HomeHome SearchSearch MenuMenu Our productsOur products

Here's how a valid tax invoice can help you avoid a Vat audit

by , 29 December 2014
SARS doesn't mess around when it comes to Vat. If it thinks you haven't done something correctly, it will audit your business.

One of the most common mistakes that leads to Vat audits is incorrect Vat documents, particularly tax invoices.

But if your tax invoice is up to scratch, it will help you avoid that dreaded audit.

Here's how...


To avoid a Vat audit always ensure your tax invoices are valid and correct 

Make sure tax invoices relating to big purchases are valid. They must give details of the seller and the name, address and Vat registration number of your business. SARS will be looking at all big purchases for errors and, in 50% of audits, it finds them!
If you don't have this document, SARS will be quick to punish you.
Here's an example of how not having a valid tax invoice will earn you an audit and a hefty penalty.
*********** New release  ************
You can get all your business tax questions answered by our experts for FREE thanks to the Vat Helpdesk… 
It comes standard with your Digital Practical Vat Guide
Click here for your copy. 

Here's how not having a tax invoice will land you in serious trouble

Happy Go Lucky buys a second-hand tipper truck from Careless Koos and pays Koos R450 000 for the truck. Koos gives him the registration papers and a receipt for the purchase, but not a tax certificate (they are both Vat vendors).
Happy claims R55 263 (R450 000 x 14/114) input tax in the July 2013 tax period. In December 2013, a SARS auditor phones Happy and asks for the tax invoice. Happy commits to getting one.
The auditor disallows the input tax claim of R55 263 claimed in the July 2013 tax period and adds R5 526 penalties and R3 454 interest. He, quite rightly, tells Happy he can claim the input tax only when he obtains a tax invoice. 
Koos is on holiday and Happy will only receive the tax invoice in January 2014. He can claim the input tax, but has to pay the R8 980 penalties and interest. Worse still, if Koos has gone bankrupt, Happy may never get a tax invoice and would have lost R64 243 through his carelessness!
If Happy had had his invoice from the start, he could have proved his input tax claim was legitimate and the auditor would have moved on swiftly.
So ensure you have a valid tax invoice so you don't trigger a SARS audit and penalties. 
Check out the Practical Vat Loose Leaf Service for 13 more tips on how to avoid a Vat audit.

Related articles

Related articles

Related Products

Recommended for You 

  Quick Tax Solutions for Busy Taxpayers – 35 tax answers at a glance

Here are all the most interesting, thought-provoking and common tax questions
asked by our subscribers over the last tax year – everything from A to Z!

To download Quick Tax Solutions for Busy Taxpayers – 35 tax answers at a glance click here now >>>
  Employees always sick? How to stop it today

Make sure you develop a leave policy to regulate sick leave in your company.

BONUS! You'll find an example of the leave policy and procedure in this report.

To download Employees always sick? How to stop it today click here now >>>
  Absenteeism: Little known ways to reduce absenteeism

This FREE e-report will tell you how you can reduce absenteeism in your workplace while avoiding the CCMA and without infringing your employees' labour rights.

To download Absenteeism: Little known ways to reduce absenteeism click here now >>>
  7 Health & safety strategies to save you thousands

Don't let a health and safety incident cost you one more cent. Implement these seven
strategies in your company today.

To download 7 Health & safety strategies to save you thousands click here now >>>