These changes were introduced because the Hungarian Tax Authority ( NAV ) is moving more and more towards matching VAT returns to NAV online invoice data reports. This means that not only the tax authority but also the companies reporting the data will have to pay more attention to checking this data. The matching of reported invoice data may represent a lot of extra work but automated solutions and software may also be used for this purpose.
Our experience shows that the right VAT return checking and automating software will detect the following most common errors.
1. Master data errors/lack of Community tax number
- Syntax error tax numbers. These tax number errors typically come from mistyping or incorrect recording. This problem can be eliminated by so-called CVD (check digit value) checking.
- Syntax correct but already deregistered tax numbers or data of partners undergoing forced cancellation. This error can be detected through an automated checking of the NAV database.
- Missing or invalid Community tax number. As from 1 January 2020, valid Community tax number of the EU buyer is a requirement for the tax exemption of intra-Community supplies, this must also be corrected using data from the VIES system.
2. Inaccurate or missing reference to the original invoice number
- In the case of manual data recording, errors of reference to the original invoice number typically come from mistyping. This problem is immediately detected by an automated program as the software indicates if the referenced original invoice number is not in the archive.
- The original invoice number is not recorded at the time of accounting or it is not included in the VAT analytical records. In such cases, an automated analyses with link to the tax authority's database is very useful.
3. MSheet of the VAT return does not show the total invoice amount, only the deducted VAT
- Partly in the case of invoices subject to a deduction ban (as only the deductible part is accounted for in the VAT analytical records),the total amount data shown on the invoice is lost, which results in MSheet ( domestic recapitulative statement ) of the VAT return being incorrect. A built-in error analysis algorithm can identify this!
- In certain cases there is deductible VAT the VAT content of which is recognized by the taxpayer for deduction but the data of the cash invoice are not recorded correctly at the time of accounting. In these cases, certain data of the invoice are missing from MSheet, which may raise questions from the tax authority or may even lead to a penalty. A built-in automated control is also able to detect this.
4. Data differences: invoice number mistyping, date of performance…
- In practice we see that the invoice number reported in online invoice data reporting and the one recorded in accounting often do not match. For example, in the case of a very long invoice number, accounting often does not record the last characters or the system does not support the recording of very long invoice numbers. The absence of special characters such as dash (invoice no. 2020/32301) or mistyping may also cause a difference.
- In many cases, the date of performance shown on the invoice is not included in VAT analytical records or if it is, it does not always match the data reported to the tax authority by the partner. Our program gives warning in both cases that the data is inaccurate or it does not match the data available at NAV.
5. The due date of late invoices is the beginning of the month because the system does not allow to record the original due date
- In the case of late invoices, it is common practice that the first day of the next month is shown as the date of performance. The reason is mostly that the system does not allow the recording of a date earlier than the given accounting month. This, however, also results in an inaccurate MSheet (domestic recapitulative statement) and a difference in tax authority analysis.
There are many factors which may seem insignificant but must be dealt with at the level of data management and data recording and checked in an automated manner. If possible (and it is with a good software),a program can provide this check for us, which will also take care of further checks in alignment with the NAV online invoice data reporting system. In fact, we can perform a mini tax audit thereby avoiding selection for an audit or an automated warning. Also, the time saved on seeking errors can be used for other tasks.