Mandatory correction of the deducted VAT

The correction of the deducted VAT is the obligation of the debtor

An entrepreneur who, for various reasons, has not paid for the purchased goods or services, is obliged to correct the related and previously deducted tax on goods and services. This is a mirror image of the bad debt relief that the seller of the goods or services may use or not have to take advantage of. By imposing on an unreliable buyer the obligation to correct input VAT, the legislator eliminates the frequently occurring pathology and enforces timely settlements with contractors.

Why the correction of the deducted VAT?

Let's face it, almost every entrepreneur sometimes defaults on payments for purchases made. This is simply our reality - if not a crisis, then a drop in off-season turnover or an unforeseen expense. As if the debtor did not have enough problems with maintaining the company's liquidity, he still has to make a mandatory return of the tax on goods and services deducted earlier.

How to correctly write off the deducted VAT?

The regulations impose on the buyer the obligation to correct the VAT deduction in a situation where, after 150 days from the date of payment specified in the invoice or in the contract, he does not pay for the purchased goods or services. It should be mentioned here that when the liability is paid, the entrepreneur automatically receives the right to re-enter such an invoice and to deduct the VAT charged on it.

The described regulations require more extensive accounting, in which detailed monitoring of payments plays a decisive role. Conducting it in the traditional way (manually or using standard offline software) is often very tedious and time-consuming. In this case, it is best to use the interactive online accounting system wfirma.pl.

Using the tools available on the website, we will present a simple way to correct the deducted VAT and re-deduct the tax when it is paid.

Correction of the deducted VAT

Thanks to the ability to mark invoices as paid or unpaid, an entrepreneur using an online accounting system can easily monitor the payment status of his liabilities. Moreover, if no payment is added to a given cost invoice, after 150 days, the system will automatically make an entry correcting the deducted VAT in the correct amount on the last day of the month in which the correction was to take place.

This fact will also be recorded in the VAT-7 / VAT-7K declaration generated in the system (by the Office >> Declarations >> VAT >> Add declaration) for the period in which the VAT correction should take place. When creating the declaration, the entrepreneur will be informed about the expenditure that will be subject to correction.

Deduction of VAT again after settlement of the cost

If, after adjusting the deducted VAT, the entrepreneur pays the liability and records this fact in the system (e.g. through the Expenses tab, selecting the Settle option after marking the invoice, or in the Office >> Payments >> Unsettled income and expenses tab, also after selecting the Settle option - see photo below), the system will make an automatic VAT deduction. This fact will be automatically included in the settlement and the VAT-7 / VAT-7K declaration for the period in which the payment is made.