80% of all SARS penalties come from making this one mistake! Here's a simple way to avoid it...
There's a reason a tax invoice is famous for being the most important link in the Vat chain: It provides an audit trail in your records and verifies your output tax.
Without a valid tax invoice, SARS will deny your input tax claims. And, your business will lose out on a potentially vital cash injection.
What's more, you won't escape penalties - 80% of the assessments SARS raises relate to invalid tax invoices.
Submit just one defective tax invoice, and SARS could hit your business with heavy penalties running into thousands of rand. It will also watch your business like a hawk to see what else you're doing wrong.
But you can avoid all of this if you have the know-how.
Read on to find out the three rules you must follow to ensure you have watertight tax invoices.
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Follow these three rules to ensure you have watertight tax invoices
If you issue invoices for more than R5 000, they must contain the following details:
The words 'tax invoice';
Your name, address and Vat number as the supplier;
The client or recipient's name and address;
If the recipient is a registered vendor, include their Vat registration number;
An individual serial number;
The date you issued the tax invoice on;
A full and proper description of the goods (indicating, where applicable, that the goods are second-hand goods) or services supplied;
The quantity or volume of the goods or services supplied;
Either the amount of the supply, the Vat and the total or the total amount of the supply, including Vat, and a statement on the invoice that says Vat is included.
Your tax invoice
must be in 'rand'.
But if it's a zero-rated export, it doesn't' have to be in rand. In this case, you have the option to use a foreign currency.
You must reflect addresses correctly on tax invoices
You must include the recipient and your address (as the supplier) on the tax invoice. This address could be either:
The physical address where the enterprise is conducted;
The enterprise's postal address; or
Follow these three rules to ensure you have watertight tax invoices and avoid SARS penalties as a result.
PS: We strongly recommend you check out the Practical Vat Loose Leaf Service.
It gives you tips, tools and advice to comply with the Vat Act.