Refund of advance in 2021

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Published: September 22, 2018

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When wanting to purchase a certain product or service, the buyer often agrees to one of the seller’s conditions: to pay a certain amount, part of its cost or the full cost, called an advance payment (deposit). But often, for a number of reasons, the buyer decides to refuse to purchase a product for which part of the money has already been paid.

Types of prepayment
Is it possible to return the prepayment?
When is it not possible to return the prepayment?
How to return the prepayment?
The procedure for filing a claim for a refund of prepayment

In this case, the question arises: is it possible to return the prepayment and how to do this?

What is an advance?

In pursuance of the agreements reached when drawing up the contract, one party often pays money for a product or service. The payment may be called an earnest money deposit, an advance payment, or an advance payment. The payer has the right to request the return of advance funds if the goods or services have not yet been provided to the recipient, or if the obligations undertaken under the contract have been partially fulfilled. In the first case, the payer is legally allowed to make a claim for payment of the advance in full. In the second scenario, it is possible to return a certain part of the advance payment, calculated with the deduction of work and services already performed. To do this, you need an advance invoice.

Reverse situation

But the opposite situation is also possible, the amount of advance payments is lower than the cost of the work performed, in this case the customer reimburses the difference to the contractor. If the contractor wishes to terminate the contract, the other party requires him to pay the difference between the transferred advance payment and the cost of the work performed, as well as a penalty for improper fulfillment of contractual obligations. The amount of the penalty is determined by the terms of the agreement and the contract. ]

An advance cannot act as a guarantee of fulfillment of obligations. It is paid by the customer as an advance payment for future work and services provided by the contractor. It does not obligate the conclusion of a contract and can be returned at any time during the contract period. The Civil Code does not provide a clear definition of the concept of advance. Earlier legislation defined the term as partial advance payment. It is not paid as full payment under a contract or other agreement.

In what cases is it possible to return the advance upon termination of the contract?

Accounting

Judicial practice Situations related to the return of advance amounts often lead to conflicts between participants. Each participant in the transaction defends their rights, which is quite natural.

Important

What documents are needed to return money to the buyer? If the supplier returns the advance partially, then he has the right to accept VAT as a deduction in the amounts corresponding to the returned parts of the prepayment, provided that adjustment transactions due to changes in contractual relations and the return of the prepayment are reflected in the accounting records. The advance is returned by the tax agent. Does he have the right to deduct VAT? Right.

Since January 1, 2008, additions to paragraph 5 of Art. 171 of the Tax Code of the Russian Federation, introduced by Federal Law No. 85-FZ of May 17, 2007, according to which the above procedure for deducting VAT amounts applies to taxpayer buyers acting as a tax agent.

Info

II quarter of 2011, declarations submitted to the tax authority on 06/13/2013 and 06/07/2013, respectively). The agreement to terminate the contract, drawn up on September 10, 2013 (later than the deadline for submitting “clarifications” with the declared deductions - June 2013), did not save the situation: the company’s arguments that the right to deduct amounts of “advance” VAT arose only from the moment termination of the contract (from the date of drawing up the agreement) was not accepted by the cassation authority.

We invite you to read: Exchange of plumbing products - during what period

The court issued a verdict: by claiming deductions in June 2013, the company missed the deadline established by law for claiming these deductions. In general, it is worth keeping in mind that the Tax Code does not provide for such a condition for deducting “advance” VAT as the presence of documents confirming the change or termination of the contract. Therefore, the absence of these documents cannot be a basis for refusal of a tax deduction, which is confirmed by the judges’ findings.

Due to the lack of the required product in the assortment, the dispatch of the second batch has been delayed. In accounting, this operation will be accompanied by the following entries: Contents of transactions Debit Credit Amount, rub.

Info

January 2015 Received an advance for the upcoming delivery 51 62-2 1,180,000 “Advance” VAT accrued (RUB 1,180,000 x 18/118) 76-av. VAT 68-VAT 180,000 Until 25.04, 25.05, 25.06 {amp}lt;* Paid 1/3 of the amount of accrued “advance” VAT 68-VAT 51 60,000 May 2015

Goods shipped 62-1 90-1 472 000 VAT accrued on sales 90-3 68 72 000 “Advance” VAT accepted for deduction 68-VAT 76-av. VAT 72,000 The part of the advance payment attributable to the sale is credited 62-2 62-1,472,000 {amp}lt;* Payment of tax on transactions recognized as the object of taxation is made in equal shares no later than the 25th day of each of the three months following the expiration tax period (clause 1 of article 174 of the Tax Code of the Russian Federation).

