How to exercise due diligence when choosing a counterparty? You can independently collect all the information about partners. Or you can use a convenient service to check yourself and your counterparty. In a few seconds you will receive a conclusion about the risks of business and tax audit.
Tax authorities require due diligence when choosing counterparties. Ignoring this requirement can lead not only to additional taxes and fines. A taxpayer who fails to exercise prudence may himself become unreliable in the eyes of his counterparties. We will tell you how to reduce business risks and check yourself and your counterparty.
Why check counterparties?
It is necessary to check the reliability of both suppliers and buyers. After all, verification has two main goals:
- Reduce tax risks,
- Reduce the risk of financial losses.
Order of the Federal Tax Service No. MM-3-06/333@ dated May 30, 2007. lists the criteria for checking the reliability of the counterparty. The inspectors themselves check companies using the same criteria. If a company shows signs of a one-day operation, then problems will arise not only for it, but also for its counterparties. Therefore, it is important to check your suppliers and buyers.
Any organization or entrepreneur can collect data about partners. Whenever controversial situation the taxpayer will have a greater chance of defending his case. It is enough to prove that the partner was checked according to the criteria specified in the Order of the Federal Tax Service No. MM-3-06/333@ dated May 30, 2007. If there is evidence of prudence, the court will lean in your direction.
Why check yourself? Firstly, to evaluate yourself according to the criteria of the examiners. This will help reduce the risks of inspections and claims from controllers. For example, if your company is mistakenly included in the unreliable lists, you can eliminate the signs of a fly-by-night company.
Secondly, to look at your company through the eyes of your counterparties. Then you can strengthen your weak sides and increase your own attractiveness in the eyes of potential customers.
How to check yourself and your counterparty independently and for free
You can check your counterparties yourself and completely free of charge; all the necessary sources are publicly available. The big disadvantage of self-checking is the laboriousness of the process. We'll tell you what to check.
Copies of documents
Request copies of the following documents from buyers and suppliers:
- Statutory documents,
- Extract from the Unified State Register of Legal Entities,
- Tax returns for VAT and income tax for the last three years,
- Accounting statements over the past three years,
- Analysis of account 68,
- Certificate from the Federal Tax Service on the status of settlements with the budget.
If the counterparty's activities are subject to licensing, ask for a copy of the license. Its absence may be decisive when the court makes a decision not in your favor (Letter of the Federal Tax Service of Russia dated 02/11/2010 N 3-7-07/84, Resolutions of the FAS VSO dated 03/25/2010 in case N A19-15776/09, dated 10/08/2009 in case No. A33-17712/08).
Resources for checking yourself and your counterparties
Check the counterparty on the Federal Tax Service website:
- In the service “Business risks: check yourself and your counterparty”,
- In the register of disqualified persons,
- In the register of mass registration addresses,
- In the register of mass founders or managers,
- In the register of persons who refused to participate in the management of the organization.
Then visit the file of arbitration cases and the database of the Federal Bailiff Service. Is not full list, it is possible to check using other resources.
Business reputation
According to the courts, a positive business reputation is an important criterion for the reliability of a partner (Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated May 25, 2010 N 15658/09).
To assess business reputation, you can use open sources, for example, look at publications that mention the company. Evaluate in what way (positive or negative) it is mentioned. You can look at reviews of the company from its contractors and employees. And also ask for letters of recommendation from other companies.
What else to pay attention to
- The actual location of the company, its production and sales areas,
- Documentary confirmation of the authority of the manager,
- The reality of fulfilling the terms of the contract (availability of production facilities, vehicles, qualified personnel, etc.).
Risk assessment
So, you have done all the work, spent time and collected a whole dossier on the counterparty. Does this provide a guarantee of protection from tax claims? You will be surprised, but no.
Too large a package of documents, according to inspectors, may be regarded as a conspiracy between companies. In their opinion, the unnecessary volume of documents was collected specifically to confuse the inspectors. In letter dated July 13, 2017 No. ED-4-2/13650@, the Federal Tax Service introduces the concept of pseudo-prudence.
Electronic service “RNA: Verification of counterparties”
The service immediately offers to start searching for counterparties. You can indicate the TIN to immediately find the right company or entrepreneur. You can also search by name.
