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How to deal with Vat on your expenses before you're Vat registered

by , 23 July 2014
Even though SARS has introduced a new registration process, getting a Vat number can still take a while -and you've probably already started trading.

This means you'll incur Vat on your purchases and expenses.

But listen up! You can claim the Vat you spent before you get your Vat number according to the Vat Act.

You'll do this using an input tax adjustment.

Read on to find out how...

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How to deal with Vat while waiting for a Vat number
Step #1: Keep all the tax invoices for business expenses for the period you're trading but not Vat registered for up to five years.
Step #2: Once you get your Vat number from SARS, claim the entire Vat back in your first return. Fill in the total amount in block 15 on the Vat return.
Step #3: Don't charge your clients Vat.

How to charge Vat and recover it from your clients while waiting for your Vat number
As a Vat vendor, you're really an agent acting on behalf of the State. And you collect Vat and pay it over to SARS under your Vat number. But what happens if you don't have a Vat number?
Even though you're trading, you can't charge Vat to your clients. But all hope isn't lost! 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.
There you have it. These three steps will help avoid SARS penalties and you won't experience any delays in your business operations because you don't have a Vat number whiles you trading. This means you'll still enjoy all the gains of being in the Vat system.

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