In order to avoid misunderstandings, legal disputes and other troubles, it is necessary to take care of the correct drafting of the contract, the clauses of which will reflect all the nuances of the return of advance funds. But in practice, the services of a lawyer are most often resorted to when the problem has already matured and needs to be solved in one way or another.

Judicial practice in Russia is replete with cases of this kind, and its analysis allows us to draw the following conclusion. Refund of the advance upon termination of the contract is not always possible by agreement of the parties. This is a complex multi-level process that requires a thorough study of the tax and civil law norms of the legislation of the Russian Federation.

What reasons could there be?

Refund of the deposit or advance payment is possible if the following grounds exist:

the party that received the advance did not fulfill its obligations;
the work was performed poorly by the contractor;
the contractor delayed the start of work and missed delivery deadlines.

We remind you that the customer has the right to refuse the services of the contractor during any period of the contract. However, in this case, the customer returns the advance minus the cost of the work performed based on the invoice for the advance payment.

Invoice for advance payment upon return of money

Issuing an invoice when returning goods

The buyer returns the goods registered with him in the general mode

The purchasing company recorded the purchased goods on account 41. But then it discovered defective goods. The company has the right to return these goods to the supplier. Or another situation - the client agreed with the supplier to return quality goods that could not be resold. How to issue a refund so that there are no errors in VAT?

In any case, it does not matter whether the goods are defective or good. The main thing here is that they are registered with the buyer. This means that he must issue an invoice to the supplier for the cost of the products returned (see diagram 1).

Accounting with the buyer . Issue an invoice to the supplier for the cost of the returned goods (clause 3 of the Rules for maintaining the sales book, approved by Decree of the Government of the Russian Federation of December 26, 2011 No. 1137). On line 2, enter the buyer's name.

Line 6 contains the name of the supplier. The buyer determines the cost of goods based on the prices given in the supplier’s shipping documents.

Thus, the accrued tax will be equal to the amount that the buyer previously accepted for deduction on these goods.

Note! If the simplified buyer issues a VAT invoice for the cost of the returned goods, you need to pay the tax and submit an electronic declaration.

Accounting with the supplier . You will be able to claim VAT on the value of returned goods based on the invoice received from the buyer. To do this, register this invoice in the purchase book.

The buyer returns part of the goods not accepted for accounting in the general mode

Let's consider a situation where the buyer identifies defective products immediately upon receiving the goods and, accordingly, does not take the goods into account on account 41.

The buyer reflects low-quality goods in the balance on account 002. Unlike the previous situation, he does not have to issue an invoice to the supplier.

On the contrary, the supplier must issue an adjustment invoice to the buyer (see diagram 2).

Accounting with the supplier . Draw up an adjustment invoice (letter of the Ministry of Finance of Russia dated April 7, 2021 No. 03-07-09/19392). In it, reduce the shipping cost due to the fact that the buyer returned some of the goods.

On line 2 of the adjustment invoice, enter the name of the supplier. Line 3 contains the name of the purchasing company. Based on the adjustment invoice, you will claim VAT deduction on the value of the returned goods.

Therefore, register the adjustment invoice in the purchase book for the current quarter. There is no need to correct reporting for the shipment period.

Accounting with the buyer . The buyer accepts registration of only part of the goods. Therefore, register the supplier’s shipping invoice only for the amount of VAT that relates to the goods accepted for registration.

Officials expressed this opinion in a similar situation with the short supply of goods (letter of the Ministry of Finance of Russia dated February 10, 2012 No. 03-07-09/05). You can calculate the amount of tax deduction in your accounting statement. There is no need to clarify the tax calculation in connection with the return of goods.

Therefore, the adjustment invoice received from the supplier does not need to be recorded in the purchase ledger.

The buyer returns all goods not accepted for accounting in the general mode

In the previous section, we looked at the situation when the buyer returns some of the goods that were not accepted for accounting. And when returning the entire unaccounted for shipment, the procedure will be different: the buyer does not register an invoice for this operation (see diagram 3).

Accounting with the supplier . There is no need to issue an adjustment invoice. In it, the company reduces the cost of shipped goods. In this situation, the shipment is cancelled. Nevertheless, the supplier has the right to claim a deduction from the cost of returned goods (clause 5 of Article 171 of the Tax Code of the Russian Federation). To do this, you can register an invoice that the supplier previously issued for shipment in the purchase book.

Accounting with the buyer . Since the buyer rejected the shipment of goods, he does not claim a tax deduction. The buyer does not register the supplier's shipping invoice in the purchase book.

