Write-off of VAT from the advance received upon expiration of the statute of limitations. The statute of limitations on the advance payment listed by the supplier has expired: we restore VAT Write-off of VAT from the advance received


Examples of entries for accounting for VAT on advances An example of a transaction for advances received by Harmony LLC under an agreement with the buyer Amalgama LLC must supply a consignment of goods in the amount of 212,400 rubles, incl. VAT - 32,400 rub. 07/10/2016 "Amalgam" transfers an advance payment of 50% of the contract amount: 106,200 rubles. VAT on advance: 106,200 * 18/118 = 16,200 rub. We reflect in the postings VAT on advances received from the buyer: Dt Kt Description of the posting Amount, rub. Document 51 62.2 Reflection of the advance received 106,200 Bank statement 76.AB 68 (VAT) VAT is charged on the advance 16,200 SF issued In August, Harmony ships a consignment of goods to Amalgam. Postings for sales and deduction of VAT from advances received: Dt Kt Description of posting Amount, rub.

VAT when writing off accounts payable: problematic situations

VAT on advances received When selling products (goods, services) to the buyer, a mandatory condition may be specified in the contract - advance payment in the amount of up to 100%. On the received advance, the organization issues a tax return and charges VAT at a rate of 18/118%.

The amount of this advance is included in the sales book as accrued VAT, that is, a tax that the organization is obliged to pay to the budget. Get 267 video lessons on 1C for free:

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In practice, after issuing a SF for the advance received, 3 situations are possible:

  • during the advance period the sale occurred;
  • no sales occurred during the advance period;
  • return of advance payment to the buyer (termination of contract, change of conditions, etc.)

Accounting for writing off accounts payable in tax accounting

Attention

In the first case, after the shipment has been made, the selling organization has the right to present previously paid VAT on the advance received for deduction. That is, the advance SF is closed with a purchase ledger entry.

In the second case, the amount of the advance and the VAT accrued on it is reflected in the VAT return for the current period in line 070 of Section 3. In the case of a refund of the advance, it is also possible to deduct the paid VAT, that is, an entry is created in the purchase book.

You can take advantage of the deduction within a year after termination of the contract. In the event of liquidation of the purchasing organization before full fulfillment of the delivery conditions, if it is impossible to return the advance payment, VAT accrued upon receipt of the advance payment is not subject to deduction.

VAT on advances: postings and examples

But it is worth noting that the presented position will need to be defended in court. An example of how to reflect in accounting and taxation the write-off of accounts payable with an expired statute of limitations. Alpha LLC uses the accrual method and pays income tax on a monthly basis.

On September 10, 2013, the company was supplied with goods worth 59 thousand rubles. (including VAT – 9 thousand rubles). According to the documents, the payment period was seven banking days, excluding the day of shipment. But the goods were not paid for for three years. Note that the supplier did not make any claims in court, and the company did not try to get rid of the debt.

After conducting an inventory, which took place on September 24, 2016, the manager decided to write off overdue accounts payable on the basis of an accounting certificate and an order from the manager. The following entries were made in Alpha's accounting: 09/10/2013: Debit 10 Credit 60 - 50,000 rubles.

VAT when writing off accounts payable

If the inventory was not carried out or the order was issued later than the last day of the reporting period in which the basis for writing off the debt arose, then, in the opinion of many arbitration courts, this is not a reason for exemption from paying tax. I note that in practice, it is possible to issue an order to write off debt no earlier than the month following the reporting month, because documents for the past month, in the best case, are received at the beginning of the next, and it still takes time to process them, draw up inventories and written justifications.

This contradiction can be resolved in two ways: issue an order “retroactively” or issue it on the actual date, including an instruction from the accounting department to reflect the results of the inventory as of the date it was carried out. If such an order is received after submitting the declaration, then it will not be possible to do without “clarification”.

VAT on advance: postings

Info

After the supplier receives the advance payment, his responsibilities include calculation and payment of VAT (Clause 1 of Article 154 of the Tax Code of the Russian Federation). Moreover, the corresponding tax is deducted:

  • upon shipment (p.

8 tbsp. 171, paragraph 6 of Art. 172

Important

Tax Code of the Russian Federation);

  • in case of a change in cost or termination of the contract with the return of previously received advance payments (clause 5 of Article 171 of the Tax Code of the Russian Federation).

