As a Vat vendor, you essentially collect tax for the state. And that's why 'there are heavy penalties for paying Vat incorrectly or late as this translates into interest lost for the government,' says the Practical Vat Loose Leaf Service.
But what happens when crisis hits? Where you've calculated the Vat return you must pay SARS, but you simply can't afford to?
SARS recommends you take these five steps to avoid aggravating an already unpleasant situation.
Take these steps when your company can't pay Vat to SARS
Step #1: Don't forget your Vat return. Even if you can't afford to pay SARS, it's a good idea to still submit your Vat returns. You'll be found guilty of an offence under the Vat Law if you don't submit your returns. The payment of the Vat return is a separate incident, which is dealt with separately under Vat Law.
Step #2: Provide a detailed explanation of your circumstances. Set out your company's circumstances in writing. Explain why you can't pay the Vat and propose how you'll be able to settle the amount in question.
Step #3: Provide SARS with up-to-date financials. Prepare a statement of your income and expenditure and an up-to-date statement of your assets and liabilities.
Step #4: Get your paperwork in order. Make a copy of your latest bank statement and take it with when you're visiting SARS.
Step #5: Consult 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,' says the Loose Leaf. Discuss your company's proposal for settling the account with the SARS' official. SARS will allow you a set period to settle your Vat account. This period will depend on your circumstances.
Keep in mind that when you finally pay off your Vat account in installments, SARS will still levy penalties and interest.