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Here's why you should register your B&B for Vat if you qualify

by , 06 November 2014
If you think Vat doesn't apply in the B&B industry, you're mistaken.

Just because you run a B&B doesn't mean you're exempt from Vat and, more specifically, Vat registration.

If you qualify, you must register promptly.

Read on to find out why this is important...


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It's crucial that you register your B&B for Vat. Here's why…

 
The Practical Vat Loose Leaf Service explains that if you're liable to register as a Vat vendor but don't, SARS can easily trace you using these measures:
 

  • It will look at your income tax returns. If you submit your income tax returns but aren't registered as a vendor, SARS will see that your annual turnover exceeds the R1 million threshold and it will come after you.

  • SARS may audit your suppliers or customers – the invoices will tip them off.

  • SARS does blitz audits on specific industries from time to time.

  • Competitors could tip SARS off.
 
Once SARS has traced you and has found that you should have registered your B&B for Vat but haven't, you'll face these four unpleasant consequences:
 
  1. You'll have to pay back all the Vat you didn't charge;
 
  1. SARS could impose additional tax in terms of the Tax Administration Act (TAA);
 
  1. You'll be liable for a penalty of 10% and interest per month on Vat you didn't pay.
 
  1. You could face prosecution. Failure to register for Vat is a criminal offence subject to a fine and imprisonment.
 
As you can see, failing to register your B&B for Vat if you qualify is out of the question. Fill in the VAT101 form and submit it to SARS to start the process. If you're not sure how to do this, The A-Z of Vat Registrations will give you an 11 step action plan you can follow to register for Vat.

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