    • The advance payment does not pass to the buyer when overdue accounts payable for advance payments are written off. Because of this, the seller is deprived of the deduction of “advance” VAT, which is confirmed by letters from the Ministry of Finance of the Russian Federation dated December 7, 2012 No. 03-03-06/1/635, dated February 10, 2010 No. 03-03-06/1/58.


    2.

    Inclusion of “advance” VAT in non-operating income. Overdue accounts payable are included with VAT in non-operating income (clause

    18 hours 2 tbsp. 250 of the Tax Code of the Russian Federation), that is, VAT is included in income for profit tax. 3.

    Accounting for VAT on advance payments

    Debit 19 Credit 60 – 9000 rub. – input VAT is reflected. Debit 68 subaccount “Calculations for VAT” Credit 19 – 9000 rub.
    – accepted for deduction of input VAT. 09/24/2016: Debit 60 Credit 91-1 – 59,000 rubles. – overdue accounts payable are written off. When calculating income tax for September 2016, the company’s accountant contributed 59 thousand rubles. included in income. And input VAT, previously accepted for deduction in the amount of 9 thousand rubles, was not taken into account in expenses (clause 49 of article 270, clause 1 of article 252 of the Tax Code of the Russian Federation). The reasons for the formation of accounts payable are as follows: the company did not transfer the goods (did not provide work, services) to the client after making an advance payment, the statute of limitations has expired, or there are other reasons. At the same time, accounts payable are included in non-operating income; it is also necessary to take into account a number of subtleties in the case of writing off VAT on it.
    Please share in the comments which option you are ready to put into practice? Letter of the Ministry of Finance of Russia dated 01/28/2013 N 03-03-06/1/38 Resolutions of the Presidium of the Supreme Arbitration Court of the Russian Federation dated 06/08/2010 N 17462/09 in case N A26-5933/2008, dated 02/22/2011 N 12572/10 in case N A40 -65335/09-98-396, Resolution of the Federal Antimonopoly Service of the North-Western District dated July 29, 2009 N F04-3773/2009 (9432-A45-15), Resolution of the Federal Antimonopoly Service of the Volga District dated September 22, 2009 in case No. A65-20719/2008 and other clause 18 article 250 of the Tax Code of the Russian Federation, clause 3 clause 2 of article 170 of the Tax Code of the Russian Federation Letters from the Ministry of Finance of Russia dated 12/07/2012 N 03-03-06/1/635, dated 02/10/2010 N 03-03-06/ 1/58 clause 19.art. 270 of the Tax Code of the Russian Federation Federal Law of November 26, 2008 N 224-FZ Clause. 1 clause 1 art. 264 and clause 19. art. 270 Tax Code of the Russian Federation, paragraph 20, paragraph 1, art.

    Write-off of advance VAT received from the counterparty

    Only the court supports a position favorable to enterprises (resolution of the Arbitration Court of the Far Eastern Federal District dated March 4, 2015 No. F03-518/2015). How is VAT taken into account when writing off accounts payable? When writing off VAT on accounts payable, it is important to act in a certain order. There are three possible scenarios:

    1. The goods were shipped to the client (work was performed, services were provided), but he did not pay for them, accepting the “input” VAT for deduction.
    2. The goods were shipped to the client (work was performed, services were provided), but no funds were contributed to pay for them, and “input” VAT was not accepted for deduction.
    3. The supplier received an advance payment and calculated VAT on it. There was no shipment of goods.

    Now let's talk about all the scenarios in more detail.

    In addition to these two described points of view, there is another position of the arbitrator, who, considering the dispute over the audit carried out for the period 2007-2008, supported the taxpayer, deciding that the income from writing off the advance received should be determined minus the VAT accrued on it. The decision was based on the fact that only economic benefits can be recognized as income, and by paying VAT on the amount of advance payment, the taxpayer does not receive economic benefits. It cannot be ignored that this court decision did not consider the issue of recognizing in expenses the amount of VAT related to the advance written off as income.

    I. Petukhova, leading expert of PRAVOVEST company

    If for some reason the organization does not pay for the goods received or does not close the advance received, it forms accounts payable. This debt cannot be recorded forever. Sooner or later it must be written off.

