The last six months have significantly changed the life of organizations – now almost all business has switched to remote working mode. How should you organize the exchange of original documents if you or your contractor are working remotely? What should you do if an original document is lost? Anzhelika Maksimova, Acsour’s Senior Accountant, spoke about the nuances of “remote document flow” to “Raschet” magazine.
In its letter No. 03-01-10/32570 dated April 22, 2020, the Ministry of Finance noted the possibility of using scanned copies of basic source accounting documents in exceptional cases, for example, in such cases as the global coronavirus pandemic. According to the source, copies of basic source documents can be used to register the data contained in them, as well as for the purpose of prompt management decision-making.
However, this Resolution did not exempt organizations from the obligation to receive the original basic source documents; simply, the deadlines for receiving them has been postponed until the end of the pandemic period.
Considering the fact that original basic source documents are necessary to confirm expenses, as well as the fact that, when conducting a desk audit, an inspector has the right to request original documents if necessary (clause 2 of article 93 of the Tax Code of the Russian Federation), it is important to maintain accounting and tax records in accordance with the law despite the difficulties of remote working mode. One of the most convenient methods of exchanging original documents today is to switch to electronic document flow (EDF) with partners. Let us take a closer look at this option.
DOCUMENT EXCHANGE VIA EDF
According to clause 1 of article 169 of the Tax Code of the Russian Federation, partners have the right to exchange electronic basic source documents if they have agreed to do so. At the same time, the Ministry of Finance in its letter No. 03-07-09/26 dated August 1, 2011 specifies that consent can be issued taking into account the rules of conduct applied in business activities, as well as good business practices. For example, it is possible to exchange letters of consent for such a form of interaction, or one of the parties can send an invitation through an EDF operator, and the other party can accept such an invitation. Organizations then have the right to exchange documents directly through the EDF operator.
Please note: the exchange of documents for earlier periods (for example, documents of which original versions have been lost) is possible through EDF, but will be riskier.
In contrast to paper document flow, in the case of EDF the dates when documents are received are clearly recorded. Therefore, for example, if the receiving party has lost the documents for the first quarter of 2020 and already reflected the VAT deduction in the tax return, and the exchange of documents in electronic form began only in the second quarter of 2020, then the acceptance of documents for the first quarter through EDF in the second quarter may entail tax risks in terms of the declaration of a VAT deduction being recognized as unjustified. The transfer of documents in this example should be carried out in paper form. What should an accountant do if an electronic document flow is not set up with the contractor, and some of the documents have been lost for one reason or another?
OPERATING PROCEDURE IN CASE OF THE LOSS OF AN ORIGINAL VERSION
Accounting rules and tax legislation do not establish a clear mechanism for restoring lost documents. Therefore, in a case of the loss or destruction of basic source documents, it is recommended to take a number of the following measures to avoid problems in the future with supervisory authorities:
– in the case of a fire, a certificate from the fire service authority (the Ministry of Emergency Situations of Russia);
– for a natural disaster, a certificate from the regional authority of the Ministry of Emergency Situations of Russia;
– for flooding, a certificate of flooding signed by the owner of the premises, or a certificate from the property’s management company.
It should be remembered that in cases of emergency situations caused by extreme conditions, it is necessary to conduct an inventory, based on the results of which a record statement of lost documents is made.
If no measures are taken to remedy the situation, the loss of the documents, even for reasons beyond the organization’s control, will not exclude fault on its part. In this case, the taxpayer’s omission will be considered a tax offense with all the consequences that follow from this.
RESTORATION OF LOST DOCUMENTS
Ideally, the organization should restore all lost documents, since according to part 1 of article 29 of Federal Law No. 402-FZ “On Accounting” dated December 6, 2011, basic source documents are subject to storage for at least 5 years after the reporting period. The Ministry of Finance states the same opinion in its letters. If this is not possible, then it is necessary to restore the documents for the current year and for the period that can be covered by a tax inspection according to article 89 of the Tax Code of the Russian Federation – i.e., three calendar years preceding the year in which the decision to conduct the inspection was taken.
The organization restores outgoing basic source documents and internal documents independently from the accounting or another program, as well as according to information contained in the account ledgers. However, even in this situation, problems may arise, for example, if the employees who signed the original versions of these documents have been dismissed. In this case, the restored documents should be signed by the current employees responsible for processing similar operations.
To restore other documents, it is necessary to contact third parties:
There is no consensus on what documents a contractor can provide in response to the organization’s request for the restoration of documents. Therefore, the contractor has the right to issue certified copies of basic source documents or issue duplicates. However, the organization may still have problems with duplicates, for example, if the signatures of the responsible persons on the duplicate do not correspond to those on the original versions. With such faults, the organization should be ready to prove in court the fact that a transaction was closed.
It should be noted that some organizations issue certified copies or duplicates of documents for a fee. In this case, the costs of restoring documents can be taken into account as part of other expenses when calculating profits tax (sub-clause 49 of clause 1 of article 264 of the Tax Code of the Russian Federation).
If an organization that is a contractor is liquidated and documents cannot be restored, it is likely that the inspectorate will additionally accrue the profits tax itself and add penalties to it and fine the organization during a tax inspection. Information that obtaining duplicates or copies of lost documents is impossible should be recorded in a certificate of the commission or in a report of the employee responsible for restoring documents.
Keep all evidence of actions taken to restore documents: both receipts by post and correspondence with contractors.
DRAWING UP NEW REPORTING
After the procedure for restoring lost documents has been completed, the next step is to create a journal of business transactions journal, restore the accounting registers and directly the reporting itself.
If there are discrepancies between part of the figures and the reporting provided by the tax authorities, it is necessary to continue to draw up the reporting, but it is necessary to be prepared for the fact that some taxes will have to be recalculated – with the missing amounts of taxes, penalties and fines being paid, and updated tax returns submitted.
NOTIFICATION OF LOSS TO THE TAX AUTHORITIES
Is it necessary to notify the tax office of the fact of a mass loss of documents? The decision is entirely up to the management of the organization, since legislation imposes no obligation to inform either the tax office or social benefit funds of such cases. In addition, failure to ensure the safety of basic source documents is a cause for the organization to be included in the plan of on-site inspections of tax authorities. However, by giving advance warning to the tax office of the loss of the documents, for example, in the case of an emergency situation, the company will have an opportunity to reach agreement with an inspectorate to postpone the provision of the requested documents in view of the need for their restoration.
If the organization could not restore all the lost documents, but decided not to correct the reporting and not to charge additional taxes, it is necessary to be prepared for the inspection to independently charge additional taxes by calculation, and it will be necessary to defend your position in court.
POSSIBLE PUNITIVE SANCTIONS
The absence of basic source documents, invoices, accounting and tax ledgers is a gross violation of the rules for accounting for income and expenses and for taxable items. For non-compliance with the requirements, the following sanctions are provided for:
Any loss of original versions complicates the current activities of the accountant, requiring an additional input of labour and time. It is impossible in any case to ignore the fact that original versions of basic source documents have been lost. It is necessary to develop a plan for the restoration of documents and act purposefully, step by step, meticulously restoring the lost original versions.
If you realize that you do not have enough resources to implement the project, we recommend that you contact providers who specialize in this problem in order for the restoration procedure to have the maximum effect.
 Letter No. 03-02-07/2/28610 dated July 22, 2013, and letter No. 03-02-07/1/211911 dated June 7, 2013