Immediately under the company name, the service issues a conclusion about the company’s reliability. One of the options is possible:
- The company is reliable and the risks when working with it are minimal:
- The company has signs of being a one-day company and when working with it, inspectors may have claims:
Risk is an integral element entrepreneurial activity. However, it is reasonable to strive to minimize it. Moreover, exercising due diligence when doing business is a necessary requirement imposed on companies by regulatory authorities. After all, without checking its counterparties, an organization may encounter partners who do not fulfill their obligations, or even one-day companies. Considering that in the Federal Tax Service system, the TIN (taxpayer identification number) is the main unique attribute of an organization, individual entrepreneur or individual, it is from it that you can obtain important information that will allow you to draw a conclusion about the reliability of the counterparty. Or perhaps the organization simply wants to clarify the legal address of another company or full name. her leader. We will tell you in our material how the Federal Tax Service of Russia on its website helps organizations check their partners.
Federal Tax Service: check by TIN
On the Federal Tax Service website you can check the counterparty by TIN in several ways.
The most common is the online service “Business risks: check yourself and your counterparty” (nalog.ru / Electronic services). By entering the organization's INN in this Federal Tax Service service, you can find out the full name of the organization, its legal address, OGRN, INN, KPP and state registration date. In the same place, if there was a termination of activity or invalidation of registration, their dates will be indicated. Here you can download an extract from the Unified State Register of Legal Entities, which contains more detailed information about the organization: size authorized capital and information about the founders (participants), information about persons acting on behalf of the organization without a power of attorney, types of activities according to OKVED and other data.
Also on the website of the Federal Tax Service, the organization’s TIN will help answer the question of whether the company made decisions on liquidation, reorganization, reduction of authorized capital, as well as other facts, messages about which should be published in the journal “Bulletin of State Registration”. To do this, you need to contact the online service “Messages of legal entities published in the journal “Bulletin of State Registration””.
If the tax authority has made a decision regarding an organization regarding its upcoming exclusion from the Unified State Register of Legal Entities, such information is also published in the journal “Bulletin of State Registration”. You can check such information using your TIN on the Federal Tax Service website.
Information is updated daily.
The lion's share of refusals to deduct input VAT and recognize transaction costs is due to unscrupulous counterparties (NCs). Insufficient verification of a future business partner, especially for a major transaction, may pose not only the risk of non-fulfillment of obligations under the contract, but also claims from regulatory authorities regarding declared deductions and expenses on profits. You can protect yourself by carefully checking your partner with everyone possible ways. On this moment there are more than 17 of them.
Almost every company at least once in its life has been faced with a refusal to deduct value added tax and recognize expenses on profits due to an unscrupulous counterparty. Tax authorities recognize transactions with such persons as doubtful, expenses as unconfirmed and inflated, and tax benefits as unjustified. A partner who seemed reliable and quite real at the conclusion of the transaction is subsequently recognized by the tax authorities as a “fly-by-night” or “transit company”. A reasonable question arises: how to check a counterparty before an important transaction and prove to the tax authority that due diligence and caution have been exercised. There are several methods that can be divided into 5 groups:
- Electronic verification services (FTS, FAS, FMS FSSP, RNP, etc.);
- Requests to government authorities (tax inspectorates);
- Providing a package of documents from the transaction partner;
- A personal meeting with the counterparty (his representative)
- Survey of companies and individual entrepreneurs who collaborated with this supplier/contractor/performer/seller;
- Studying the company/individual entrepreneur website and reviews about it on the Internet
What are the risks for an organization when collaborating with an unverified partner?
- Material losses, broken deals, tarnished reputation
- Refusal to deduct (reduce) VAT;
- Additional charge of value added tax;
- Refusal to recognize expenses as justified for profit tax purposes and to reduce the tax base for a disputed person;
- Additional income tax (IP);
- Bringing to tax liability for non-payment of VAT, NP;
- Calculation of fines and penalties
- Appointment of an on-site tax audit (VNP)
Interaction with a dubious company (entrepreneur) may become the basis for the appointment of a GNP. This right is granted to regulatory authorities in clause 12 of the Concept for conducting on-site inspections:
Specified item involves the use of tax evasion and tax minimization schemes. The use of “shell companies” is one such scheme. It consists in reducing the tax burden on VAT and profits, illegal compensation value added tax from the budget, unreasonable recognition of expenses on profit. Therefore, interaction with unverified companies (IPs) recognized by tax authorities as unscrupulous, “fly-by-night” companies threatens the taxpayer with an on-site audit. The main document that guides the regulatory authorities in this situation is Resolution of the FAS Plenum No. 53. It defines the main criteria for a person to exercise due diligence and caution (DIO).