    Three years of waiting

    Only overdue accounts payable need to be written off. As a rule, this obligation arises for an organization when the statute of limitations expires - three years, during which civil law guarantees the counterparty protection of its rights (Article 196 of the Civil Code of the Russian Federation). You can write off the debt before this period only if you become aware of the liquidation of your creditor. Documentary confirmation of liquidation is an extract from the state registration register.

    Since writing off accounts payable leads to the emergence of non-operating income, the accountant must clearly understand that the statute of limitations is counting (clause 2 of Article 200 of the Civil Code of the Russian Federation):

    • or from the next day after the deadline for fulfilling obligations under the contract has expired;
    • or upon expiration of the performance period, if it is defined in the obligations;
    • or from the moment when the creditor acquires the right to demand fulfillment of obligations (if this period was not specified in the agreement).
    The limitation period is interrupted if the creditor files a claim against the debtor or if by his actions the debtor confirms the existence of obligations (Article 203 of the Civil Code of the Russian Federation). Recognition of debt, in particular, may be:
    • payment of penalties under the contract;
    • request for deferred payment (delivery);
    • partial or full recognition of claims;
    • reconciliation of mutual settlements with the execution of the corresponding act, etc.
    Any of these actions results in the three-year period starting over and the appearance of income in the form of written-off accounts payable being delayed accordingly.

    Start with an inventory

    The volume of overdue accounts payable is determined based on the results of the inventory. This amount must be reflected in the act in form No. INV-17. The write-off is formalized by order of the head of the organization on the basis of accounting certificates.

    The inclusion of accounts payable in income is not a sale.

    Consequently, the object of VAT taxation does not arise in this situation. Input tax corresponding to the amount of accounts payable cannot be deducted either. After all, one of the main conditions for tax refund – payment for goods (work, services) – has not been met. In this case, the VAT written off from account 19 should be included in non-operating expenses. Then the organization’s balance sheet profit will increase by the amount of actually received but unpaid assets.

    Example 1

    The Colosseum company charges VAT on shipment. The tax period is a month. In September 2002, the organization received materials worth 50,400 rubles. (including VAT - 8400 rubles). For three years the materials were not paid for. Moreover, the supplier did not make any claims, and the buyer did not take any measures to repay his debt.

    Based on the results of the inventory carried out in September 2005, the director of the Coliseum decided to write off accounts payable with an expired statute of limitations. The following entries were made in the company's accounting records:

    In September 2002:

    Debit 10 Credit 60

    – 42,000 rub. – materials are capitalized;

    Debit 19 Credit 60

    – 8400 rub. – input VAT is reflected.

    In September 2005:

    Debit 60 Credit 91-1

    – 50,400 rub. – accounts payable with an expired statute of limitations are written off;

    Debit 91-2 Credit 19

    – 8400 rub. – charged to expenses for input VAT on written off accounts payable;

    There may be another option: when the organization writes off the amount received as an advance payment for which the products were not shipped. Since in this case the VAT on the unclosed prepayment had to be transferred to the budget, the amount of outstanding accounts payable will be less. It is included in non-operating income minus tax. However, it will still not be possible to recover VAT.
    After all, there was no sale, and the advance payment was not returned to the buyer.

    Example 2

    Based on the results of the inventory carried out in September 2005, the director of the Coliseum decided to write off accounts payable with an expired statute of limitations. The following entries were made in the company's accounting records:

    Let's use the data from the previous example and assume that in September 2002, Colosseum received not materials, but an advance payment for the upcoming delivery.

    Under these conditions, the following entries must be made in accounting:

    Debit 51 Credit 62 subaccount “Advances received”

    – 50,400 rub. – an advance has been received from the buyer;

    Debit 62 subaccount “Advances received” Credit 68 subaccount “VAT calculations”

    – 8400 rub. – VAT is charged on the advance received.

    In October 2002:

    – 8400 rub. – input VAT is reflected.

    Debit 68 subaccount “VAT calculations” Credit 51

    – 8400 rub. – VAT is transferred to the budget.

    Debit 62 subaccount “Advances received” Credit 91-1

    – 8400 rub. – charged to expenses for input VAT on written off accounts payable;

    – 42,000 rub. – accounts payable with an expired statute of limitations are written off.

