AD CC vs. SARS (VAT case #1069) 25th July 2014
What were the facts of the case?
SARS deregistered VAT vendor AD CC in January 2000 because he failed to submit his VAT returns.
He would charge the VAT and issue tax
invoices, but he didn't submit the VAT returns or pay over the VAT to SARS.
SARS did an audit on AD CC in 2010, in which he was assessed for unpaid VAT.
This resulted in him facing a 200% understatement penalty in terms of the Tax Administration Act.
The vendor then objected and appealed the penalty, stating that he had taken over the business from his father, and didn't know that it had been deregistered.
But he STILL didn't submit VAT returns or pay the VAT.
What did the Court say?
The Court noted that once the vendor was caught, he cooperated fully with SARS, and so it decided to reduce the penalty from 200% to 100%.
The Court held that a fine was still applicable as the vendor was charging VAT and not paying it over to SARS.
What can you learn from this case?
1. If you take over a business, check its Vat registration
2. If you charge VAT, declare it and pay it over to SARS.
3. DON'T charge any VAT if you're not registered for it!
4. If SARS decides to audit you, always remember that your cooperation can really be to your advantage.
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