Have a look at this letter I received from Lucia, one of my Practical VAT loose Leaf Subscribers.
We've been audited by SARS for four tax periods in a row. That's every tax period in 2016 alone!
We submit our return in time, we're compliant with all our VAT, but every time, SARS notifies us of another VAT audit! Here are copies of our VAT returns.
What is the problem?'
After receiving this, I turned to Dee Bezuidenhout, who was a SARS VAT auditor for several years for her input. Dee took one look at the question and sighed. She knew exactly what was going on. It wasn't SARS. Unfortunately, this company kept triggering their own VAT audits.
Last week I told you about SARS' three new ways to select you for a VAT audit.
But this wasn't the case for this company...
Read on to see what this company was doing wrong, so you can avoid unnecessary VAT audits.
Avoid these eight red-flags that could trigger your next VAT audit
Ex-SARS auditor reveals: eight red-flags SARS looks for when selecting who to audit…
Make sure you know what they are
so you can avoid them
You could unnecessarily trigger your own VAT audits
Did you know that SARS red flags certain actions you do as a VAT vendor? This is what helps them to pick up who they should audit.
But Lucia wasn't aware of this.
When Dee looked at her VAT returns, she saw that from January 2016, Lucia's company put in figures for income received from exempt supplies
. But none of her previous VAT returns from 2015 had any figures under exempt supplies.
This new change alerted SARS to Lucia's return. Here's why…
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Are you sure your VAT return is 100% correct?
Putting a zero in the wrong place on the new VAT Return could trigger your next SARS audit!
Find out how to make sure this never happens to you by getting your VAT Return right every single time
Avoid this one red flag SARS looks out for
When your answers on your VAT registration form don't match your VAT return, it's an immediate red flag and SARS will audit you!
So when Lucia's company filled in their VAT registration form, they told SARS what business they'd conduct. They said they'd make only taxable supplies, and not exempt supplies.
So everything was fine until the end of 2015. But then in 2016, when they started putting figures under exempt supplies on their VAT return, SARS flagged this immediate change. SARS then checked this against Lucia's VAT registration documents and saw they weren't in the business of making exempt supplies, so they'd conduct an audit to check.
And there are seven other red flags like this to watch out for. Get your hands on them here or risk triggering your next unnecessary VAT audit.
Dee Bezuidenhout is hosting the best-selling VAT Masterclass in October this year. Book your seat now
and take part in the practical mock VAT audit – everything you need to know about SARS VAT audits and how to survive them.