Recently, more and more value added tax payers (hereinafter – VAT) complain about the suspension of tax invoices submitted by them for registration in the URTI for the same reason: “there are no data in the table that are supplied on a regular basis and their volume is equal to or exceeds the value of the balance of the purchase of goods/services”. Why tax invoices are blocked and when such a threat arises – below.
When there is a threat of blocking TI/AC
The mechanism of suspension of registration of tax invoices (hereinafter – TI) and adjustment calculations (hereinafter – AC) in URTI determines the Procedure for suspension of registration of tax invoice/adjustment calculations in the Unified Register of Tax Invoices, approved by Resolution of the Cabinet of Ministers No. 1165 on December 11, 2019 (hereinafter – Procedure No. 1165). According to it, each of the documents submitted by the VAT payer for registration must undergo automated monitoring of compliance with the criteria for assessing the degree of risk.
The fate of TI/AC submitted for registration is decided by automated monitoring, and it has four stages of verification.
Stage 1. Verification of TI/AC for compliance with the signs of unconditional registration
If TI/AC meets at least one of the four features defined in item 3 of the Procedure No. 1165, it acquires a blocking ‘immunity’. This means that such TI/AC will be allowed to be registered in URTI without the condition of passing other stages of monitoring. At the same time, blocking ‘immunity’ does not apply to reducing TI (with the sign ‘-‘) and TI, issued to non-payers of VAT (with the type of reason ‘02’). And, of course, on those TI/AC which do not have anti-blocking signs. Such TI/AC pass to the second stage of check.
Stage 2. Verification of the VAT payer for compliance with the risk criteria
When a VAT payer meets at least one of the eight criteria listed in Annex 1 to Procedure No. 1165, such a payer is included in the list of risky. In this case, the TI/AC submitted by the payer for registration will be blocked. All subsequent TI/AC will be blocked until the payer is excluded from this list.
If the VAT payer is not recognized as risky, the submitted TI/AC proceeds to the next stage of verification.
Stage 3. Checking the tax history of the VAT payer
If the tax history of the VAT payer turns out to be positive, the TI/AC will be admitted to the next stage of the verification, otherwise it will be blocked.
The list of indicators that determine the positive tax history of a VAT payer is contained in Annex 2 to Procedure No. 1165. At the same time, the tax history of a VAT payer will be considered positive if this taxpayer has complied with at least one of the indicators specified in this annex. And this is protection against blocking TI/ AC in the event of a risky transaction by a risk-free payer.
Step 4. Verification of risk of the transactions specified in TI/AC
If the transaction specified in the TI/AC meets at least one of the six criteria listed in Annex 3 to Procedure No. 1165, it is considered risky. Only a positive tax history of the payer can save it from blocking.
Therefore, the registration of TI/AC will be stopped if the results of the automated monitoring establish compliance:
- of VAT payer with at least one criterion of risky VAT payer;
- the transaction specified in the TI/AC at least one criterion of risky transaction, but provided that the payer is risk-free, but does not have a positive tax history.