Buyer on a simplified or imputed basis

Buyers on simplified and imputed products do not pay VAT. Therefore, the buyer will not issue invoices regardless of whether he has accepted the goods. Document flow depends on something else: how many goods the buyer returns - the entire batch or only part of it.

The buyer returns some of the goods

The supplier first issues an invoice for shipment, and then an adjustment invoice (see diagram 4).

Accounting with the supplier . In the purchase book, the supplier registers an adjustment invoice (letter of the Ministry of Finance of Russia dated March 19, 2021 No. 03-07-15/8473).

Accounting with the buyer . Do not issue any return invoices and do not highlight VAT on the return invoice. Otherwise, disputes will begin about why the tax was not paid.

The buyer returns the entire lot

In such a situation, the invoice that the supplier drew up when shipping the goods is sufficient (see Diagram 5).

Accounting with the supplier . When returning an entire shipment of goods, the supplier does not issue an adjustment invoice. To claim a deduction, you can register an invoice for shipment in the purchase book (letter of the Federal Tax Service of Russia dated May 14, 2021 No. ED-4-3/8562).

Accounting with the buyer . A company in a special regime should not indicate the amount of VAT on the return invoice.

How to reflect invoices in the sales ledger and purchase ledger when returning

What code to indicate in column 2 of the sales book or purchase book

The buyer returned the goods accepted for registration using the common system and issued an invoice (Scheme 1)

The supplier indicates code 03 in the purchase book. The buyer also enters code 03 in the sales book.

The buyer on the general system returned some of the goods that were not accepted for registration (Diagram 2)

The seller registers an adjustment invoice in the purchase book and enters code 18 in column 2. Code 03 does not need to be specified. The buyer does not register an adjustment invoice.

The buyer on the general system returned the entire batch of goods that were not accepted for registration (Diagram 3)

The supplier registers his shipping invoice with code 03 in the purchase book. The buyer does not register the shipping invoice.

The buyer returned some of the goods in special mode (Schemes 4 and 5)

The supplier registers an adjustment invoice in the purchase book and indicates code 16. And the buyer reflects this document in the income and expenses book.

The buyer returned all goods in special mode (Diagram 5)

The supplier registers a shipping invoice in the purchase book and indicates code 16. But the buyer does not register this document anywhere.

How to issue an invoice for the return of goods without VAT

How to issue an invoice for the return of goods without VAT The seller issues an adjustment invoice, guided by legislative acts, registers the transaction in the purchase book and makes corrections in accounting documents. An invoice is issued within five days from the date of registration of the return.

Watch a video about adjustments From organizations on the simplified tax system In the majority

VAT, the seller does not lose the right to deduct VAT. Thus, for tax accounting, the reason for the return does not matter at all: Accounting for VAT transactions when returning goods from the buyer The procedure for displaying the return of goods on accounting accounts directly depends on the period of receipt of the claim from the buyer: Get 267 video lessons on 1C for free:

Free video tutorial on 1C Accounting 8.3 and 8.2;
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the sale and return of goods were made within one reporting period;
at the end of the implementation year, but before the reporting period for that year;
after submitting annual reports for the year in which the product itself was sold.

Return of goods from the buyer with VAT - postings to the supplier Account Dt Account Ct Posting amount, rub.

VAT when returning goods from the buyer

In the invalid letter dated March 7, 2007 No. 03-07-15/29, officials rightly noted that the provisions of Chapter 21 of the Tax Code do not provide for exceptions to the general procedure for applying VAT deductions when returning goods by persons who are not VAT payers.

And as we have already said, they ordered sellers to make corrections to the previously issued invoice, and then register the corrected document in the purchase book.

Note that in connection with the advent of Resolution No. 1137, the norms of the chapter of the Tax Code regarding the deduction of VAT when returning goods have not changed at all. This means that the conclusions made by the Russian Ministry of Finance earlier should still work now.

The main conclusion is this: if the buyer applies the special regime and does not issue an invoice, the seller still has every right to apply a deduction in relation to the goods returned to him.

Issuing invoices when returning goods: an alternative to the Ministry of Finance

Accounting certificate 41 60 24 000 Returned goods (30 pcs.) (December) 300,000 rub. are displayed at the new cost. : 300pcs. × 0.8 × 30pcs. = 24,000 rub. Accounting certificate 19 60 4 320 VAT is reflected on the returned goods (30 pcs.) (December) 54,000 rub. : 300pcs. × 0.8 × 30pcs. = 4,320 rub.

