Tax settlements are subject to increasing risk and cause increasingly serious problems for entrepreneurs. It is commonly said that tax authorities are increasingly challenging the right of companies to deduct input VAT, considering that the taxable person participated in tax fraud, cooperated with a "bogus" enterprise or participated in a "carousel" fraud. Unfortunately, this phenomenon is becoming quite common and it may affect any entrepreneur, including honest ones. According to the tax authorities and administrative courts, responsibility for VAT extortion is borne not only by the fraudster (the entity that committed or knew about the extortion) but also by the buyer of goods or services that did not know, but with due diligence should have known at the time of the transaction that the contracting party acts unfairly.
The penalties are severe…
The lack of due diligence (or otherwise failure to act "in good faith") may result not only in a denial of the right to deduct input VAT on the acquisition of goods or services (which in practice means the necessity of payment of often very high amounts with interest to the tax office, at the moment at the level of 12% per annum), but also the criminal and fiscal liability of the people managing the company. The loss of image – both for the individuals concerned and the company itself - is also of importance.
So-called "fraudulent invoices" that are present in trading constitute an additional problem. It is punishable not only to issue an inaccurate invoice or an inaccurate bill but also to use such a document - at present, such an act is punishable under the Penal and Fiscal Code with a fine up to 720 daily rates and imprisonment for a period no shorter than one year; and, additionally, it may constitute a criminal offence under the Penal Code, punishable even with imprisonment for a few years.
What to do in order to avoid being a victim of fraudsters and not to be accused of fraud yourself?
It is essential for entrepreneurs to develop and implement appropriate mechanisms concerning the verification of reliable contracting entities, circulation of documents and internal control, so that fraudulent invoices are kept far away from reliable business. This will reduce the risk of the tax authorities recognising that during the transaction the entrepreneur failed to exercise due diligence. For this purpose, it is also desirable to properly train employees who are in contact with contracting entities or processing documents related to tax settlements. The accepted models of action and safeguard procedures should always be tailored to the individual circumstances of the taxable person, the industry and the legal environment in which it operates as well as the prevailing rules of cooperation with customers.
Therefore, RSM Poland – as a team of experienced professionals in the field of tax consulting, auditing, accounting and legal consulting – offers the development of dedicated effective verification procedures allowing to minimise the risk of questioning of VAT settlements by the tax authorities and to eliminate the problem of fraudulent invoices. Moreover, we offer organisation of effective training for the management and employees as well as professional representation of entrepreneurs both in tax and criminal proceedings.
If you need any support with respect to the deduction of input VAT or consultation in terms of tax risk related to obtaining tax in a fraudulent manner, contact our expert, Przemysław Powierza:
tel. +48 61 8515 766
fax +48 61 8515 786