From this article, you will learn:
- When a taxpayer can be removed from the VAT register?
- How the Supreme Administrative Court interprets deletion from the register?
- What consequences taxpayers have to face after the Supreme Administrative Court's judgment?
On 23 October 2023 the Supreme Administrative Court, composed of seven judges, adopted a resolution (reference number I FPS 3/23) regarding an issue that is extremely important from the point of view of VAT taxpayers. It found that in some cases the authority is not obliged to inform taxpayers in the form of a decision of depriving them of the status of active VAT payers, and deletion from the VAT register by the office is possible without the need to inform the taxpayer. The fact of having the status of an active VAT payer is extremely important for entrepreneurs carrying out taxable activities in Poland.
What is the legal basis for deleting a taxpayer from the VAT register?
The dispute resolved in this resolution concerned whether the head of the tax office must notify a VAT taxpayer of being removed from the register of active VAT taxpayers pursuant to Art. 96 section 9(5) of the VAT Act.
Pursuant to Art. 96 section 9 of the VAT Act, the head of the tax office removes the taxpayer from the register as a VAT payer without the need to notify the taxpayer thereof if:
- the taxpayer does not exist or
- despite documented attempts, it is not possible to contact the taxpayer or his representative, or
- the data provided in the registration application turns out to be false, or
- the taxpayer or his representative does not respond to the summons of the head of the tax office, the head of the customs and tax office, the director of the tax administration chamber or the Head of the National Tax Administration, or
- the information held indicates that the taxpayer is conducting activities with the intention of using the activities of banks within the meaning of Art. 119zg (1) of the Tax Ordinance or cooperative savings and credit unions for purposes related to fiscal fraud within the meaning of Art. 119zg (9) of the Tax Ordinance, or
- against this taxpayer, the court imposed a ban on conducting business activity on the basis of separate provisions.
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When is it possible to remove a taxpayer from the VAT register without his knowledge? The current lines of jurisprudence of administrative courts
Pursuant to the provisions of Art. 96 section 9 shows that the head does not have to inform the taxpayer about being removed from the register. Nevertheless, over the course of several years of the provision's existence, there have been rulings by administrative courts that had a different view on the act of removal from office.
The first of them indicated that deletion from the register of VAT payers is a material and technical activity and there is no need to notify the taxpayer of the deletion. The basis for such an assessment were arguments indicating that deletion takes place as a result of verification activities, and these do not require tax or evidentiary proceedings. This line was dominant in the jurisprudence.
At the same time, there was a second line of case law which indicated that deleting a taxpayer from the register of VAT payers is not only a material and technical activity, because the consequences of deleting a taxpayer affect his or her rights and obligations. Among other things, the possibility of deducting VAT (by the taxpayer, but also by his contractors). This argument emphasized the need to issue a decision and deliver it to the taxpayer.
In addition to these two lines of case law, there was also a third one, which indicated that deletion from the register is a material and technical activity, but the authority must notify the taxpayer about the deletion.
Why did the dispute end up in court? Based on a dispute between the taxpayer and the tax authority, which deleted the taxpayer from the register without issuing a decision or informing him about it, there was a need to examine a legal issue, which was presented to a panel of seven judges in the decision of 2 June 2023 (reference number I FSK 78/20). The basis for deleting this taxpayer was Art. 96 section 9 (5) of the VAT Act, where first the Head of the National Tax Administration notified the head of the tax office about the blocking of the bank account, and then the head of the tax office deleted the taxpayer from the register. The dispute concerned the issue of whether in this situation the tax authority is obliged to issue a decision on deletion and must inform the company about its deletion from the register of VAT payers. Or is there no such obligation and can it be limited to carrying out material and technical activities in this respect?
What does the NSA say?
In its resolution of 23 October 2023, the Supreme Administrative Court found that deleting a taxpayer from the register is a material and technical act and there are no grounds to inform the taxpayer about it by way of a decision. For the taxpayer, this means that he or she may be removed from the register by the office without even knowing about it. The consequences of this can be very serious.
Consequences for taxpayers – how to reduce the risk of being removed from the register of VAT payers
This resolution is extremely important from the point of view of all active VAT taxpayers. The Supreme Administrative Court indicates that deprivation of the VAT taxpayer status is only a material and technical activity and may take place without the taxpayer's knowledge. Such action by the authority may result in far-reaching, unfavorable consequences related to running a business. It cannot also be ruled out that the theses of the above resolution will also be applied to other grounds justifying the deletion of a taxpayer, as specified in Art. 96 section 9 of the VAT Act.
To reduce the risk of being removed from the register of active VAT taxpayers, it is worth protecting yourself against such an eventuality. The RSM Tax Advisory Department has prepared tools that will help protect taxpayers against the above-mentioned actions of the authority.