Accounting certificate 68 19 4 320 VAT is charged for deduction on the returned goods Accounting certificate 60 62 28 320 Offset of claims 24,000 + 4320 = 28,320 rubles. Accounting certificate 51 62 325 680 The buyer paid for the unreturned part of the goods 354,000 – 28,320 = 325,680 rubles.

Bank statement How to reflect the return of goods from the buyer in the VAT return The procedure for displaying the return of goods from the buyer in the VAT return directly depends on the reasons for the return.

The supplier works with VAT and the buyer without how to make a return

It must be remembered that without an invoice, it is impossible for the seller to make corrections in the purchase book, and its incorrect execution will negate all efforts to accept the tax as a deduction. The most vulnerable party is the seller, so he needs to seriously control the process of returning goods. Individual The return of purchased goods by an individual is a common operation in retail enterprises.

The basis for its implementation, in the same way as in settlements between enterprises, is a claim drawn up by the buyer, justified and motivated.

Return of goods by special guard

The seller can issue a VAT deduction for the amount of VAT on the returned goods. But to do this, the adjustment must be made in the quarter in which you returned the goods.

You do not have to register the adjustment invoice received from the seller in the purchase book. You clarify the amount of VAT on the basis of a calculation certificate issued when returning the goods (the amount of delivery minus the cost of return, allocated VAT for each item).
If the return is carried out by a special regime If you use a simplified taxation regime, and you returned the goods to the supplier, then you do not need to worry about issuing an invoice for the return - the seller will handle this. This is due to the fact that legal entities and entrepreneurs under the “simplified regime” do not pay VAT, and therefore have no right to a tax deduction. Therefore, “the simplifier does not need to issue an invoice for a return (either partial or full).

Document flow depends on something else: how many goods the buyer returns - the entire batch or only part of it. The supplier first issues an invoice for shipment, and then an adjustment invoice (see diagram 4). Accounting with the supplier. In the purchase book, the supplier registers an adjustment invoice (letter from the Ministry of Finance of Russia dated March 19, 2021.

Buyer's account. Do not issue any return invoices and do not highlight VAT on the return invoice. Otherwise, disputes will begin about why the tax was not paid. In such a situation, the invoice that the supplier drew up when shipping the goods is sufficient (see.

diagram 5). Accounting with the supplier. When returning an entire shipment of goods, the supplier does not issue an adjustment invoice. To claim a deduction, you can register an invoice for shipment in the purchase book (letter of the Federal Tax Service of Russia dated May 14, 2021 No. ED-4-3/8562). Buyer's account.

Invoice for advance payment upon return of money

Read other articles about product returns:

Source: https://emarkethelp.ru/kak-vypisat-schet-fakturu-na-vozvrat-den-p04/

The difference between the concepts of advance, deposit and prepayment

All relationships between the customer and the contractor are determined by the civil code. A clearly defined description of the deposit is contained in Art. 380 Civil Code of the Russian Federation. It states that the agreement on the issuance of a deposit must be drawn up in writing, and its exact amount is indicated. The deposit is considered a kind of security for the guarantee of the contract. Thus, if the service contract is terminated by the customer, the deposit remains with the contractor. But upon termination, the executor pays double the amount. You cannot make a deposit in the form of securities.

With an advance, as we said above, the situation is more complicated. The legislator does not disclose this concept, so it happens that an advance and a deposit are often confused. However, this is a mistake, since advance, prepayment and deposit mean different types of payments. The advance payment can always be returned to the buyer in full if the transaction does not take place.

What is the procedure for returning a prepayment?

When making real estate transactions, both forms of advance payment are used. Let's look at how the advance payment and deposit are returned in the event that the parties to the transaction refuse to sign an agreement for the purchase and sale of residential real estate.

Refund of advance payment for apartment

In accordance with Article 487 of the Civil Code of the Russian Federation, parties to a transaction may provide for the buyer’s obligation to partially pay for the apartment before its transfer by the seller (advance payment). In this case, the buyer is obliged to pay the remaining amount within the period established by the contract.

In case of violation of payment terms, the seller has the right not to transfer the goods to the buyer. In this case, he may be required to pay a late fee. Financial responsibility provisions are usually written into the contract, so you should carefully study its terms.

If the seller has not fulfilled his obligation to transfer the apartment, the buyer has the right to demand execution of the contract or the return of funds transferred as an advance.

You should know! A fine for non-fulfillment of the contract may be provided not only for the buyer, but also for the seller. If the transaction is terminated due to the seller’s guilty actions, he will have to return the advance and pay a penalty for failure to fulfill the obligation.

