Liability for unpaid VAT

It has been several years since tax liability became part of our legal system. However, many entrepreneurs remain unaware of the threat it poses.

For example, if you have a supplier who is on the list of VAT payers for whom a reason exists for cancellation of their VAT registration and you pay them an invoice including statutory VAT, you run a risk. The risk arises because if the supplier fails to pay even a part of the VAT, then you will automatically become liable for this amount. The customer is thus liable to the state for these unpaid taxes, and it is solely up to the state whether it will enforce liability or not.

Suppliers will be put on the list of VAT payers at risk of default if they repeatedly:

• fail to file a tax return or VAT statements, or
• fail to pay tax duty, or
• are unreachable at their address, or
• violate their obligations during a tax inspection.

It is thus of the utmost importance to have a system in place to help you check suppliers. It is also possible to eliminate the risk completely. You can do this if you are paying a due obligation to a supplier who is on the list by paying the VAT element directly to the tax authority on the supplier’s behalf.


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