If your business, for some reason or another, finds itself in a position where it can't pay it's VAT liabilities, you shouldn't just ignore it and hope for the best.
You're still liable! And if you don't acknowledge this, you'll be facing penalties, interest and jail time.
But if you happen to find yourself in a sticky situation with SARS, use these 6 damage control tips to get back on their good side:
Tip#1: Make sure your VAT are up-to-date
Keep your current VAT returns and payments up-to-date. This will prevent SARS from penalising you and charging you interest.
This will also show SARS that you're trying to be compliant.
Tip#2: Pay on time
SARS charges VAT interest monthly, so always try pay any VAT that's in arrears by the last day of the month.
If you pay the next day, SARS will charge interest for the whole month!
Tip#3: SARS will usually remit the penalties
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If your late payment wasn't intentional, SARS will usually remit the penalty.
So pay all outstanding VAT, penalties and interest so that SARS can remit all the penalties, but not the interest.
But remember that this will be the case only if your late payment wasn't intentional. Examples of unintentional late payments:
· A big debtor suddenly let you down; or
· Your accountant was ill; etc.
Note that you'll have to prove the above.
Tip#4: What to do if SARS doesn't remit the penalties
SARS must remit the penalty if you paid late because the government, province, municipality or any other state institution caused the late payment.
You must hand in a request at a SARS branch for a penalty remission and attach a copy of the bank statement or other supporting documents.
If SARS doesn't remit your penalty, then you should ask them for a reason in writing. And if you're not happy with this reason, then lodge an objection. If SARS rejects your objection, submit an appeal.
To find out the other 2 tips, click here…