What does payment of a company's debt by a third party mean? This means that the company's debt is repaid by another company. As a rule, she herself is a debtor of the enterprise, and therefore the funds paid to her go towards repaying her debt.
In what cases is it relevant to pay a debt by a third party? Almost every company that has been operating for some time is both a creditor and a debtor. That is, it both lends funds and gives them to third-party companies. All this makes it possible to pay off your debt to one organization with the funds of another. This will be relevant if the company currently does not have the required amount of funds. This can be a convenient way for a third party paying off someone else's loans to pay off their debt.
How to account for payment for goods (work, services) by a third party ?
Main features of the operation
The Civil Code of the Russian Federation does not say anything about the procedure for processing debt payment by a third party. The algorithm used was formed by practice. It consists of the following stages:
- The company sends a letter to its debtor with a request to pay his debt.
- The debtor transfers his funds to the main creditor. The order specifies the appropriate purpose of the payments - payment for the debtor.
How or for a third party under the simplified tax system
A letter of request and an order with an appropriate note are all confirmation that the company has paid the debt for another organization. The presence of these documents is important, since without them, the company that paid off the debt can begin to collect the paid funds from the recipient. The basis is the enrichment of the creditor resulting from an erroneous payment. Without supporting documents, both the main debtor and his creditor bear the risks. If the company begins to collect funds, the debtor will have to pay the debt to the creditor himself.
How to reduce the risk of collecting client tax debts from the bank as a third party?
IMPORTANT! An entrepreneur cannot control what a third party indicates in his payment order. Therefore, it is doubly important to draw up a letter of request and take confirmation of its receipt. The paper will serve as proof of the operation. Proper documentation is a way to reduce all possible risks.
Does the recipient need confirmation?
Sometimes the recipient counterparty requires a letter from the payer, with whom it is not bound by contractual obligations, to offset the payment to the debtor in order to insure itself against claims from the transferring company. Such an action is justified if the payment document contains incomplete data that does not allow an unambiguous interpretation of what the money was received for. However, the very fact of transfer of funds (with a full and accurate breakdown for whom and against what obligations it is paid) serves as a sufficient basis for their offset against the debtor. Therefore, demanding such a letter from an essentially stranger seems unnecessary.
It would be more correct (if the organization nevertheless decides to further protect itself) to take a letter from its counterparty - the buyer with a request to allow payment not to himself, but to a third party with a detailed indication of who will pay and for what, in what amount.
This procedure and already established business practice show that there is nothing terrible or illegal when payment is made by a third party.
This can even be convenient for the parties to the agreement - funds arrive faster, bypassing additional transactions in the participants’ accounts, and if properly executed, neither the parties nor the tax inspectorates will have any claims. You can find more complete information on the topic in ConsultantPlus. Free trial access to the system for 2 days.
Rules for writing a letter of request for debt repayment
The request letter must include the following information:
- Name of the legal entity entrusted with covering the debt. This is so important because even if the legal entity does not put the required mark in the payment order, using the details it will be possible to prove the purpose of the payment.
- An obligation that is transferred to a third party. In particular, you need to disclose its details: details of the agreement on the basis of which the debt arose, its amount.
- If the third party is a debtor of the enterprise (as is the case in most cases) and the funds paid by him go towards his debt, it is recommended to also indicate this in the letter. This is beneficial to both the first and second parties. The company has a greater chance that the counterparty will agree to such a transaction. The debtor can be sure that the payment will actually go towards the obligations and the creditor will not oblige him to repay the debt.
- The debtor to whom the letter is sent may not know all the intricacies of drawing up a payment order. It is also advisable to mention them. In particular, specify the need to indicate the purpose of the payment - repayment of the debt of another company.
ATTENTION! The letter of request must be signed by the head of the enterprise or a person with appropriate authority. The presence of a signature is of interest to the debtor, since it proves that the order actually took place.