Example from judicial practice 1. Between Gavrilova T.N. and Kuznetsova E.V. an agreement was concluded, under the terms of which Kuznetsova E.V. undertook to transfer to Gavrilova T.N. apartment. I made an advance payment as security for my obligations. The rest of the funds had to be transferred the day before signing the agreement for the purchase and sale of the apartment. According to the terms of the contract, if the transaction is canceled due to the fault of the buyer, the funds remain with the plaintiff. The purchase and sale contract was not signed due to the fact that Kuznetsova E.V. failed to fulfill obligations related to deregistration of the property. Gavrilova T.N. considered that her rights had been violated and went to court to protect her rights. The appellate instance recognized the deposited funds as an advance, subject to offset against the cost of the apartment, and not as a deposit as a means of securing an obligation. In this regard, the court considered that Kuznetsova E.V. there are no grounds for withholding funds and decided to return them to T.N. Gavrilova. (Determination of the First Cassation Court of General Jurisdiction dated December 18, 2019 No. 88-3244/2019).

Refund of the deposit for the apartment

According to Article 380 of the Civil Code of the Russian Federation, the deposit is transferred to the seller as evidence of the conclusion of the contract and to ensure its execution. The agreement on the transfer of funds must be concluded in writing.

In accordance with Article 381 of the Civil Code of the Russian Federation, a deposit can be made only in two cases:

The parties abandoned the deal by mutual consent;
The contract was terminated due to impossibility of performance due to the occurrence of circumstances for which the parties are not responsible.

In case of failure to fulfill obligations to transfer the apartment due to the fault of the seller, he must pay the buyer double the amount of the advance payment. If the buyer changes his mind about buying it, the deposit remains with the seller.

Important! If there is any doubt as to whether the amount paid for the future purchase and sale of residential premises is a deposit, this amount is considered to be paid as an advance unless otherwise confirmed (for example, when transferring funds by receipt).

Example from judicial practice 2. Stepanov O.A. concluded with Timofeev N.T. an earnest money agreement in which the terms of a future purchase and sale agreement for residential real estate were agreed upon. Stepanova O.A. gave the deposit to the seller by signing a receipt. Later Timofeev N.T. said he intended to sell the property to other buyers. On the same day, the buyer contacted the seller and offered to pay double the amount of the deposit, but she was refused. Considering that her rights were violated, Stepanova O.A. went to court to protect her rights. The appellate instance did not find O.A. Stepanova guilty. that the bank did not give her a loan. She took all necessary actions to conclude a purchase and sale agreement for the apartment. Also, the court did not find N.T. Timofeev guilty, since evidence of his evasion from the deal was not presented. In this regard, the plaintiff's demands were partially satisfied. A one-time deposit was collected in favor of the buyer. (Appeal ruling of the Moscow City Court dated December 20, 2019 in case No. 33-53350/2019).

What does the law say?

Law on the protection of rights on the side of consumer interests. Payment is made in full, and this rule works “by default” with rare exceptions. Such exceptions include situations where it was previously provided for the execution of a preliminary purchase and sale agreement or another document certifying and fixing the terms of the transaction even before its completion. This is what they do, for example, when making a large purchase. Like, for example, an advance payment when buying an apartment. If an agreement was drawn up that clearly stated the circumstances under which the prepayment may be withheld, then their violation leads to the fact that the prepayment may be withheld in full or in full.

In the second, most common case, in which the prepayment or part of it is usually not returned, when the goods are ordered through the store. In this case, the advance payment represents compensation for losses that the seller may incur. At the same time, the conditions under which the advance payment is not refunded are usually specified in the operating rules of the trade organization, about which the buyer must be warned.

Well, the last most common case when the prepayment is not returned exactly is when ordering services. If the contractor purchased materials and tools to complete your order, then the money is unlikely to be returned to you. But at the same time, you need to remember a very important thing: they can withhold the advance payment only if you were warned about this in advance.

What to do if the seller refuses to return the advance payment?

It happens that the seller refuses to return the advance or deposit, believing that the transaction did not take place due to the fault of the buyer. In this case, your interests must be protected through the courts. When considering the case, the court will regard the seller’s refusal as unjust enrichment and oblige him to return the money to the buyer.

If it is established that the advance payment is a deposit and the deal fell through due to the fault of the buyer, then his claim will be denied. Therefore, before going to court, you should carefully study the terms of the preliminary agreement.