    The amount of book profit will be the same:

    – 42,000 rub. – profit from writing off overdue accounts payable is reflected.

    What to write in the report

    In the second example, in the income statement, the amount of written-off accounts payable is reflected in the line “Non-operating income” and is deciphered in the line “Write-off of accounts payable for which the statute of limitations has expired.” In the case of the first example, in the income statement, the amount of written off accounts payable (without VAT) is also reflected in the line “Non-operating income”, and the amount of VAT is shown in the line “Non-operating expenses”.

    In conclusion, a few words for organizations that use a simplified taxation system and pay a single tax on the difference between income and expenses.

    They cannot reduce the amount of debt by the amount of input VAT. The fact is that “simplified” workers have the right to take into account only paid expenses as expenses.

    When accounts payable are written off, no payment occurs, therefore, despite the provisions of subparagraph 8 of paragraph 1 of Article 346.16 of the Tax Code, they will have to include the total amount of debt including VAT in non-operating income.

    *According to the Ministry of Finance, organizations that determine profit on a cash basis, when writing off accounts payable, should consider the date of receipt of income as the date of termination of their obligations (letter dated August 26, 2002 No. 04-02-06/3/61).

    attention

    Non-operating income in the form of written off accounts payable is recognized in the reporting period in which the statute of limitations expired or in which the debtor received documentary evidence of the liquidation of the creditor.

    Cases where the buyer has transferred an advance to the seller, but does not take the goods back and does not demand the money back, are not frequent. Apparently, this is why many issues that arise in such a situation are not sufficiently regulated by law.

    Situation

    The organization is engaged in wholesale trade. An advance has been received from the buyer, but the goods have not been shipped. The statute of limitations has expired, the buyer does not come to pick up the goods, and it is impossible to find it. VAT is paid on the advance amount. How to deal with overdue advances in accounting and tax accounting? When writing off debt, can accrued VAT be taken into account as an expense for profit tax purposes?

    The inventory commission confirms the correctness and validity of the amounts of accounts payable (subclause “c” of clause 3.48 of the Methodological guidelines for the inventory of property and financial obligations, approved by order of the Ministry of Finance of Russia dated June 13, 1995 No. 49). Based on the results of the inventory, an inventory report of settlements with buyers, suppliers and other debtors and creditors is drawn up in form No. INV-17, approved by Resolution of the State Statistics Committee of Russia dated August 18, 1998 No. 88.

    Advances identified during the inventory, for which the statute of limitations has expired, are written off for each obligation based on the inventory data, written justification and order of the head of the organization (clause 78 of the Regulations). An overdue “creditor” is recognized in other income in the reporting period in which the statute of limitations expired, in the amount reflected in the accounting records (clauses 7, 10.4 and 16 of PBU 9/99).

    Upon receipt of the advance, the organization paid VAT on its amount. When writing off accounts payable in the form of an advance, the tax amount is taken into account as part of other expenses (clause 11 of PBU 10/99 “Expenses of the organization”). This is done with the following entries:

    Debit 62 Credit 91-1

    Accounts payable are written off in the amount of the advance received;

    Debit 91-2 Credit 62-VAT (or 76-VAT)

    The VAT accrued upon receipt of the advance has been written off.

    According to paragraph 18 of Art. 250 of the Tax Code of the Russian Federation, amounts of accounts payable written off due to the expiration of the limitation period or for other reasons (except for the cases provided for in subparagraph 21, paragraph 1, Article 251 of the Tax Code of the Russian Federation) are classified as non-operating income. These amounts should be included in income on the last day of the reporting period, in which the statute of limitations expires (clause 1 of the letter of the Ministry of Finance of Russia dated December 27, 2007 No. 03-03-06/1/894, letter of the Federal Tax Service of Russia for Moscow dated July 4. 2008 No. 20-12/063584). The problem is that the Tax Code of the Russian Federation says nothing about what amount can be included in income - with or without VAT?

    Another question that an accountant faces when accounting for overdue advances is: what to do with the VAT paid to the budget on the advance amount? We were unable to find any official explanation. But experts have differing opinions. The income includes the entire amount of the advance payment along with VAT. The tax amount is taken into account as an expense for profit tax purposes.

