Vat Matters

Vat Loose Leaf subscribers regularly contact the Practical Vat Loose Leaf’s Helpdesk guru to help them sort out payment and refund problems with SARS. Here are five common and dangerous Vat scenarios that subscribers find themselves in. And some tips for avoiding them!

Mismatched payments do happen

Often, the payments are received late, internet or debit order payments are not matched to Vat or PAYE returns (SARS has billions of Rands sitting in an unallocated suspense account), or SARS has just made an innocent mistake.

Taxpayers are often blissfully unaware that, according to SARS’ record, large amounts of penalties and interest have been levied against them automatically by the SARS computer.

In the good old days, SARS contacted taxpayers so that the matter could be resolved – but this no longer happens. It lets penalties and interest mount up and takes great delight when the taxpayer finds out he owes millions....

We’re now entering the hunting season

I recently helped a vendor sort out penalties and interest of R1.8 million incorrectly levied by SARS because of a payment not credited back in 1998. How did the taxpayer find out? Well, in February and March each year, SARS staff goes on a revenue drive to meet targets so they can get their bonuses... and they called the taxpayer!

Claim your Vat refund

When vendors claim Vat refunds, they are often not aware that SARS is required by law to make refunds within 21 business days of receiving a Vat return, failing that it must, by law notify the vendor in writing why it can't make the refund.

In most cases, SARS doesn’t notify the vendor of refunds when it should

I recently had to help two vendors, both international companies, to recover R7.5 million and R6.3 million, respectively. I’m now in the process to recover nearly R2 million for a welfare organisation that feeds and houses street children and sends them to school.

Does SARS care? Definitely not! SARS auditors might lose their bonuses if they make this refund.

4 Step checklist to follow

So what must you do to make sure SARS doesn’t skin and then hide your skeleton in its closet?

1. Get statements of account for the last five years from SARS.
2. Check these statements and request SARS to remit penalties and interest incorrectly charged, or charged without giving you a chance to explain.
3. Follow up any refunds not made. One of our subscribers had found that SARS had not made refunds totalling R683 ,000 over the last two years - his bookkeeper gave up on trying to get these refunds, resigned her job and emigrated to Australia!
4. Make sure SARS staff date stamp every document you deliver to its branches. And keep copies of everything.

Get the skeletons out the closet and get a life!

Until next month

Peter Franck
Editor-in-Chief Practical Vat Loose Leaf

P.S. If you need a Vat consultant, email Lenell. She has my details and she’s happy to pass them on to you.

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