Despite the fact that a gradual process of emerging from quarantine has begun in Russia, the situation in many regions of the country is unstable, and international travel is still difficult. Therefore, companies are still forced to cancel business trips.
In our new article we’ll talk about how to properly conduct and take into account business trip cancellations due to coronavirus.
Step #1: prepare an order to cancel the trip
First of all, it is necessary to issue an order to cancel business trips due to the spread of coronavirus infection. For each trip, you must indicate the reasons why the trip did not take place – here you can indicate the introduction of quarantine or a high alert regime in connection with the coronavirus pandemic. Additionally, the document should include references to regulations of the authorities of the Russian Federation, constituent entities, and WHO recommendations.
You can also simply cancel a previously issued travel order. However, it can only be canceled if the company has not yet paid the daily allowance or payment for tickets/accommodation for the employee.
Order to cancel a business trip due to coronavirus sample
Step #2: cancel reservations
If, in preparation for a business trip, the company has already made reservations for tickets and hotels, then after issuing an order to cancel the trip, they will also need to cancel them. These actions must be correctly taken into account in accounting.
Often there are fines for cancellation of tickets and hotel reservations – all such payments, including penalties or penalties, should be taken into account as non-operating expenses.
Debit Credit Description of operation
60 51 Paying for an employee’s accommodation from a current account
51 60 After canceling the reservation, the hotel transferred the refund minus fines/commissions
91.02 60 The company took into account penalties and fines as non-operating expenses
In the case of an international business trip, one of the possible expenses is obtaining a visa. It is possible to take these costs into account to reduce the tax base in case of trip cancellation, but the company should be prepared to explain the reason for canceling the trip if questions arise from the tax authorities. To avoid claims from tax inspectors, you must have a ready-made package of documents confirming that the trip was canceled precisely because of the pandemic – that is, for reasons beyond the control of the employer and employee. Examples of such documents could be:
- Order from the manager to cancel the business trip with a mandatory indication of the reasons for the cancellation and references to the regulations of the Russian Federation (on the suspension of the message) and countries to which employees are sent (an example of an order is given in our article above);
- Document on cancellation of hotel reservation and travel documents;
- Document from the visa center or consulate where the visa was issued on the restrictions imposed in the country of entry ( desirable).
If for some reason the company has already issued an advance for a business trip, which subsequently did not take place, then the employee needs to return the entire amount. Refunds are made directly to the cashier or to the company’s bank account.
Debit Credit Description of operation
71 51.50 Payment of daily allowance to an employee
51.50 71 Refund of daily allowance upon cancellation of a business trip
Step #3: accounting for personal income tax and insurance premiums
If a business trip is cancelled, the company cannot withhold personal income tax from the employee – the costs incurred by the employer are not his income. This is true for the costs of visas, reservations, tickets, etc.
All these expenses that did not lead to the completion of the work task within the framework of the business trip are entirely borne by the employer. Accordingly, there is no need to impose insurance premiums on them.
If an employee bought tickets at his own expense and then returned them, then the refund fee must be included in expenses. The employee does not need to withhold personal income tax and pay insurance premiums from compensation amounts for such expenses.
