Dear reader,

I’m quite confident that you know by now that if you submit a Vat refund return to SARS, it must pay you your refund within 21 business days, or else it must pay you interest. At least, this is what the Vat Act says. But does it really work like this? 

Let’s take a look

You calculate your Vat return and you’re due a refund (e.g. your input tax is more than your output tax). You submit the return on time and now you wait to get feedback from SARS.

You’ve done your duty, what’s SARS’ duty towards you? 

In terms of Section 44 of the Vat Act, SARS has 21 business (working) days to make that refund to you. In these 21 working days, it will

1. Conduct the audit;
2. Investiage the query;
3. And pay you your refund.

If you don’t get your refund, SARS must pay you interest at the prescribed rate, calculated for every day over 21 business days that it’s late. 

Does this happen? 

No!!! Generally SARS has an excuse to suspend the interest payable and not make your refund within 21 business days, due to any number of reasons, such as:

• It claims it couldn’t contact you, the vendor;
• It has queries on other tax periods;
• You have returns due from other tax periods;
• You owe money on other tax periods.

SARS can only withhold your refund and thereby suspend the 21 business days to make a refund if:

• It doesn’t has the contact details of the vendor – so make sure your details are up to date;
• Your banking details aren’t correct;
• You owe returns on Vat or any of the other taxes SARS administers;
• Your refund is less than R100;
• Your return is submitted late;
• You owe money to SARS on Vat or any of the other taxes – in this case SARS is allowed to apply the refund against such amounts owing.  

SARS CANNOT withhold your refund or suspend interest if it has queries on any other tax periods – there’s no provision in Section 44 of the Vat Act which allows it to do so! And if SARS does withhold your refund, it must give you reasons in writing against which you’re able to object!

Let’s look at a practical example:

Mrs D submits her Vat return for the February 2011 tax period, on time, on 15 March 2011. Mrs D manufactures zero-rated supplies. Her return results in an amount of R68 987 refundable to her by SARS. In terms of the Vat Act, SARS must refund Mrs D by 21 April 2011. 

All Mrs D’s details are up to date with SARS, and she owes them nothing – no returns or money.
It’s SARS’  duty to complete any query or audit in the time span between 15 March and 21 April and ensure she has her refund (if all is correct) by 21 April 2011.  If not, Mrs D has a right to insist on interest! 

Follow these 5 steps to get interest back from SARS:

1. Ensure you are correct! Yes, before you even try to fight for a refund, make sure that you don’t owe SARS any returns (for any taxes – PAYE, personal tax, etc), or any money!
2. Ensure your details are correct on the SARS system and that your return was submitted on time!
3. Write a letter setting out the tax period, when the return was submitted, and when the 21 business days expired. 
4. Request that interest be payable to you. 
5. Hand deliver it to the SARS office where you are registered, together with a copy and ensure they stamp the copy so you can prove you gave them such a letter (things have a way of getting lost in the post…).

Claim what’s rightfully yours - don’t be intimidated.

Till next month,

Dee Bezuidenhout - Vat Consultant

P.S. It’s only 4 more days till the launch of the fantastic new business website. It’s going to be packed full of critical tax and Vat content, special offers on fantastic financial products and more. Don’t miss out - read your Tax Bulletin on Monday 28 March!

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