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Business tip: Submit your Vat returns on time - so SARS will help you out when you run into trouble

by , 19 February 2014
Do you have a habit of submitting your vat returns late? If so, continue reading to find out why you should change your ways and submit returns on time.

One of the steps you can follow when you've discovered you can't afford to pay SARS is to meet with SARS.

When you meet with SARS, explain your situation and submit your written circumstances together with your statements of income and expenditure, assets and liabilities and latest bank statement.

SARS will then assess your situation and decide if it'll allow you a set period to settle your Vat account. This period depends on your circumstances.

This is when submitting your Vat returns on time come into play.

We'll look at two examples by the Practical Vat Loose Leaf Service to demonstrate this point:

Example 1: Mr SK Elm, a pharmacist, has a few clients who owe him money. As Mr Elm has supplied the goods, and issued an invoice, he has to pay the Vat over to SARS – (he's registered according to the invoice basis).

Because his debtors haven't paying their accounts, Mr Elm runs into cashflow problems and can't pay the entire Vat over to SARS for the March tax period.

Mr Elm sets out his problem in writing, making a proposal to SARS as to how he can pay off the Vat, and takes this letter along with his bank statement, an income statement and a statement showing his assets and liabilities in to the SARS client service centre.

He hands in his documents to SARS, and three weeks later receives a letter from SARS approving his proposal to pay off the Vat.

Now let's look at the second example:

Example 2: Koos Koekemoer owns a scrap metal dealership. However, he never submits his Vat returns on time, always pays SARS later than he should, and generally isn't very compliant with his Vat returns.

He doesn't have a bank account and keeps all his cash in a box under the desk in the office. During November, he's held-up and all his cash is stolen. Now he really doesn't have money for anything – never mind the Vat!

He too, sets out his problem in writing, making a proposal to SARS as to how he can pay off the Vat, and takes this letter along with his bank statement, an income statement and a statement showing his assets and liabilities in to the SARS client service centre.

He hands in his documents to SARS. SARS, however, is unlikely to approve anything here as Mr Koekemoer hasn't been compliant in the past and his Vat record with SARS isn't so great!

From the two examples, you can see that having a good Vat record (submitting your Vat returns on time) counts when it comes to overdue Vat payments. And it'll save you on when crisis hits. So submit your Vat returns on time.

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