The procedure for returning the advance upon termination of the contract

The customer submits a written claim, which clearly states the demand for the return of the advance amount and the reasons why he made this decision. If the return is justified and confirmed by the terms of the contract, the advance payment must be paid to the customer within the terms established by the agreement, unless it contains clauses indicating other conditions. The contract can be terminated if there is consent of both parties or as a result of the demands of one party, but if there is a judicial act. If there is a unilateral termination of the contract, then in court the applicant presents relevant evidence confirming the fact of non-fulfillment of the conditions.

Refund of advance in 2021

When drawing up a contract of arrangement, often one party pays money for a product or service. The payment may be called an earnest money deposit, an advance payment, or an advance payment. The payer has the right to apply for the return of advance funds in 2021 if the goods or services have not yet been provided to the recipient, or if the obligations undertaken under the contract have been partially fulfilled. In the first case, the payer is legally allowed to make a claim for payment of the advance in full. In the second scenario, it is possible to return a certain part of the advance payment, calculated with the deduction of work and services already performed. To do this, you need an advance invoice.

In what cases is it possible to return the advance upon termination of the contract?

Refund of the deposit or advance payment is possible if the following grounds exist:

• the party that received the advance did not fulfill its obligations; • the work performed by the contractor was poor; • the contractor delayed the start of work and missed delivery deadlines.

This, of course, only benefits the performer and partly frees the hands of unscrupulous citizens. But the customer may well lose his funds paid in the form of an advance. In this case, even the court will be on the side of the performer. Refunds to third parties are issued if such a clause is indicated in the contract.

In case of unilateral termination of the contract, the contractor returns the advance amount on the day when the contract actually ceased to be valid. If the case was heard in court, then on the day the decision was made. If there is a refusal to pay advance amounts, then from the moment the agreement is terminated, interest will be accrued on this amount for the use of someone else's funds. The customer has the opportunity to insure his money by contacting the bank for an advance guarantee. It serves as a guarantor of coverage of expected risks in case of violation of the contract by the contractor. Insurance is issued for the period of validity of the contract, that is, until all obligations are fully fulfilled by the parties. In this case, the guarantor who issued the insurance controls the timely implementation of the contract and all the conditions specified in it.

“Money in the morning, chairs in the evening”! This is not only Ostap Bender’s favorite motto. All sellers prefer to work this way. But even an advance payment does not always guarantee the seller that the client will buy these “chairs” from him. No seller is immune from situations where an advance has to be returned. The trouble with the return is aggravated by the VAT paid on the advance. In this case, you can take the tax paid as a deduction, following certain rules. First, it is necessary to terminate the contract, return the advance to the buyer and reflect this operation in accounting. All these operations must be carried out within a period not exceeding one year from the moment the failure occurred.

Separately, it is necessary to stipulate the return of the advance when the real estate purchase and sale agreement is terminated. The process of buying or selling real estate is itself labor-intensive, requiring a lot of time and effort from all parties involved. An advance payment is often made when purchasing an apartment.

Therefore, termination of the contract in this case causes quite serious damage to both the buyer and the seller. But life makes its own adjustments, often our plans change for reasons that do not depend on us, and we are forced to submit to circumstances.

There are not many grounds and reasons for terminating the contract:

One of the parties suffered losses or damage due to the fault of the other party.
Refusal to leave the living quarters.
Eviction from home in violation of preliminary agreements.
Changes in the essential terms of the contract.

Next, we will consider the advance payment under the contract.

In a situation where the contract is terminated, a refund of the advance payment is also possible. If the situation is obvious: the contractor has not started work, the advance payment is subject to full refund. In practice, the contract is usually terminated when the customer has already paid the advance and the contractor has already completed part of the work (the quality of this work is often the reason for termination of the contract). As in the cases indicated above, the customer does not have the right to demand advance payment in full.

If the contractor is to blame for the termination of the contract, then the customer has the right to demand, in addition to the return of the advance payment, payment of a penalty for violation of contractual obligations. In this case, the contractor is obliged to pay all amounts previously received under the contract minus the cost of the work actually performed and documented by the acceptance certificates of the work performed. The deadline for repayment of the advance must be met.

Situations related to the return of advance amounts often lead to conflicts between participants. Each participant in the transaction defends their rights, which is quite natural. If it is not possible to resolve the conflict through negotiations, the party that suffered losses has the right to apply to the court with a statement of claim sent to the location of the defendant.

The claim is drawn up indicating the name of the judicial authority; information about the participants in the case; the grounds for the plaintiff’s claims, as well as evidence supporting them; information about preliminary proceedings. The essence of the case is described in detail with the described violations of the rights and legitimate interests of the parties and a list of documents attached to the statement of claim, as well as their copies.

