Bad debts
The company-the debtor has long been eliminated and excluded from the state register... is Already on this basis can be attributed to this "creditors" to the category of bad debts. But even here the tax authorities there is often a different view. To rely in such cases you will have to arbitration.
The debt to memory
Pursuant to the supply agreement the company "Arkhbum" pre-paid part of the ordered goods – timber for production of cellulose, wood pulp and wood-based panels, which in the timber industry are called "balances". However, the partner did not hurry to fulfill their obligations. After some time it was decided to produce a partial offset, after which the accountants of both companies amounted to an act of reconciliation, where it was clearly indicated by the remaining amount owed. After the signing of this document, the management of "Arkhbum" has not taken any decisive action to return the remaining money. And after some time the company received the news that their supplier in the past and the debtor in the present now will cease to exist.
To the memory of "deceased" soon counterparty the firm has remained the same, still not written off debt, which has become a sign of bad debt.
"The concept of "bad debt" contained in paragraph 2 of article 266 of the tax code, says tax lawyer Sergei Voronin. – First, it is a receivable with the expired limitation period, which, as a General rule, is three years from the date of recovery of the debt (article 196 CC). Secondly, it is a debt that is impossible to obtain from the contractor. Unreal for recovery, you can count the debt of the liquidated organization (since its exclusion from the register), the firm is bankrupt if it is known that it does not have sufficient funds for the payment of money, as well as the counterparty with which the court bailiff was unable to recover the amount of the obligation (for example, if all property of the organization is on the right of operational management, instead of ownership), etc. Please note that the bankruptcy procedure itself is not yet a basis for this debt was recognized as hopeless. Decisive in this situation are the positive answers to two questions: whether the debtor is recognized as bankrupt? Excluded if the company is bankrupt from the Unified state register of legal entities (letter of the Ministry of Finance of Russia from April, 11th, 2008 № 03-03-06/1/276)".
After reviewing the above standards, as well as taking advantage of the rule prescribed in subparagraph 2 of paragraph 2 of article 265 of the tax code, accountants have decided to recognize the debt as bad and included in non-operating expenses as a loss in the current period. No sooner said than done. So, after taking inventory and completing inventory act of debt workers has formed a complete package of documents, proving that "hanging" is really hopeless debt, which includes outstanding purchase orders, payment orders, indicating the transfer of advance payment, signed by both parties the reconciliation statement and certificate of incorporation that the organization-debtor is liquidated. Added "evidence package" financial information (a written justification of the reasons for the cancellation) and the corresponding order of the head of the company. Thus, the write-off of receivables was decorated by all the rules.
Can't be!
However, the tax authorities, who arrived with a field test, described the situation differently. They immediately said that prepayment is not taken into account when determining the costs of enterprises, taking into account the income and expenses on an accrual basis (paragraph 14 article 270 of the tax code). And even if non-operating costs equal the losses of the company (sub. 2 paragraph 2, article 265 of the tax code), then the pre-payment is not an expense, and, therefore, it cannot be classified as losses and bad debts.
In addition, the inspectors focused on the fact that the Statute of limitations for payment orders expired three years before the accountants assigned debt "uncollectible" status. Meanwhile, officials pointed out, writing off such debts in non-operating expenses is possible only in the period when there was a reason for the recognition of their unreal for recovery, that is, in the opinion of the tax authorities to write off bad debt we had several years ago, and now the firm is "worthy" of additional income tax and penalties of fines and penalties for underestimation of the base for calculation of tax in the audited period.
But the accountants of the company "Arkhbum" was quite sure that he was right. They explained that the limitation period was not to end so long as he is counted not from the date of payment and the date when supplier acknowledged the debt and "Arkhbum" has acquired the right to demand a refund. In proof of his innocence, the staff of "Arkhbum" put forward the argument that the fact that the uncollectible allows you to add it as a non-operating expense under subparagraph 2 of paragraph 2 of article 265 of the tax code as a loss as the amounts of bad debts.
But the tax authorities focus on the arguments did not pay, and the company had nothing to do but to appeal to the court of the Arkhangelsk region with the statement for recognition of such decision invalid.
All confirmed
Judges of first instance, followed by appeal arbitrators ruled in favor of the applicant company (legal basis – the decision of Arbitration court of the Arkhangelsk region, dated 4 August 2009 and the decision of the Fourteenth arbitration appeal court from October 16, 2009 on business № A05-7412/2009 respectively). They pointed out that the disputed debt is truly hopeless, as the company-the supplier liquidated and the company "Arkhbum" has all the necessary papers to confirm this fact. That's why the court sees no reason to refuse the organization in its demand.