It is worth noting that at the moment there is no clear list of actions, the commission of which will be an unambiguous confirmation of the manifestation of DOIO. Even if all of the verification methods listed below are carried out, the tax authority may recognize the counterparty as dishonest and the tax benefit unjustified.
The reason is that at the moment taxpayers do not have the rights that are granted to government agencies, in particular: interrogating the managers and founders of disputed counterparties, requests to banks and inspectorates at the place of registration, requesting documents and much more. But using all possible methods to verify a trading partner is more likely to protect against the risk of adverse consequences.
Electronic resources for verifying a counterparty
Using the Internet sites of official government agencies, you can obtain basic information about a future business partner, find out whether the legal entity is in the process of bankruptcy, making changes to the Unified State Register of Legal Entities, whether the main persons of the company are disqualified, check the accuracy of the basic data of the legal entity and much more.
Federal Tax Service website
It should be noted that a disqualified person does not have the right to sign documents on behalf of the company, so it is advisable to use this search when concluding large transactions.
If the counterparty is not present at the registration address, this is very often another sign of the taxpayer’s dishonesty, which is referred to by the tax authorities during the audit.
You can find out whether an organization is a plaintiff or a defendant by referring to the file of arbitration cases.
When checking information using Internet resources, it is necessary to save screenshots of checks to confirm the fact of DOIO in the event of claims from the tax authorities.
Obtaining an extract from the Unified State Register of Legal Entities
One of the main ways to check the legal capacity of an organization before concluding contracts is to obtain an extract from the state register. Completion of this action, even in the absence of other evidence, may serve as the basis for confirming the fact of manifestation of DOI when choosing a business partner. There are two ways to obtain an extract from the Unified State Register of Legal Entities:
- Through the tax authority;
- Via an electronic request on the Federal Tax Service website
To receive a statement in paper form, you must pay for the services for its submission in the amount of:
- 200 rub. - the receipt period is five days from the moment the tax authority receives the request;
- 400 rub. - urgent statement, the receipt period of which is 1 day.
You must also submit a request for this extract. It is compiled in any form. It must indicate the name, INN, OGRN of your organization and counterparty, postal (electronic) address and telephone number of the applicant.
To receive an electronic statement, you must have a personal taxpayer account or be registered on the Federal Tax Service website.
Check out to in electronic format is provided free of charge, has an electronic signature and is equivalent to paper.
Receiving a package of documents from a future partner
A sign of conscientiousness and caution when choosing a business partner will be the fact of a request from the last package necessary documents, among which:
- Charter;
- State registration certificate;
- Certificate of registration with the tax authority;
- Decision on the election (appointment) of the head of a legal entity;
- License or certificate of admission to certain types of work (SRO)
You can check the license on the website corresponding to the type of work. The validity of the SRO certificate data is on the website of the self-regulatory organization, as well as by requesting an extract from the register of SRO members.
It should be noted that these documents must be valid not only at the time of conclusion of contracts, but also at the date of recognition of expenses.
- Documents confirming the powers of persons who have the right to act without a power of attorney.
Such documents are: a copy of the passport of such a person, a copy of the employment order, a copy of the protocol general meeting founders, a copy of a bank card, a power of attorney, if such a person is not the head of the organization.
Copies must be certified by the seal and signature of the relevant person.
It is also advisable to reconcile the signatures in your passport and bank card.
You can verify the authenticity of your identity document on the FMS website.
You can also additionally request from the organization:
- Certificate on the status of settlements with the budget;
- Letters of recommendation from companies cooperating with this legal entity;
- Certificate of value and quantity of fixed assets;
- On the availability of labor resources;
- Balance sheets and income statements
- Business partner website and reviews about it
- It is also worth carefully studying the company’s website, if it contains TIN and certificate numbers, and comparing them with the documents received on purpose. It is also necessary to carefully check reviews about the organization on the Internet.
