Dear Reader,

I just got off the phone with Peter Franck, one of our Vat experts. We were putting the finishing tweaks on the Vat article that’s going to be published in the September issue of Tax Watch. The article focuses on invoicing errors that catch taxpayers and Vat vendors out most often.
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R12 million in penalties!

“We can’t talk about common errors, without mentioning late payments,” said Peter.

“I’ve just had a meeting with a client who incurred Vat penalties of R12 million! Just because they always pay their Vat one or two days late”, he told me. “I can’t tell you who this client is, but I can tell you they’re never going to pay late again!”.

In his job as a consultant, Peter sees this kind of tax bill all too often. But that doesn’t make me feel any better about it. That’s millions of Rands that businesses are pouring down the drain, simply because they don’t stay on top of their Vat deadlines and don’t pay on time. 

Another of Peter’s clients is looking at R3.5 million in penalties, for the same misdemeanor…

SARS doesn’t make courtesy calls to remind you to pay on time

My mission today is to remind you that Vat deadlines are, well, deadlines. If you don’t pay on time, the SARS computers automatically levy penalties of 10% (plus interest of an extra 1%). You don’t get a courtesy call, reminding you to pay or asking you if it’s OK for SARS to charge you the penalty. Those penalties and interest will just keep growing, until you pay.

Of course, if you’re subscribed to the Practical Vat Loose Leaf, then you probably already know this. And you’ve probably never paid late! But a refresher never hurts!

Follow these pointers
These pointers are taken from the Practical Vat Loose Leaf (chapter P01), which Peter writes:

• When a payment is late, SARS first allocates the payment to settle the penalty and then allocates the balance to the tax. If your payment is still short, SARS will charge you interest on the outstanding balance, until you’ve paid up.

• The banks have imposed payment limits. If your Vat liability exceeds these limits, it’s up to you to approach your bank in good time, to make alternative arrangements for the payment. SARS won’t accept this as an excuse for non-payment.

• SARS must receive your Vat return and your payment by the 25th of the month. But if this falls on a public holiday or weekend, the onus is on you to pay by the closest preceding day.

• Make sure you get a proof or payment from SARS (either a confirmation slip, or a Vat 213). And keep a copy of this poof of payment. You’ll need it if there’s ever a dispute about payments!

• If you’re going to be unable to meet the payment deadline (e.g. you’re away on business), then the easiest way to take care of the payment is to issue SARS with a post-dated cheque, together with your Vat reference number and tax period. Include a letter, in which you ask for an extension on your Vat return. And state your reasons clearly.

I’m sure these tips will go a long way to keeping your business out of trouble!

Fulvia Becatti
Managing Editor: Practical Vat Loose Leaf and Practical Tax Loose Leaf

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More hot topics and recent updates...

Take a look at some of the most popular past articles:

    * Are you sure you’re claiming the maximum from SARS, for your medical expenses? 
    * 8 point checklist for 100% valid tax invoices
    * Small Error, Serious Consequences! How to Avoid Penalties for Errors in Vat Declarations
    * 3 Examples of Valid Tax Invoices

Which have been your favourites? Email me and let me know which articles are your favourites. fulvia@fsp.co.za

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