How to return the advance upon termination of the contract? Let's figure it out.

If the customer makes a claim for reimbursement of the amount spent, the contractor must prove that he took all necessary actions to fulfill the terms of the contract. In order to avoid misunderstandings, legal disputes and other troubles, it is necessary to take care of the correct drafting of the contract, the clauses of which will reflect all the nuances of the return of advance funds. But in practice, the services of a lawyer are most often resorted to when the problem has already matured and needs to be solved in one way or another.

Other similar

Deal Breakers

Violations of the transaction are considered significant if they entailed significant damage to the other party. Such a case is considered suitable for termination of the contract by one of the parties. Often the problem appears before the work begins, this allows the advance to be paid in full, and the contract is terminated. However, when concluding an agreement, the parties can make a reservation that upon termination of contractual obligations, the advance payment cannot be returned under any circumstances. This, of course, only benefits the performer and partly frees the hands of unscrupulous citizens. But the customer may well lose his funds paid in the form of an advance. In this case, even the court will be on the side of the performer. Refunds to third parties are issued if such a clause is indicated in the contract.

Court decisions on the return of advance payments

Only the court can recognize an advance as a deposit.
If it comes to appealing to the authorities, the sellers try to convince the court to recognize the advance as a deposit. The concept of a deposit is defined by Article 380 of the Civil Code of the Russian Federation, which states that a deposit is given by one of the parties to the transaction to the other party as a guarantee of the fulfillment of obligations assumed against the funds due for payment under the contract.

Article 381 of the Civil Code of the Russian Federation states that if the transaction fails due to the fault of the party who paid the deposit, then the funds remain at the disposal of the second party.

This outcome fully corresponds to the interests of the seller, but the courts are guided in this case by the provisions of Articles 421 and 422 of the Civil Code, which invalidate the inclusion in the advance agreement of the provisions applicable to agreements on the payment of a deposit, namely, on the liability of the parties for the failure of the transaction.

Therefore, if the parties do not reach the conclusion of the main agreement, according to which the real estate becomes the property of the buyer, then the advance agreement loses its force. Money paid as an advance on a future transaction must be returned to the failed buyer in accordance with Article 1102 of the Civil Code of the Russian Federation. Refusal to return is classified as unjust enrichment at someone else's expense.

In this situation, sellers find themselves at a loss because they did not take the trouble to understand the legal terminology in time. Many of them sincerely believe that the advance payment agreement is a full-fledged replacement for the deposit agreement, or even perceive it as a preliminary purchase and sale agreement. However, these arguments cannot influence the court's decision.

Deadlines

Advance refund procedure3. Refund of advance payment upon termination of the contract: consequences for the seller Termination of the contract and return of the advance payment Advance payment is an advance payment made by the buyer as part of the execution of the contract before the start of work or transfer of goods. Typically, the contractor uses this amount to purchase the materials necessary to execute the transaction. We are talking about the return of the advance upon termination of the contract. Both parties can initiate it.

Buyer. He must inform the seller of his intentions. Termination can only be made in writing.

If the case was heard in court, then on the day the decision was made. Refund of advance payment Then, when you received an advance payment, you had to include it in income.

Attention

What to do when the advance is returned? When an organization returns an advance to the simplified tax system, the income of the period when the money was transferred back is reduced by the amount of the return (clause 1 of Article 346.17 of the Tax Code). In column 4 of Section I of KUDiR, on the date of return, the amount of money transferred is recorded with a minus sign. The advance can be returned either within the same reporting (tax) period or in different ones.

We suggest you read: How to return the money you lent: how to collect a debt through court

However, regardless of the time of return, the obligation to submit an updated declaration and recalculate tax amounts (advance payments) for previous periods does not arise.

Types of terminated transactions

Real estate transactions

Work agreement

Next, we will consider the advance payment under the contract.

Refund of the deposit for the apartment

The deposit transferred for the apartment can be returned to the Buyer only if the Seller voluntarily agrees to do this, or if force majeure occurs, as a result of which the purchase of the apartment fails (when there is no fault of the Buyer - see clause 1 of Article 416 of the Civil Code of the Russian Federation).

Deposit , unlike an advance, is a concept strictly regulated by law (Articles 380, 381 of the Civil Code of the Russian Federation). These clauses specify when and under what circumstances a deposit can be paid, when it can be returned, and what happens if the terms of the contract are violated.

