ACCOUNTING AND TAX ACCOUNTING OF TRANSACTIONS UNDER CESSION AGREEMENTS

 AT THE ASSIGNEE

The cost of acquiring the right to claim is recognized by the assignee in income tax expense. The income reflects the payment received from the debtor, as well as the amounts transferred by the new assignee (if the assignee decides to resell the debt to another person).

THE DEBTOR

The transfer of the right of claim from the seller to a third party in the analytical accounting of the debtor company is reflected on the basis of a written notification received from the original creditor about the assignment of the right to claim the debt.

VAT

The procedure for determining the tax base when exercising property rights is regulated by article 155 of the Tax Code of the uk Federation.

AT THE ASSIGNOR

The seller charges VAT only on the amount of excess of the amount of income received during the assignment over the amount of the assigned monetary claim (clause 1 of article 155 of the Tax Code of the Russian Federation). But this does not happen often, as receivables are usually sold at a price below the debt itself. When selling debt at a loss, the tax base is zero.

On the basis of paragraph 1 of Art. 155 of the Tax Code of the Russian Federation, it can be concluded that the seller's object of taxation arises only if he concedes the debt for goods (work, services) subject to VAT. Consequently, when it comes to non-taxable transactions, then the concession should not be the basis for calculating tax. But UK Tax Service does not agree with this statement. In a letter dated August 14, 2017, No. SD-4-3 / 15915 @, she explained that clause 1 of Art. 155 of the Tax Code of the Uk Federation, there are no exceptions, which means that when the initial creditor assigns a monetary claim under a service agreement that is not subject to VAT, the tax base is determined by the taxpayer in accordance with para. 2 p. 1 of Art. 155 of the Tax Code of the UK Federation (for the difference between the amount of income received by the original creditor and the amount of the assigned claim).

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ACCOUNTING AND TAX ACCOUNTING OF TRANSACTIONS UNDER CESSION AGREEMENTS

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