As for the write-off period, the arbitrators noted that, first, the Tax code does not contain terms that the costs in the form of bad debts may be deducted only at the time of expiry of the limitation period. And secondly, the judges drew the attention of the inspectors that at the time of liquidation of the supplier, the limitation period had not expired as to count it should be, not from the date of intended agreement transfer of money and from the time when the company became aware that a firm partner has her money. In this case, a "reference point" is the date of abandonment of the reconciliation act.
But the point of view of the tax again does not coincide with the majority opinion. The officials gathered to challenge the decision of both instances of appeal. In the complaint they again indicated that expenses not deductible for tax purposes, cannot be charged to non-operating expenses as bad debt.
Unreal accounts receivable
However, Federal arbitrators unconditionally supported their colleagues. They reminded the tax authorities that the expenditures in the amount of which decreases a company's income when calculating the tax on profit, can be considered not only reasonable and documented costs, but sometimes the losses of the company. Included in this category and hopeless (or unrealistic to recover) the debts (sub. 2 paragraph 2, article 265 of the tax code), that is, debts for which either expired Statute of limitations, or terminated the obligation owing to impossibility of its execution (by an act of public authority or liquidation of the organization).
According to the order on accounting policies at the company "Arkhbum" to account for revenues and expenditures in order to calculate profit tax was applied the accrual method. In accordance with paragraph 14 of article 270 of the RF tax code, costs for the purposes of calculating income tax does not include expenses in the form of property, works, services, property rights transferred in the manner of advance payment by taxpayers determining incomes and expenditures on accrual basis. However, according to the court, these provisions of the Tax code do not exclude the possibility of the recognition of funds transferred in the order of preliminary payment, bad debt by virtue of paragraph 2 of article 266 of the tax code. After all, "Arkhbum" did not include the disputed amount of the advance payment under the contracts of timber supply in the expenses for calculating profit tax and the obligation under these contracts was not executed.
Therefore, concluded the judges, the company was entitled to reduce tax base under the profit tax on "bad" losses. And when you consider that during the inspection, the firm had submitted all necessary papers to confirm the fact that the disputed debt is created for these purposes, the tax claims are absolutely baseless (the resolution of FAS of the Northwest district from January 15, 2010 on business № A05-7412/2009)
Later
Special attention the judge paid to the question of the withdrawal date "deadweight" debt. The arbitrators began with the fact that the period during which the company must write off the receivable in the tax legislation.
In addition, receivables for which the Statute of limitations has expired, as well as other debts, unreal for collecting, are written off under each obligation on the basis of data of the held inventory, written substantiation and the order (instruction) of the head of the organization and are, respectively, at the expense of the reserve of doubtful debts or to the financial results of commercial organizations (paragraph 77 of the Regulations on accounting and reporting, approved by Ministry of Finance order of 29 July 1998 No. 34n). As for the results of the inventory, they should be reflected in the accounting and reporting of the month in which it was completed (the Methodical instructions on inventory of property and financial liabilities approved by order of RF Ministry of Finance dated June 13, 1995 № 49). So firm did the right thing and irregularities in its actions there is.
The judges also came from the fact that the moment of write-off in non-operating expenses bad debt arises in the tax period when there were circumstances tax law links the right to reduce taxable profit in the amount of bad debts (in this case, is the exclusion of the enterprise from the Unified state register of legal entities under Chapter 25 of the RF tax code, paragraph 1 of article 12 of the Law dated 21 November 1996 No. 129-FZ "On accounting", regulations of the constitutional Court of 28 October 1999, No. 14-P, the decision of the Supreme Arbitration Court of 16 November 2004 No. 6045/04, letter UFNS Russia in Moscow from April 8, 2008 № 20-12/034110, as stated in the regulation of FAS northwestern district on January 15, 2010 on business № A05-7412/2009).
"Accountants should be remembered that even if the Statute of limitations expired before it was liquidated the enterprise-the debtor to cancel the debt in the current period is still possible – no doubt a corporate lawyer Mr Ratkin. And it is not necessary to submit a revised Declaration for the profit tax for the accounting period, when there was a ground to declare the debt uncollectible. Indeed, as already indicated, the write-off period legislation is not installed. Just keep in mind that in this aspect the opinion of Mininova at odds with arbitration practice (by the way, this is noted by other arbitrators – see, for example, the decision of FAS Volga-Vyatka district dated 19 February, 2007 No. A11-5916/2006-K2-18/340 and the Federal Central district on August 2, 2008 № A68 - up-47/12-06-2810/06-114/12)."