneur (and usually a taxpayer) will check his new contractor when he intends to start working with him on an important scale. One thing is business reliability and another thing - as it turns out - tax integrity. Among the proposals that are most often mentioned on various types of training are the following ways:
- verification of information from the National Court Register or CEIDG - this is a good starting point, although mainly for data consistency testing with other sources; one should also keep in mind that the information contained in these registries depends, to a large extent, on the diligence of the registered person in updating the data themselves;
- verification of the entity in the REGON database - also useful only for checking the consistency of data from different sources; CSO is not very eagerly monitoring entrepreneurs;
- use of the database available on the Tax Portal of the Ministry of Finance - we can check (only) up to date data, whether the given entity is an active VAT payer; however, we do not know what the status was yesterday;
- applying for the issuance of a certificate of the contractor to the head of the competent tax office - great when someone has time to wait for it 7 days; I also know cases in which such certificates to subjects who have been behaving at least strangely for a long time, were issued by the officials without a blink of an eye;
- use of business intelligence services - primarily to verify the reliability of the repayment of liabilities: yes, although this is a significant cost and a lot of effort; the solution is commendable only when it comes to larger cooperators;
- verification of the premises (office, warehouse) of the contractor - yes, although it is important to be aware that a typical commercial brokering does not require contact with the commodity, and that carrying out such activities does not necessarily involve having any extensive logistic base - the conclusions may therefore be too hasty;
- sending requests to the contractor to send scans/copies of the office submitted VAT-7 declarations or electronic confirmations of sending JPK-VAT files - it is worth remembering here that the first ones are easy to counterfeit and do not prove anything and the latter may contain false data; not without significance is the fact that we would immediately seem morbidly suspicious in the eyes of an honest contractor.
So what to choose? It is best to select a set of tools for a particular case - so that the effort and the resources are proportionate to the degree of risk. Current and new business partners need to be categorized and approached as individually as possible. A good procedure, best built with an experienced tax advisor, will greatly facilitate verification and will also reduce the potential negative consequences for your business.
Should the contractors from abroad be treated differently? This will be the topic of my next post.