IMPORTANT! The payment is made by a third party, and therefore the company does not have direct access to documents confirming the payments made. However, their presence is necessary to prove repayment of the entire amount of debt. Therefore, it makes sense to request a copy of the payment order from the debtor. The paper must be marked with execution from the financial institution.
Example of a letter of repayment of obligations
General Director of Prodvizhenie LLC I.P. Ufimtsev Chelyabinsk, st. Kirova 1, no. 1 From the General Director of Oliva LLC V.V. Ripak Chelyabinsk, st. Vorovskogo, 6
Ref. dated June 20, 2016 No. 363
LETTER about transferring money towards debt
We have a debt to Oliva LLC in the amount of 200,000 rubles. We ask you to pay off the debt of Oliva LLC in the amount of 200,000 rubles. Details for payments: TIN 11133355443 KPP 7657488956 OGRN 10754754785 r/s 407657776544878558654 in the Chelyabinsk branch of the Sberbank of Russia K/s 6655999996665555700088 BIK 066468888886
Transfer of payment using these details will mean the termination of the debt of Prodvizhenie LLC to Oliva LLC in the amount of 200,000 rubles.
In the order, we ask you to mention the purpose of the funds: “Payment for the rental of premises for Oliva LLC under agreement No. 10 dated July 10, 2016 in the amount of 200,000 rubles is not subject to VAT.” We also urge you to send us a copy of the payment order. The document must bear a mark from the banking institution regarding execution.
General Director of Oliva LLC Ripak /V.V.Ripak/
Is an order for payment to a third party an offer?
The Supreme Court of the Russian Federation, by its ruling dated December 22, 2022, partially canceled the acts of the courts of previous instances and sent case No. A40-121066/2019 in the canceled part for a new consideration.
Although the definition does not contain new legal positions, three different approaches reflected in the judicial acts in the case actualize the corresponding legal problems. Firstly, what is the legal nature of the creditor’s instruction to the debtor to make payments under the agreement in favor of a third party? Secondly, does a copy of the act confirm the fact of offset in the absence of the original, and how to assess whether the person who sent the reconciliation act by email has the authority to sign the relevant document?
Fable of the case
Accounting
Let's look at the postings used using the example from the above letter of request. Oliva rents premises for 200 thousand rubles excluding VAT. She shipped products to Prodvizhenie LLC in the amount of 200,000 rubles. The cost of the goods was 160,000 rubles. A letter requesting payment of Oliva's debt was sent. The payment has been made. Both parties chose the simplified tax system, and therefore they do not pay VAT. Let's look at the entries in the accounting book of Oliva LLC:
- DT62 KT90-1. Amount: 200,000 rubles. Explanation: total debt of Promotion.
- DT90-2 KT41. Amount: 160,000 rubles. Write-off of the cost of goods transferred to Promotion.
- DT44 KT60. Amount: 200,000 rubles. Reflection of debt to the lessor of Oliva.
- DT60 KT62. Amount: 200,000 rubles. Amortization .
ATTENTION! The last entry is made only after receiving the primary document, that is, a copy of the payment order. The records should mention primary documentation confirming the operations performed.
How does legislation affect the nuances of accounting for payments to a third party?
The order of accounting entries made when paying for third parties may be influenced by legal regulations.
The law does not prohibit a company or individual entrepreneur from paying off the obligations of third parties. The subtleties of this procedure are described in Art. 313 Civil Code of the Russian Federation. But there is a limitation for such an operation - the presence in the law or agreement between the parties of a clause on the mandatory fulfillment of obligations personally by the participants in the transaction. If such a condition exists, additional entries in the accounting of counterparties will not be needed - all transfers under the agreement will occur without the participation of third parties.
Although no one prohibits a third party from financially supporting the debtor. This person can transfer money to pay off the debt, for example, as part of a loan agreement. In this case, settlements between the debtor and the third party will be made within the framework of the loan agreement using the accounting entries inherent in this type of agreement.
Find out what transactions are used when recording loans in accounting from this material.
We will describe below what transactions are made when paying for a third party.
