Businesses that exceed the R1 million threshold legally have to register for Vat. And businesses with a turnover of R50 000 in the last twelve months can voluntarily apply for a Vat number.
Even though SARS has introduced a new registration process, getting a Vat number can still take a while. And I'm sure you don't have the time to sit around and wait for SARS to give you your number.
So what do you do? Well, you can carry on trading as normal. Not having a Vat number doesn't stop you from operating. It just means you can't charge Vat and will incur Vat on your purchases and expenses.
Doesn't sound fair does it?
It's not, but not all hope is lost.
You can claim the Vat you spent before you got your Vat number (Section 18(4)(b), Vat Act).
You can claim input tax up to five years after the date on the invoice. You'll do this using an input tax adjustment. Here's how…
Don't let SARS drag its heals on your Vat registration
Use this eleven-step action plan to get your Vat number the same day!
You need to follow the right procedure when you submit your VAT101 form. If you don't, you might have to pay out of your own pocket Vat owed to SARS while you wait for your Vat number.
Luckily for you, we've put together an eleven-step action plan to help get your Vat number the same day... And I want you to have it! Here it is
Here's how to deal with Vat while you wait for your number
Keep all the tax invoices for business expenses for the period you're trading but not Vat registered for up to five years.
Once you get your Vat number from SARS, claim all that Vat back in your first return. Fill in the total amount in block 15 on the Vat return.
Don't charge your clients Vat.
As a Vat vendor, you're really an agent acting on behalf of the State. As a vendor, you collect Vat and pay it over to SARS under your Vat number. But what happens if you don't have a Vat number?
How to charge Vat and recover it from your clients while waiting for your Vat number
Even though you're trading, you can't charge Vat to your clients. Once you receive your Vat number, you can go back and levy the Vat on your clients (Section 67, Vat Act)
. This is, of course, unless you have an agreement that specifically disallows this.
Let's look at an example.
Asif and Jacques start an accounting practice. They start trading on 1 May 2014. They haven't received their Vat number at the end of May when they issue invoices. So they don't charge their clients Vat.
They only receive their Vat number on 1 June 2014. But SARS holds them liable for Vat from 1 May 2014. A business must charge Vat from when it becomes liable to register. It's legal for Asif and Jacques to go back to the clients they invoiced in May and charge the 14% Vat as an additional charge. So they issue credit notes for the May invoices and re-issue tax invoices that include Vat.
Their clients can claim the Vat back as input tax.
Let's look at another example
Bob's Construction wins a tender with Golden Municipality to build a bridge. Bob isn't Vat registered. Golden Municipality is afraid Bob will register now that he's won the tender and increase the price with Vat. So the municipality specifies in the written agreement that the price is fixed. Even if Bob registers for Vat, he can't levy the Vat on the municipality when he receives his Vat number because of this agreement.
Apply these three steps today, claim back your Vat and put more money in your businesses bank account.
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