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How to stay on SARS' good side if you're forced to make a late Vat payment

by , 29 December 2016
How to stay on SARS' good side if you're forced to make a late Vat paymentIt's good business practice to save yourself time and avoid unnecessary fines and penalties by making your Vat payments correctly and on time. But what happens if your payment is late due to unforeseen circumstances? Read on to discover what your company can do to stay on SARS's good side even with a late payment.

It's your responsibility to ensure SARS receives your company's Vat payments correctly and on time to avoid any penalties or interest. But life happens and unforeseen events can cause your company to default.

Luckily, there's a way to salvage the situation and stay on the right side of the law.

Here's how to stay on SARS' good side

If your company is struck by an unforeseen disaster, for example, your computer records are wiped out by a virus or are lost in a fire, the best solution is to write to SARS.

Your letter must explain what happened and state that you'll have difficulty working out your company's Vat liability and request an extension to submit your tax return.

'You'll need to make a provisional deposit of the amount of Vat you estimate you'll owe as this'll demonstrate your good faith to SARS,' advises the Practical Vat Loose Leaf.

When you account for Vat later on, remember to refer back to the amount you estimated you'd need to pay SARS. That's because if you've paid in excess of what your company actually owes, SARS will refund that excess on your request. But if you short-paid SARS, you'll have to pay in the difference.

Remember, while it's still likely that penalties and interest will be raised on the shortfall, you'll have a good case to argue for remittance of this amount,' says the Loose Leaf.

Here's an example by the Practical Vat Loose Leaf of a late payment letter you can send to SARS

Dear Sir

VALUE ADDED TAX: Insert (YOUR TRADING NAME AND VAT NUMBER AND TAX PERIOD)

We refer to the above tax period and payment which is due by the ………………… (Insert date) and wish to inform you that we will be unable to submit our Vat return and payment on time due to the following reasons:

(Explain your situation)

In light of the above, however, we estimate our Vat liability for the tax period to be R…………….. and attach a cheque of R…………………. in lieu of a deposit towards payment of the Vat. We estimate that we will be able to submit our Vat return and the balance of the payment by ……………….

We thank you in anticipation. Should you have any queries, please do not hesitate to contact me,………………, at…………………….

Yours faithfully
……Signature……
 

Putting a zero in the wrong place on the new Vat Return could trigger your next SARS audit!
 

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