Possible risks
Such almost circular debt repayment is characterized by a considerable number of risks:
- The primary debtor sending the letter will refuse to acknowledge his request and that the debtor has made payment on his debt. The counterparty will have to repay the debt again.
- The counterparty will make the payment, however, after the creditor writes off his debt, he will return the funds on the basis of an erroneous payment. You will have to pay the debt amount again.
- The creditor files a claim with the primary debtor that payments have not been made even though payment was made by a third party.
You can easily protect yourself from all these troubles. This requires proper documentation. Based on the available papers, it is possible to confirm all the details of the transaction that the other party denies. The main documents that will be required: a letter of request with all the details and a payment order.
Regulatory regulation
The creditor may accept the fulfillment of an obligation from a third party, and is sometimes obliged to do so. So, payment from a third party must be accepted when:
- the obligation is assigned by the debtor to this person (clause 1 of Article 313 of the Civil Code of the Russian Federation);
- the debtor is late in fulfilling a monetary obligation (clause 2 of Article 313 of the Civil Code of the Russian Federation);
- a third party may lose its right to the debtor’s property as a result of foreclosure on this property (Clause 2 of Article 313 of the Civil Code of the Russian Federation).
Upon receipt of an advance payment, the taxpayer is obliged to calculate VAT on it and issue an invoice (paragraph 2, paragraph 1, paragraph 3, article 168 of the Tax Code of the Russian Federation) to the buyer (Article 169 of the Tax Code of the Russian Federation).
Pay someone else. If it is not the supplier who receives the money for the goods
To speed up mutual settlements, we transfer money according to a letter from our supplier to his counterparties, thereby covering our debt to him. Tell me, are these actions permitted by current legislation and how are such operations carried out from the point of view of taxation and accounting?
According to Art. 312 of the Civil Code of the Russian Federation
As a general rule, when fulfilling an obligation, the debtor has the right to demand evidence that the performance is accepted by the creditor himself or
a person authorized by him to do so
.
From this formulation it follows that the debtor can perform the obligation not only to the creditor himself, but also to any other person
, whom the creditor has authorized to accept the fulfillment of the obligation.
Therefore, if, at the request of the supplier (creditor), your organization (debtor) makes payment (performance) to one of the supplier’s counterparties (that is, the person whom the supplier-creditor has authorized to accept the fulfillment of an obligation from your organization), then these actions do not contradict current legislation.
This is confirmed by the provisions of Art. 313 Civil Code of the Russian Federation
, according to which the fulfillment of an obligation can be assigned by the debtor (and in relation to its counterparty, your supplier is a debtor) to a third party (for example, your organization), if the law, other legal acts, terms of the obligation or its essence do not imply the obligation of the debtor (supplier) ) fulfill the obligation personally.
In this case, the creditor (the creditor in this situation will be the counterparty of your supplier) is obliged to accept the performance offered for the debtor (supplier) by a third party (your organization).
That is, in your situation, your organization acts as a “third party”.
Thus, your actions are completely legal.
When an obligation is fulfilled by a third party, there is no change of persons in the obligation.
That is, the creditor of your organization (both before and after the supplier sends a letter to you with a request to make a payment not to him, but to one of his counterparties) continues to be your supplier, and until the money is transferred you will continue to owe exactly this to the supplier, and not to its counterparty.
By virtue of the provisions of Art. 312 Civil Code of the Russian Federation
the fulfillment of an obligation performed not to the creditor, but to a person authorized by him, is essentially the fulfillment of the obligation to the creditor himself.
In accordance with paragraph 1 of Art. 408 Civil Code of the Russian Federation
proper performance terminates the obligation.
Thus, by making a payment not to the supplier, but, at his request, to one of his counterparties, you are repaying your debt to the supplier himself.
Accounting entries must reflect the debt repayment operation under consideration, taking into account the civil legal meaning of this operation identified above.
Let's say you purchased materials from a supplier.
