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Who's responsible if SARS sends your Vat refund by cheque and it gets lost?

by , 27 May 2015
Whenever a legal conflict arises, all parties look for the most advantageous solution. However, when it comes to specific regulations, clear responsibilities and preset penalties, there isn't much businesses can do.

While today's articles isn't a case of a business making a mistake, we'll explain what happens when SARS sends a refund by cheque and the cheque is lost.

Who is responsible when your Vat refund goes missing?

On 16 October 2006, SARS told Stabilpave they were due for a Vat refund of R724 494.

SARS didn't have their banking details. So it posted a cheque for this amount. But, a fraudster intercepted the cheque and cashed it!

SARS said since Stabilpave hadn't given their banking details, it meant Stabilpave gave it permission to pay by cheque.

Luckily for Stabilpave, the Court found that they hadn't told SARS they wanted a cheque. So the risk was actually on SARS. So SARS had to refund Stabilpave again.

But the plot thickened.

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But, it wasn't as easy as that. Stabilpave had to wait for more than seven years to get its Vat refund!

This occurred because it had to go to the High Court and the Appeal Court to get a ruling in  its favour.

Important: Because of issues like this, SARS now only issues payments and refunds by direct, automatic electronic transfer to your company bank account.

After this case, SARS changed the rules to pass the risk of a loss of a refund to you, the taxpayer! So if you supply SARS with the wrong banking details, or you change your banking details and don't update them with SARS, you'll incur the losses!

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