Have a look at this letter I received from Lucia, one of our Practical VAT Handbook 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 audit
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…
Are you sure your VAT return is 100% correct?
Putting a figure 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.
Until next time,
Group Publisher: Fleet Street Publications
PS. Ex-SARS auditor Dee Bezuidenhout has put together a special report detailing these red-flags as well as everything you need to survive every Vat audit you'll ever have, you can claim your copy here