    Adherents of this position believe that when writing off the “creditor”, VAT can be taken into account either as part of other expenses associated with production and sales, on the basis of subclause. 1 clause 1 art. 264 of the Tax Code of the Russian Federation, or as part of non-operating expenses (subclause 20, clause 1, Article 265 of the Tax Code of the Russian Federation). A different approach, in their opinion, leads to discrimination against taxpayers depending on the method of occurrence of accounts payable.

    Discrimination is as follows. If we recognize that VAT paid on advances is not included in expenses when writing off accounts payable, an interesting situation arises. As a general rule, the buyer, who has received goods and an invoice from the seller, accepts VAT for deduction without waiting for payment (clauses 1, 2 of Article 171 and clause 1 of Article 172 of the Tax Code of the Russian Federation). If for some reason the buyer did not accept the tax as a deduction and did not transfer the payment, he has the right to take into account the VAT amounts related to this debt as expenses when writing off the “creditor”. Basis - sub. 14 clause 1 art. 265 Tax Code of the Russian Federation.

    It turns out that taxpayers who received goods free of charge can deduct VAT or include it in expenses. And taxpayers who received funds (advances) free of charge and paid VAT do not have the right to either deduct it or take it into account as expenses.

    The reasoning is certainly interesting. But to the discrimination mentioned in paragraph 2 of Art. 3 of the Tax Code of the Russian Federation, they have no relation. It states that “taxes and fees cannot be discriminatory and applied differently based on social, racial, national, religious and other similar criteria.” It is unlikely that the method of occurrence of accounts payable can be considered such a criterion. This is the most witty and risky version of all existing ones. It consists in the fact that when an advance with an expired statute of limitations is included in income, the nature and tax qualification of the funds, and therefore the procedure for their taxation, change. Instead of an advance, subject to VAT and not subject to income tax, we have funds received free of charge that are not related to payment for goods. Free receipt of funds is not subject to VAT (Article 146 of the Tax Code of the Russian Federation). But these funds are included in non-operating income on the basis of clause 8 of Art. 250 Tax Code of the Russian Federation. Thus, the VAT previously paid on the advance must be returned to the taxpayer as overpaid and included in the “creditor” amount, which is written off against income for profit tax purposes.

    Version three. Editorial. In our opinion, when forming the tax base for income tax, as in accounting, the income includes the amount of the previously received advance minus the amount of VAT paid to the budget from this advance. But VAT is not deductible.

    Let us present the arguments. According to Art. 41 of the Tax Code of the Russian Federation, the amount of VAT actually paid to the budget cannot be considered as an economic benefit and therefore cannot be income subject to income tax. In addition, sub. 2 p. 1 art. 248 of the Tax Code of the Russian Federation establishes that when determining income, the amounts of taxes presented to the buyer are excluded from them.

    The procedure for applying VAT deductions is established in Art.

    171 and 172 of the Tax Code of the Russian Federation. They state that VAT, calculated and paid to the budget upon receipt of an advance, is claimed for deduction either at the time of shipment of goods (performance of work, provision of services), or at the time of return of the advance (clause 5 of Article 171 and clause 4 of Article 172 Tax Code of the Russian Federation).

    In our situation, the goods were not shipped, the advance payment was not returned. Therefore, you cannot claim a deduction.

    This is confirmed in the letter of the Ministry of Finance of Russia dated 06.06.2005 No. 03-04-11/127. The financiers referred to clause 6 of Art. 172 of the Tax Code of the Russian Federation, which states that deductions of tax amounts calculated from advances are made from the date of shipment of the relevant goods (as amended currently in force).

    Ministry of Finance: let everyone in, don’t let anyone out!

    We “sent” all three listed versions to the Russian Ministry of Finance, asking financiers to express their opinions. And we received in response another option for solving our problem.

    “In tax accounting of the amount of accounts payable (liabilities to creditors) written off due to the expiration of the statute of limitations or for other reasons, except for the cases provided for in subsection. 21 clause 1 art. 251 of the Tax Code of the Russian Federation are recognized as non-operating income. The basis is clause 18 of Art. 250 of the Tax Code of the Russian Federation.

    Thus, due to the expiration of the statute of limitations, the organization is obliged, when determining the tax base for income tax, to include in its income the amount of the previously received advance.

