When Requesting a Deferral of Vat It Is Not the Same to Pay As To Be Paid Or You Cannot Be Charged Twice for the Same Thing

Miguel Cremades.

31/03/2022 Uría Menéndez (uria.com)


In our article of 17 February 2022, we looked at the impossibility of deferring taxes unless it can be proven that the taxes have not yet been paid (article 65.2(f) of the General Tax Law). We also highlighted that a tax assessment resulting from a tax regularisation that reduced the deductible input VAT does not create an output VAT debt.

We have come across some even more extreme administrative interpretations of this rule. In one case a company charged VAT on the sale of real estate it owned. The tax authority seized the payment from the seller (by way of an attachment order) including the VAT as it suspected the seller may end up going insolvent and its tax liabilities would be transferred to another company/as a precautionary measure in the event that another party were to become responsible for the tax liability. The seller included the VAT in its self-assessment and, owing to its lack of liquidity caused by the attachment, requested a VAT deferral claiming that it had not been paid the VAT.

The tax authority rejected the VAT deferral request on the ground that it knew that the VAT had in fact been paid to the seller since the tax authority had seized the payment and held the funds. It also informed the seller that enforcement measures were underway (i.e. the attachment), that a court order notifying it that tax collection proceedings had been initiated would be issued and that in the meantime it could not obtain a certificate confirming that it was up to date with its tax obligations. It also informed the seller that appealing the decision refusing the VAT deferral request would not avoid the attachment or collection order, unless the economic-administrative court were to overrule it, which would take at least three years.

If what we are talking about here is inadmissibility, what seems inadmissible is preventing a taxpayer from requesting a VAT deferral when the raison d’être for the rule permitting the tax authorities to refuse the deferral request does not exist because the taxpayer obviously lacks funds. And not only because the tax authority’s application of the rule results in an outcome so far removed from that intended, but also because the tax authority requesting payment of the VAT is already in possession of it. Above all, it is inadmissible that this should be done through enforcement to guarantee payment of a debt that does not yet exist, leaving the taxpayer on the brink of insolvency.

Explaining tax procedures to taxpayers can be extremely difficult sometimes.

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