In Ukraine, the system of blocking tax invoices, which was intended to be a tool to combat fictitious transactions, is increasingly resembling a tool of pressure on honest business. Entrepreneurs suffer significantly from the blocking of invoices, because it deprives them of the opportunity to receive a tax credit, leads to significant financial and reputational losses, and for small and medium-sized businesses can cause bankruptcy.
The time required to unblock a tax invoice in a pre-trial procedure takes up to 4 months, and in a judicial procedure it can be about 1 year. Unblocking takes not only time, but also resources, while the work of the enterprise is actually blocked.
The procedure for unblocking tax invoices is a real bureaucratic maze that can cost you a lot of time and nerves. Therefore, we will consider the most common reasons for blocking tax invoices and analyze how to avoid them.
The most common reasons for blocking tax invoices
According to a study conducted by the Council of the Business Ombudsman, it was found that 40% of active VAT payers in Ukraine faced problems related to the blocking of tax invoices. Roman Vashchuk, the business ombudsman, who personally initiated an investigation into numerous cases of blocking of tax invoices, noted that the fiscal pressure on business is large-scale.
As the tax officials themselves explain, the main reason for the blocking of invoices is the imperfect operation of the automated system of SMCOR, which often stops real business operations.
We will consider why this system stops operations and blocks the registration of tax invoices.
1. Absence at the enterprise of the goods or the impossibility of providing the service specified in the tax invoice
If the volume or nomenclature of the delivered goods does not correspond to the volume or nomenclature of the remaining goods in the warehouse, the tax invoice will probably be blocked after its registration. The automated system of SMCOR will see that the company did not buy such a product or bought it, but in volumes much smaller than what was delivered.
Each type of product has its own code. For example, beet seeds have a code of 1209, and the beet itself has a code of 0706, and the system does not understand how when you buy the product 1209, you sell 0706, or how you bought a ton and sold 10 tons. As a result, registration stops and the system reports that the balances do not correspond to the sales volume.
The same applies to services. If the volume of work carried out by the enterprise does not correspond to the number of employees of the enterprise, its material and technical base, etc., the tax invoice may not be registered.
2. Being on the list of payers who meet the risk criteria
If your company is included in the list of enterprises that meet the risk criteria (approved by Cabinet of Ministers Resolution No. 1165), the registration of all tax invoices is automatically terminated. It is quite easy to get on this list by carrying out a transaction with a counterparty from the list of risky payers. Further registration of invoices will become possible only after the relevant commission of the State Tax Service of Ukraine makes a decision regarding the non-compliance of your company with the risk criteria.
3. Sale of goods with a high markup
Transactions in which the value of a product or service is too high compared to similar goods/services on the market may appear suspicious, and the registration of a tax invoice for such a transaction will be stopped.
4. Inadequacy of personnel qualifications to the level of performed work
For example, if the company is engaged in construction and high-rise works, in order to stop the blocking of invoices, it is necessary to provide together with explanations of the contract, acts of completed works, invoices, receipts, staff list and other available documents. However, if these documents do not contain information about the availability of qualified workers at the enterprise who can perform the relevant work, there are no permit documents for carrying out such types of work, as well as documents confirming the qualifications of the workers, the invoice will be blocked.
5. Lack of documents for storage and transportation of products
Failure to provide documents confirming storage and transportation, loading, unloading of products, warehouse documents (inventory descriptions), including invoices/invoices, acts of acceptance and transfer of goods (works, services), entails a refusal to register tax invoices.
How to prevent tax invoices from being blocked?
In order to avoid the blocking of tax invoices, such a mechanism is provided, such as the submission by the VAT payer of a data table in which the UKKTZED codes of goods or DCP services, which are purchased/supplied by the enterprise on an ongoing basis, are indicated, with the mandatory attachment of a corresponding explanation with reference to the tax and other reporting on the reality of carrying out one's business activities, ensuring the necessary amounts of property, labor resources, technological equipment, etc.
After consideration of such table of data of the payer and the absence of tax risks, the commission of the tax authority makes a decision to take it into account, and in the future, the registration of tax invoices for the sale of goods/services according to the codes of UKTZED of goods or DCP of services specified in the data table is not suspended.
It is necessary to submit the data table in electronic form by means of electronic communication. An explanation with information about the activity of the payer is provided in the form of an appendix attached to the table.
If the data table is not considered the first time, it can be submitted again, there are no restrictions. At the same time, for it to be taken into account by the commission of the tax authority, it is necessary to eliminate the reasons for refusal specified in the previous decision. The table with explanations is considered by the DPS commission of the regional level within five working days, which makes a decision on its inclusion or non-inclusion.
Please note that for the unconditional registration of tax invoices, according to the approved Data Table, a decision on compliance with risk criteria should not apply to your enterprise. While in risk status, you cannot register a waybill. However, if you are removed from the risk list, all the data tables taken into account will resume their application.
Carefully check your counterparty, because cooperation with a risky payer will lead to the suspension of registration of tax invoices. Unfortunately, the law does not provide an effective tool for this, which creates certain difficulties, since companies are not obliged to report information about themselves. Therefore, use open sources of information, such as the register of court decisions, the register of legal entities, Opendatabot, etc.
Pay attention to the date of registration of the counterparty company, the amount of its authorized capital, how often the director has changed (and why).
Please also pay attention to the fact that in the Electronic Cabinet there is a service that allows you to check the riskiness of counterparties, but there is a nuance. This can be done only with the consent of the counterparty. Consent is given in the "Consent" section of the "Settings" menu of the private part of the Electronic Cabinet and provides for the control body to provide information about such a taxpayer to its counterparties in the amount determined by the taxpayer.
Thanks to this service, you can get the following information about your counterparty:
- address and information about the place of registration;
- data of officials;
- separate subdivisions and objects of taxation;
- tax debt and monetary obligations;
- amounts of taxes paid;
- availability of licenses;
- information on inclusion and exclusion from the list of risk payers;
- information on blocking tax invoices;
- presence of export or import operations;
- other information.
The mechanism of blocking invoices today is imperfect, the system does not understand business operations. For example, the company buys small chickens and raises them to adulthood. And in the future, he sells adult chickens and poultry meat. The system does not see this process of raising chickens and processing meat and blocks operations, because the product is different at the entrance and exit. That is why it is important to keep all original documents confirming the reality of your transactions. Such documents can be:
- contracts and their annexes;
- expense invoices;
- warehouse receipts, warehouse storage contracts;
- power of attorney to receive goods;
- invoices, receipts, statements, payment orders;
- invoices, customs declarations (when carrying out foreign trade);
- acts of services rendered / works performed;
- certificates of registration of vehicles and equipment;
- information about objects of taxation;
- reports confirming the availability of labor resources;
- contracts with contractors and documents confirming payment for their services.
In the presence of all the primary documents that prove the reality of your operations, and the availability of the necessary material and technical base, in case of stopping the registration of any of your tax invoices, you can always provide reasoned explanations to the controlling authority and avoid further blocking of invoices.