The following notes were made:
DEBIT 10 “Materials” CREDIT 60 “Settlements with suppliers and contractors”
– materials have been capitalized, the debt to the supplier for received materials is reflected;
DEBIT 19 “VAT on purchased assets” CREDIT 60
– VAT on purchased materials is taken into account.
As for what entries need to be made when transferring money at the request of the creditor (in your case, the supplier) not to himself, but to the person indicated by him, the opinions of accountants sometimes differ.
Some argue that these entries should be made using count 76
"Settlements with other debtors and creditors."
That is, when transferring money to the person indicated by the creditor-supplier (supplier's counterparty), you need to make an entry:
DEBIT 76 CREDIT 50 “Cash”, 51 “Settlement accounts”
;
and then “close” between themselves account 60 (debt to the supplier) and account 76 (payment made at the request of the supplier to his counterparty):
DEBIT 60 CREDIT 76
However, this option, although it makes it possible to reflect in accounting that the money was transferred not to the creditor-supplier himself, but to the person indicated by him, has disadvantages from the point of view of accounting methodology.
After all, according to the Instructions for using the Chart of Accounts, account 76
“Settlements with various debtors and creditors” is intended to summarize information on settlements for transactions
with debtors and creditors
not mentioned in the explanations to accounts 60-75.
Since the supplier’s counterparty, as we have already found out, is neither a debtor nor a creditor for your organization, it is methodologically incorrect to reflect settlements with it on account 76.
It would be more correct to carry out in accounting the transfer of money to the supplier's counterparty as a payment made to the supplier himself:
DEBIT 60 CREDIT 50, 51
,
because from the point of view of civil law, the payment you made at the request of the supplier not to himself, but to his counterparty, is essentially the repayment of your debt to the supplier himself.
And you do not have any legal relationship with the supplier’s counterparty; for you, he is just a person authorized by the supplier to accept money from you.
Therefore, there is no need to reflect settlements with it using separate entries.
True, supporters of the first accounting option (using account 76) rightly note that with the second accounting option (without using account 76), the accounting does not reflect information that the payment was made not to the creditor himself, but to the person indicated by him.
However, we are closer to the second accounting option (without using account 76), although in practice accountants successfully use the first option (using account 76), since it usually does not raise questions among inspectors.
From the point of view of income taxation, some nuances in the payment procedure you set out (not to the supplier himself, but to the person indicated by him) can only occur if you use the cash method
recognition of income and expenses.
In accordance with paragraph 3 of Art. 273 Tax Code of the Russian Federation
Taxpayer expenses are recognized as expenses after they are actually
paid
.
In this case, payment for the goods
(works, services and (or) property rights) the termination of the counter-obligation by the taxpayer - the purchaser of the specified goods (works, services) and property rights to the seller, which is directly related to the supply of these goods (performance of work, provision of services, transfer of property rights) is recognized.
Since the performance performed by the debtor (your organization) not to the creditor (supplier) itself, but to a person authorized by him (the supplier’s counterparty), according to the norms of the Civil Code of the Russian Federation, terminates the debtor’s obligation to the creditor
, then when applying
the cash method,
you will be able to take into account the costs of purchasing goods from a supplier for profit tax purposes only after the money for the goods is transferred to the supplier himself, or, which is essentially the same thing, to the supplier’s counterparty.
If your organization uses the accrual method
, then it does not matter to you to whom exactly (the supplier or, at his direction, another person) the payment is made, since with the accrual method, the recognition of expenses does not depend on the fact of payment.
On the procedure for calculating value added tax
the fact that money was paid for the goods not to the supplier himself, but to the person indicated by him, does not affect.
Accounting with the supplier
The organization “Konfetprom” sold goods to the buyer “Cafe Summer”. At the same time, “Konfetprom” owes another organization “Sweets Shop”. The “Konfetrom” organization asks the buyer to transfer the debt to the account of the “Sweets Shop” organization.
Checking mutual settlements
Let's create SALT for account 62, we see accounts receivable.
We will also create a SALT for account 60, we see the debt to the supplier.