Personal meeting with the General Director
Before concluding a deal or a major contract, it is better to meet with the director or manager in person. Very often, transactions carried out “in absentia” and by mail raise doubts among the tax authorities and, as a rule, are justified.
In conclusion, it should be noted that all of the above checks of the counterparty, even in their entirety, cannot serve as 100% confirmation that the organization will be a bona fide taxpayer, but they will help confirm the fact of the manifestation of DOI when choosing a party to the contract. As a rule, even if the tax authorities refuse to deduct and recognize expenses for a disputed legal entity, the courts side with bona fide taxpayers if they have documents confirming that they have shown DIO.
You can also familiarize yourself with these and other methods of verifying legal entities in the following video:
To summarize the above, we will briefly reflect on ways to check the reliability of a future partner:
- Through Internet resources (website of the Federal Tax Service, Federal Migration Service, FAS, FSSP, Registers of unscrupulous suppliers and information about the facts of the activities of legal entities);
- Request for a package of documents;
- Obtaining an extract from the state register;
- Checking the company website and reviews;
- Personal meeting with the head of the organization
Business partner is one of the most important points any business. The prosperity of your company will depend on how well he fulfills his obligations. But how can you check your counterparty and protect yourself from possible troubles? It's not that difficult to do. You will need to know a minimum of information about your future partner. Most often, it is enough to know only the TIN. How to check the counterparty and protect yourself? Read more about this.
Why check?
Even a novice entrepreneur knows: if you want to reduce business risks as much as possible, check yourself and your counterparty in every possible way. Most often, large companies with a well-established financial security service resort to such checks. Small companies, as well as single entrepreneurs, most often neglect such events. And in vain. Checking a counterparty for free, quickly and reliably is quite simple. You just need to know what exactly to pay attention to.
What does TIN mean and how to check its validity?
First of all, it is worth checking the counterparty by TIN. What it is? TIN stands for individual identification number. It is assigned to each person or entrepreneur as a sign that he is registered with the tax authorities.
You can find it out using any search engine. Just type in the full name of the company and you will immediately receive a lot of information, including the company’s TIN. You can also do the opposite operation - use the TIN number to find out additional information about the company.
Sometimes, however, it happens that there seems to be a TIN, but no information can be found on it. This is worth thinking about. It is possible that the number offered is not real and is just a series of numbers. And the company is a one-day company. You can check your counterparty and protect yourself in this case as well. There is a simple formula with which you can check the reality of the identification number. Any legal entity's TIN consists of 10 digits. We will use the first 9 for calculations, and the 10th is a test one.
Take the first 9 digits and multiply them like this:
- 1st - multiply by 2;
- 2nd - by 4;
- 3rd - by 10;
- 4th - multiply by 3;
- 5th - by 5;
- 6th - by 9;
- 7th - increase 4 times;
- 8th - multiply by 6;
- 9th - to 8.
Now add all the results together and remember this number.
Divide the number obtained as a result of addition by 11. If the resulting result has a remainder, then you need to discard the decimal part and multiply the whole number again by 11. Now compare the resulting number and the one that came out as a result of adding the products (we memorized it). You need to subtract one from the other. The resulting digit must match the last, tenth digit. If everything worked out - the TIN number is real, if it didn’t work out - it’s worth thinking about it.
How to find out the TIN by company name?
If you do not want the tax authorities to ask you questions, you must check the counterparty before concluding a transaction. If, apart from the name, you don’t know anything about your future partners, it doesn’t matter. You can find out the TIN this way. There are small rules here:
- the company name is entered into the search engine without quotes;
- the search must be performed by full name, without abbreviations;
- Enter the name exactly as it is, even if there are spelling or grammatical inaccuracies.
Having found the necessary data, you can find out not only the TIN, but also some other data. Sometimes the difficulty may lie in the fact that several companies may have the same name. Then you can check by type of activity or some additional information.
How to find a TIN using other details?
It is not difficult to check the counterparty using the TIN. But sometimes this data is not enough. If the company you are looking for has its own website, you can usually find details such as the Unified State Register of Legal Entities, State Register of Legal Entities, or OGRN there. All this may be useful for further verification. Having learned as much additional information as possible from open sources, you can contact the Federal. Personal appeals, of course, cost money, but the expenses are completely justified. The tax office will be able to check the counterparty very quickly. You will be provided with extremely accurate and reliable information. For individuals, the certificate costs 200, and for legal entities - 400 rubles.
