Explanations to the income tax declaration

 Explanations for the income tax declaration

The Federal Tax Service Inspectorate will finally ask for an explanation of the income tax declaration, if there are losses, the characteristics creep out with the VAT report or with accounting. Find out how to write explanations for the declaration in these options.

Inspectors often have questions as they inspect their income tax returns Small Business Accountants in Walsall. There are some contradictions in the report itself, there - the amounts do not coincide with those that appear in the rest of the submitted documents and company reports. In such cases, a serious inspector will ask for written explanations for the declaration. No matter how strange it may be, but the time for this will not be so small - only 5 working days (!). This period is fixed in clause 3 of article 88 of the Tax Code of the Russian Federation.

If a mistake really crept into your calculations, you will have to submit an updated declaration. But the reason for the inconsistencies can be fully justified. Then it is enough to put all the details to the inspector in writing and, so to speak, provide him with explanations to the declaration. And it is not even necessary to say that just for these cases we have finally prepared standards of explanations for you.

In any situation, attach copies of documents confirming those or other transactions to the letter. Of course, we all know very well that these can be contracts, invoices, invoices, payment orders, for example, for the transfer of interest under a loan agreement and other securities. The more you describe the operations, adding documents for each of them to the letter, the more convincing your arguments will be.

Different amounts of revenue in the income tax and VAT return

The fact that the amount of income in the income tax return seems to differ from the amount of income in the VAT report may raise questions. It goes without saying, but everything, as much say, therefore, that almost all controllers believe that these characteristics in both declarations should be similar.

But this is not entirely true. It should be noted that by no means all incomes that form the base for income tax are included in the proceeds for calculating VAT. I would like to emphasize that there are transactions on which you need to pay income tax, but at the same time, you do not have to calculate VAT. An example of this is the positive-sum differences (clause 4 of article 153, clause 11.1 of article 250 of the Tax Code of the Russian Federation). Their amount is attributed to non-operating income. Please note that, however, they do not affect the VAT base in any way.

It also happens on the contrary: there are transactions subject to VAT, which are not, as it were, taken into account when calculating income tax. For example, the donation of products.

Example

In January 2016, Mir LLC handed over products to its counterparty on a gratuitous basis with a total value of 30,000 rubles. excluding VAT. And it is not even necessary to say that in addition to this, the company's revenue for the first quarter of 2016 also amounted to 520,000 rubles. (without VAT). It is no secret that this figure was included in the quarterly income tax return as the company's income.

And in the VAT declaration in column 3 on line 010 of section 3, the accountant indicated 550,000 rubles. (520,000 + 30,000). All, therefore, that in case of gratuitous transfer of property, the Tax Code asks for VAT to be charged, as in ordinary sales. The most experienced accountant prepared in advance explanations for the declaration to the inspection. They might look like this.

Explanations of the different income in the income tax and VAT return

In connection with the discrepancy between the incomes in the declarations of Mir LLC on income tax and VAT for the I quarter of 2016, we inform the following.

There were no errors in these reports. The discrepancies between the indicators in the declarations on income tax and VAT for the first quarter of 2016 are explained by the different taxation procedure, as everyone knows, of certain transactions for the sale of products (works, services) for the purpose of calculating income tax and VAT.

Namely, in the first quarter of 2016, our organization donated products. Everyone knows for a long time that on the basis of subparagraph 1 pt 1 of article 146 of the Tax Code of the Russian Federation, the cost of donated products is recognized as an object of VAT taxation. Therefore, it is reflected in column 3 on line 010 of section 3 of the VAT declaration in the amount of 30,000 rubles.

And for the purpose of calculating income tax, the cost of the donated products, as everyone knows, is not income in accordance with Articles 249 and 250 of the Tax Code of the Russian Federation. It is undoubtedly worth mentioning that due to this, it is not included in the income tax return.

Accounting for most of the income tax expense as indirect

Reviewers may also end up feeling that you have deliberately overestimated the share of indirect costs. And thus they reduced the profit tax, without waiting for the sale of products or the provision of services.

After all, as you remember, direct costs are recognized as they are realized. This is the requirement of Clause 2 of Article 318 of the Tax Code of the Russian Federation. And indirect, so to speak, can be written off immediately at the time of their appearance. It should be noted that that is why it is profitable to refer as much of the amount spent as possible to indirect costs. And the inspectors don't like it. Everyone has known for a long time that how is it for you to assure the auditors that you have distributed costs between direct and indirect, not as if deviating from the rules?

Your main argument is that the law allows you without the help of others, to put it mildly, to determine the composition of direct and indirect costs, fixing it in the accounting policy. Such a right, namely, is given by paragraph 1 of Article 318 of the Code.

So make an explanation of the declaration and attach a copy of your company's accounting policy, so that the auditors believe you, to put it mildly. It is also possible that together with it, present decoding of indirect costs in the form of accounting and tax registers (account cards, balance sheets, and others). I must say that in the explanations, duplicate the number of costs in accordance with the documents.

In response to the Message (with the requirement to provide explanations) No. 17-05 / 2508 dated 05/17/2016 LLC "Raduga" reports the following.

There were no mistakes in the income tax return for the 1st quarter of 2016. According to clause 1 of Article 318 of the Tax Code of the Russian Federation, the taxpayer, without the help of others, describes in the accounting policy for tax purposes a list of direct costs associated with the creation of products (performance of work, provision of services).

In accordance with the accounting policy of LLC "Raduga" for 2016, indirect costs include expenses for renting premises, for ensuring the usual criteria for labor and fire safety, for advertising, for pre-sale preparation of products. Everyone knows that online 040 of Appendix No. 2 to sheet 02 of the income tax declaration for the first quarter of 2016, LLC "Raduga" reflected indirect costs totaling 500,000 rubles. It should be noted that among which:

• rental costs, as we constantly say, a trading floor in the amount of 200,000 rubles;
• the cost of providing the usual criterion of labor and, as people are used to saying, fire safety in the amount of 50,000 rubles;
• advertising expenses in the amount of RUB 100,000;
• expenses for pre-sale preparation of products in the amount of 150,000 rubles.

In previous reporting periods, LLC “Raduga” did not have expenses for pre-sale preparation of products. In connection with the expansion of the range of products in the first quarter of 2016, in the end, stickers and stickers were purchased with a total value of 150,000 rubles. This amount is included in the cost of pre-sale preparation of products on the basis of Clause 1 of Article 318 of the Tax Code of the Russian Federation.

In general, other prerequisites may also contribute to an increase in the share of indirect costs. Imagine, the sales of the enterprise fell sharply. Accordingly, the amount of direct costs also decreases. And, as a result, the number of indirect ones is growing. If your company has such specific incidents, tell about it in an explanatory letter. It's no secret that you must add that soon the situation will change to the top side.