    Considering that the goods have not been sold, the provisions of sub. 2 p. 1 art. 248 of the Tax Code of the Russian Federation does not apply to this operation. Therefore, the amount of the previously received advance is included in income, taking into account the amount of value added tax.

    In accordance with sub. 1 clause 1 art. 264 of the Tax Code of the Russian Federation, the amounts of taxes and fees are taken into account as part of other expenses associated with production and sales. Write-off of accounts payable for the advance received confirms the fact of lack of sales.

    According to sub. 14 clause 1 art. 265 of the Tax Code of the Russian Federation, non-operating expenses associated with production and sales include expenses in the form of taxes related to the supplied materials, works, services, if accounts payable (liabilities to creditors) for such supplies are written off in the reporting period in accordance with clause. 18th century 250 Tax Code of the Russian Federation. That is, the taxpayer has the right to reduce the tax base for income tax by the amount of VAT only on accounts payable for inventories, works, services written off in the reporting period in accordance with clause 18 of Art. 250 of the Tax Code of the Russian Federation as part of non-operating expenses.

    Chapter 25 of the Tax Code of the Russian Federation does not provide for the possibility to take into account the amount of value added tax on advances received, written off due to the expiration of the statute of limitations, as part of non-operating expenses.” Elena Vikhlyaeva,

    Consultant of the Indirect Taxes Department of the Department of Tax and Customs Tariff Policy of the Ministry of Finance of Russia:

    “The deduction of VAT calculated and paid to the budget from the amounts of advance payments is made in the event of their return to the buyer (clause 5 of Article 171 of the Tax Code of the Russian Federation). Taking into account that in this case the amounts of advance payments are not returned, there are no grounds for deducting value added tax.”

    Taking into account the diversity of positions presented, only the Supreme Arbitration Court of the Russian Federation can put an end to this issue. But when this will happen is unknown.

    As a rule, organizations carry out an inventory of their payments regularly. If for some reason an inventory was not carried out and the head of the organization did not sign an order to write off the overdue “creditor”, it will still have to be included in income. This position is shared by the majority of arbitration courts (see, for example, resolutions of the Federal Antimonopoly Service of the West Siberian District dated April 14, 2008 No. F04-1680/2008(1949-A27-26), dated April 2, 2007 No. F04-1863/2007(32958-A45 -40), East Siberian District dated October 17, 2007 No. A33-14926/06-F02-7876/07, Ural District dated November 15, 2007 No. F09-9347/07).

    The courts believe that an annual inventory of payments is necessary, and indicate that the amount of debt must be included in income in the tax period in which the statute of limitations expired.

    Let us note that there are also court decisions in which arbitrators recognize that until the debt is written off, it is not included in income. Argument: The Tax Code of the Russian Federation does not contain instructions regarding the moment of accounting for overdue accounts payable (see resolutions of the Federal Antimonopoly Service of the East Siberian District dated September 12, 2007 No. A33-12062/06-F02-5493/07, West Siberian District dated March 9, 2006 No. F04 -8885/2005(20013-A27-3).

    The Federal Antimonopoly Service of the Central District, in its resolution dated August 21, 2008 No. A09-6013/07-24, recalled: in the absence of a written justification and order, the taxpayer has no legal basis for including the “creditor” in non-operating income.

    The VAT payer, upon receipt of payment for the upcoming supply of goods (performance of work, provision of services) subject to VAT, must calculate VAT for payment on the prepayment (clause 1 of article 146, clause 1 of article 154, clause 2 of clause 1 of article 167 Tax Code of the Russian Federation).

    And when transferring an advance payment, the VAT payer has the right, subject to certain conditions, to accept VAT from the transferred payment for deduction (clause 12 of Article 171, clause 9 of Article 172 of the Tax Code of the Russian Federation).

    We will tell you in our consultation how to reflect VAT on advances received and issued in the accounting and reporting of the seller and buyer.

    VAT on advances received

    When the buyer transfers an advance against VAT-taxable sales, the seller reflects the receipt of funds:

    Debit of accounts 51 “Settlement accounts”, 52 “Currency accounts”, 50 “Cash”, etc. - Credit of account 62 “Settlements with buyers and customers”, subaccount “Advances received”

    For the amount of VAT on the advance payment received, the seller will generate the following posting:

    Debit of account 62, subaccount “Advances received” - Credit of account 68 “Calculations for taxes and fees”, subaccount “VAT”

    How is VAT reflected on advances received in the balance sheet?

