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Avoid this simple tax invoice mistake - it counts as Vat fraud!

by , 11 February 2013
Three men have been jailed in Britain for setting up nine fictional firms so they could get away with £300,000 in a Vat scam. But Vat fraud isn't always a cloak and dagger, pre-planned event. It's surprisingly easy to commit Vat fraud - here's one way to avoid it.

It's usually tax fraud that makes the headlines but it seems Vat fraud is increasing.
 
Last week, three men involved in a British Vat scam pleaded guilty to conspiracy to cheat the public revenue, says The Register website.
 
Here in South Africa, SARS' Enforcement and Customs Operations report for January 2013 shows that Vat fraud and abuse of the tax system is on the rise in South Africa, too.
 
In fact, a SARS employee was arrested on allegations of Vat fraud for illegally registering over 200 companies for fraudulent Vat refunds, says SARS.
 
You could be guilty of Vat fraud too, without knowing it!
 
 It's becoming common for customers to ask you to issue two tax invoices for a single transaction.
 
You need to avoid this at all costs, as this could result in the Vat being claimed twice as input tax.
 
If this happens, you'd be held liable for Vat fraud, says FSP Business.
 
So what do you do if the original tax invoice goes missing?
 
You can avoid committing Vat fraud by issuing a copy of a tax invoice, but you'll have to make sure the word 'copy'appears clearly on the tax invoice copy.
 
This way, if input tax is claimed on the strength of a tax invoice copy, SARS auditors will be able to check to see whether the Vat has already been claimed as input tax or not.
 
It's simple. One word can prevent you from being persecuted for Vat fraud.

Make sure any tax invoice copies you issue clearly state they're copies!

Remember, the most important link in the Vat chain is the tax invoice. Get it wrong, and you won't be able to deduct input tax on your purchases. Fo rmore information on tax invoices get your hands on The Practical Vat Loose Leaf. In the Practical Vat Loose Leaf we've got a dedicated chapter on tax invoices and you'll discover:
  • What's the difference between a regular invoice and a tax invoice         
  • Checklist: When you'll need a tax invoice            
  • 8 Requirements for a valid tax invoice                 
  • 3 Ways to show the Vat amount on a tax invoice            
  • Differences between full and abridged tax invoices        
  • Examples of valid invoices, tax invoices and abridged invoices        
  • 8 Rules for issuing and using electronic invoices        
  • Managing your tax invoices correctly as a supplier and as a recipient        
  • Common tax invoice errors to avoid                
  • How to issue Invoices if you act as an agent            
  • Use the Vat264 form to keep records of invoices for second-hand goods    
  • How repossessed goods are invoiced              
  •  Alternatives to tax invoices                       
Get your Practical Vat Loose Leaf here...



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