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Non-sequential invoice numbers could justify estimates of additional income

If the place of residence and the place of work are far Invoice numbers generally have to be assigned sequentially. As the Federal Fiscal Court (Bundesfinanzhof, BFH) once again confirmed, in specific cases, numbering gaps could justify estimates of additional income by the local tax office.

In the case in question, a caretaker service was subjected to a tax audit that found non-sequential numbering of the outgoing invoices. Furthermore, a cash flow calculation that showed deficits and considerable unexplained deposits was examined and this prompted the tax auditors to make estimates of additional operating income, which were roughly in the amount of the annual deficits from the cash flow calculation. In his case before the tax court, the claimant arrived at a reduction of the estimates of additional income in terms of the amount, however, his claim was without merit and the estimate of additional income remained – and this has now been confirmed by the BFH in its decision of 31.5.2023 (case reference: 1X B 111/22).

The BFH ruling demonstrates that it is indeed only in individual cases that non-sequential invoice numbers can justify estimates of additional income, but not generally. However, the judges have still not given a clear answer to the question of whether or not gaps in the invoicing system alone would provide sufficient grounds for making estimates of additional income. In this as well as in another case there were, in addition, other defects in the accounting process. 

Please note: It cannot be ruled out that even without such other circumstances an estimate would be right and proper if it seems that a complete record of the income cannot be ensured.

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