Collecting data about the counterparty: what to check?
If you are planning to enter into a deal with a new counterparty, try to get as much information as possible about him. You will need copies of the following documents:
- state registration certificate;
- tax payer certificate;
- business license (if any);
- a copy of the company's charter.
Obtaining complete information about the counterparty includes the following points:
Basic data. This includes: last name, first name of the founder, full name of the enterprise, TIN, date of foundation, legal and physical addresses, information about whether this entrepreneur has already liquidated companies.
Information about the enterprise. Data on the legality of the company’s work, reviews, especially from independent sources.
Employee data. Some companies conduct big number transactions through their employees, thereby diverting attention from the manager.
Information about the proposed transaction. Special attention should be applied to the contract amount. If we're talking about If we talk about cooperation with individual entrepreneurs, then we can’t talk about any millions. If a certain LLC offers you a deal worth more than 25% of the funds on the company’s balance sheet, you should think about such cooperation. Information about the balance sheet must be required before signing the contract.
Check the counterparty by TIN: Federal Tax Service
This is the very first authority that is worth visiting to obtain reliable information. The federal tax service can check a counterparty by TIN very efficiently. Of course, there is a temptation to do this quickly and for free using the appropriate services on the Internet. But if the transaction is large, it would be best to personally visit the tax office and make an official request. The received document will not only completely protect you from scammers, but will be a kind of “amulet” from the tax authorities themselves. They will no longer have any reason to claim that you did not take sufficient action to identify an unreliable counterparty.
Nalog.ru: check yourself and your counterparty
If official document You don’t need signatures and seals, and you don’t need the money for a paid check; you can use the official website of the Federal Tax Service. It’s called nalog.ru (nalog.ru). Check yourself and your counterparty, and your business is not in danger.
The structure of the site is quite simple. It is intuitive even for those who rarely deal with computers. First you need to go to the appropriate section:
- individuals;
- legal entity.
Now from the list, select the link “Check the counterparty” and go to the corresponding page. In the window that appears, enter the numbers INN/OGRN or the name of the organization. In the window located just below, enter the captcha - several numbers written in the picture. Now click the “Find” button and enjoy the result. On the page that opens you can download the document in .pdf format, where there is practically full information about the company.
So if you don’t want problems, go to nalog, check yourself and your counterparty, and feel protected.
You can also perform other types of searches on the Federal Tax Service website:
- Information about persons who provided documents for state registration or for making changes to the constituent documents.
- Data on persons in respect of whom a decision has been made to liquidate, reorganize or reduce the authorized capital.
- Information on the exclusion of an inactive legal entity from the Unified State Register of Legal Entities.
- Register of disqualified persons and information about organizations whose executive bodies include such persons.
- and data on companies with no contact at registered addresses.
- Data on organizations that have tax arrears or do not provide tax reports.
- Information about individuals who have several organizations registered.
- Other data.
What can you find out about IP?
If you decide to check your counterparty and yourself, and your counterparty is an individual entrepreneur, then with the help of the Federal Tax Service service you can obtain the following information:
- surname, first name, patronymic;
- citizenship;
- USRIP registration number;
- date of entry into the register;
- data on the availability of licenses and their quantity;
- information about tax registration - date and TIN;
- OKVED - codes of types of entrepreneurial activity;
- registration data with the Social Insurance Fund and the Pension Fund;
- information about the specific branch of the tax service in which documents on registration of a specific individual entrepreneur are located.
What information can you get about a legal entity?
If your counterparty is a legal entity, then the Federal Tax Service website can provide you with the following information:
- Name and legal address.
- OGRN registration date and number.
- Information about the founders of the company, the creation or reorganization of a legal entity.
- Information about any significant changes in the activities of the organization.
- Data on the beginning of liquidation or reorganization, if any.
- Information about the head of the company and the amount of authorized capital.
- Information about all divisions of the company.
- OKVED data and information about all available licenses.
- Information about registration with the Social Insurance Fund and Pension Fund.
- Information about the specific branch of the Federal Tax Service, which contains a package of documents on company registration.
You probably already understand: “If you want to minimize business risks, check yourself and your counterparty.” By following this rule with every transaction, you will not only never have problems with tax office, but you will also save your money from scammers.