    VAT on advances received in the 2018 balance sheet, for which reporting is prepared, reduces the amount of accounts payable reflected in the liability side of the balance sheet ().

    Let's show this with an example. Let us recall that in 2018 the basic VAT rate was 18%.

    Seller A received an advance from Buyer B in the amount of RUB 65,000. (including VAT 18%).

    The advance received and accrued VAT in the amount of 9,915 (65,000 * 18/118) were reflected by Seller A in the following accounting entries:

    Debit of account 51 - Credit of account 62, subaccount “Advances received”: 65,000

    Debit of account 62, subaccount “Advances received” - Credit of account 68, subaccount “VAT”: 9,915

    To simplify, let’s assume that the organization had no other operations during the reporting period.

    As a result of this operation, the following amounts will be reflected in the balance sheet:

    • on line 1250 “Cash and cash equivalents” - the amount of the prepayment received is 65,000;
    • on line 1520 “Accounts payable” - the amount of the advance received, reduced by accrued VAT (55,085) + VAT accrued for payment to the budget (9,915). The final line balance is 65,000 (55,085 + 9,915).

    It will be possible to accept VAT as a deduction on an advance received upon return of the advance in the event of termination or change in the terms of the contract or upon shipment of goods (performance of work, provision of services) for which the advance was received (clauses 5, 8, Article 171, p. Clause 4, 6, Article 172 of the Tax Code of the Russian Federation).

    Then, when accepting advance VAT for deduction, the following entry will be generated in the seller’s accounting:

    Debit of account 68, subaccount “VAT” - Credit of account 62, subaccount “Advances received”.

    VAT on advances issued

    When transferring the advance payment, the buyer will reflect the following entry:

    Debit account 60 “Settlements with suppliers and contractors”, subaccount “Advances issued” - Credit accounts 51, 52, 50, etc.

    Based on the received advance VAT invoice, the buyer will make an entry in accounting:

    Debit of account 19 “VAT on acquired assets”, subaccount “VAT on advances issued” - Credit of account 60, subaccount “Advances issued”

    And will accept advance VAT for deduction:

    Debit of account 68, subaccount “VAT” - Credit of account 19, subaccount “VAT on advances issued”

    In the balance sheet, the amount of the advance payment is reflected minus the VAT accrued on it (Appendix to the letter of the Ministry of Finance dated 01/09/2013 No. 07-02-18/01, Letter of the Ministry of Finance dated 04/12/2013 No. 07-01-06/12203).

    Let us demonstrate this using the above example of an economic situation.

    The advance payment issued by Buyer B and the calculated VAT in the amount of 9,915 (65,000 * 18/118) are reflected in the following accounting entries:

    Debit of account 60, subaccount “Advances issued” - Credit of account 51: 65,000

    Debit of account 19, subaccount “VAT on advances issued” - Credit of account 60, subaccount “Advances issued”: 9,915

    As a result of this transaction, the following amounts will be reflected in the balance sheet of Buyer B:

    • on line 1230 “Accounts receivable” - the amount of the prepayment issued 65,000, reduced by the amount of VAT on it (9,915);
    • The same line will show the amount of VAT to be reimbursed from the budget in the amount of 9,915.

    The final balance of line 1230 - 65,000 (55,085 + 9,915).

    These transactions are not reflected in the liabilities side of Buyer B’s balance sheet.

    When returning an advance payment (for example, upon termination of a contract) or upon receipt of goods (work performed, services rendered) from the supplier, the previously accepted VAT on the advance payment is subject to restoration (clause 3, clause 3, article 170 of the Tax Code of the Russian Federation):

    Debit of account 60, subaccount “Advances issued” - Credit of account 68, subaccount “VAT”

    Also, VAT on advances received and issued is often recorded in separate subaccounts to account 76 “Settlements with various debtors and creditors”. This option is convenient because it will be convenient for the accountant to see the total amount of advances received and issued in accounts 62 and 60, respectively, and not reduced by the amount of VAT.