The provisional tax amount of R3 million would be placed into the company's cheque account, so SARS could debit this amount by the due date of 31 December 2015. The VAT due, an amount of R350 200, would also be paid over to SARS.
What he and his bookkeeper hadn't realised is the company's VAT would be debited from the cheque account before 31 December 2015. Which means there were insufficient funds left for the debit of provisional tax….
It was only when Mr Jones came back to work on 10 January 2016, that he picked up the error. SARS had considered the provisional payment unmade. And slapped XYZ Trading with a penalty of R300 000! PLUS interest of R2 342.46!
Here's how they got out of paying the penalties…
********** Advertisment **************
How much time do you spend looking for useful tax information? Do you need all the South African taxes analysed and explained in one easy location?
Now you can have all the information in one place: The Practical Tax Loose Leaf Service.
Over 500 pages compiled by our tax experts, comprising of:
All the definitions and legal regulations, useful advice, exceptions to the rules that help you slip through the legislative jungle of taxes.
Case studies and practical examples that show you what elements you should consider for your taxes to be perfect.
Red flags you need to watch out for and the penalties you'll face if you don't respect them.
Sample templates at your disposal, ready to be filled in, customised and printed.
You will also get free access to the accountingandtaxclub.co.za. Here you'll find questions and answers on any tax and accounting issues. You can also ask our experts a tax question.
Get your copy of the Practical Tax Loose Leaf Service now.
What you can learn from the advice we gave Mr Jones
XYZ had intended to pay the VAT AND the provisional tax to SARS. But it was a transaction error that landed them on the wrong side of the taxman!
We advised XYZ to pay up the interest (tough luck!) that same day. And then write SARS a detailed letter, explaining the error and proving that it had both intended to make payment and had made the funds available.
It worked! SARS scrapped the penalty amount!
********* Advert ***********
99 Tricks and tips to minimise your tax!
Safe solutions to the most current controversial tax issues!
I'm going to get straight to the point without wasting your time. Here's what this is about.
I've had a number of queries from your colleagues from other companies who've come across challenging tax situations they've encountered in their day-to-day tax role.
We've used our network of top tax experts, people with weight in SARS, to give us the solutions. Do you want to know what these solutions are?
Find out here