According to the general rule specified in the law, the deposit remains with the Seller of the apartment if the transaction did not take place due to the fault of the Buyer, and the deposit is returned to the Buyer in double size if the transaction failed due to the fault of the Seller. We are not talking about any fines or penalties here. The very fact of the deposit determines the conditions for its return and non-return.

In order for these “standard” conditions for the return of the deposit to take effect, it is necessary that the agreement under which an advance payment for the apartment is made must indicate that this amount is precisely a deposit . Usually the relevant articles of the law are also added there (see above) to eliminate doubts.

But there is a nuance. The Seller and the Buyer have the right to indicate in the deposit agreement special (their own) conditions for its return . For example, if the Buyer gets sick and cannot show up for the transaction on time, then he does not lose the deposit. Or, for example, if the Buyer is denied a mortgage loan, then the Seller will return the deposit to him. But for this to happen, such conditions must be clearly and unambiguously specified in the contract.

The conditions for the deposit can be included both in the Preliminary Purchase and Sale Agreement (this allows for clause 4, Article 380, Civil Code of the Russian Federation) and in a separate Agreement on the deposit when purchasing an apartment. There is no fundamental difference here. In both cases, the contract describes the terms of the future transaction, and the condition for securing the Buyer’s obligations by making a deposit.

Apartment purchase and sale transaction. For the list of documents for registration with Rosreestr , see the Glossary at the link.

In practice, both the advance and the deposit are paid directly to the Seller of the apartment (i.e., its owner) and to the real estate agency (intermediary). But the trick of the agency is usually that they draw up the contract in such a way that liability under it arises unilaterally. Those. if the Buyer refuses the transaction, then he loses his deposit (according to the article of the law) or advance payment (in the form of a fine). The agency keeps it. If the agency itself (more precisely, its client-seller) refuses to sell the apartment, then it simply returns the prepayment received to the Buyer. The agency will not sign up for any fines for its client.

What should the Buyer do if he refuses the transaction due to the fact that during the process of checking documents he discovered an increased risk for himself? How then can I get my prepayment back?

Conditions for the return of the advance or deposit in the agreement

It is possible to return the advance or deposit if the agreement stipulates in advance those conditions that may force the Buyer to abandon the transaction for objective reasons. For example, a separate clause in the Advance/Deposit Agreement should indicate something similar to this:

“If circumstances are discovered that impede the completion of the transaction, or lead to the risk of its being declared invalid, the Seller returns the advance payment to the Buyer in full within 3 days from the moment these circumstances are discovered.”

Then the Buyer will have a legal reason to return the advance payment made for the apartment, even if he himself abandoned the transaction after discovering problems in the documents.

Receipt for the return of the advance payment or deposit for the apartment

An important point for the Seller (recipient of money)! When returning a deposit or advance payment for an apartment , he should take a receipt stating that the money was returned to him in full due to the fact that the purchase and sale transaction did not take place. Otherwise, the Seller risks being deceived - an unscrupulous Buyer may, through the court, demand the return of the money again, and even with interest (“unjust enrichment” - see the articles below).

When returning the advance/deposit, the Seller must also return his own receipt stating that he accepted this money from the Buyer.

How to buy a mortgaged apartment that is pledged to the bank? 3 ways - see the link.

Is it possible to return the advance or deposit paid for an apartment?

What is an advance?

Reverse situation

Accounting

What reasons could there be?

Invoice for advance payment upon return of money

The buyer returns the goods registered with him in the general mode

The buyer returns part of the goods not accepted for accounting in the general mode

The buyer returns all goods not accepted for accounting in the general mode

Buyer on a simplified or imputed basis

The buyer returns some of the goods

The buyer returns the entire lot

How to reflect invoices in the sales ledger and purchase ledger when returning

How to issue an invoice for the return of goods without VAT

VAT when returning goods from the buyer

Issuing invoices when returning goods: an alternative to the Ministry of Finance

The supplier works with VAT and the buyer without how to make a return

Return of goods by special guard

Read other articles about product returns:

The difference between the concepts of advance, deposit and prepayment

What is the procedure for returning a prepayment?

Refund of advance payment for apartment

Refund of the deposit for the apartment

What does the law say?

What to do if the seller refuses to return the advance payment?

The procedure for returning the advance upon termination of the contract

Refund of advance in 2021

Other similar

Deal Breakers

Court decisions on the return of advance payments

Deadlines

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Types of terminated transactions

Real estate transactions

Work agreement

Refund of the deposit for the apartment

Conditions for the return of the advance or deposit in the agreement

Receipt for the return of the advance payment or deposit for the apartment