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If you've already paid Vat and the debt goes bad, do this so you don't lose money

by , 07 November 2014
As a Vat vendor, you have to collect Vat from your clients and pay it over to SARS. If you give your clients credit, then you may have to pay over the Vat, before you get the payment from your client.

Unfortunately, this leaves you in a position where the debt might go bad. This means you've paid Vat on a payment you never got.

This could cause serious cash flow problems in your business.

Luckily, there's something you can do when this happens so your business doesn't lose money.

Read on to discover what it is...

 
*********** Product endorsement  ************
 
Easy VAT Calculations in 3 steps!
 
Are you aware that thanks to the self-assessment Vat system, you're an unofficial SARS agent?
That's why you must 
 
Get your basic VAT calculations right the first time!
 
No matter how great your turnover, or how confusing your mix of exempt, deemed, notional or standard-rated supplies, there are still three basic steps to determine your Vat liability.
 
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If you've paid Vat on a debt that goes bad, do this

 
If your Vat registration is on the invoice basis, and you have debtors, you won't know if a debt will go bad until it does.
 
Thankfully, if you find yourself in this unlucky position and all your recovery methods didn't work, you can claim the Vat portion of that debt back as an input tax deduction during the tax period that you financially wrote off the debt as irrecoverable in.
 
You'd claim this input tax back by completing block 17 on your Vat return.
 
There you have it. Don't let bad debts cost you extra Vat. Claim the Vat back as input tax on your next Vat return.
 
For more on Vat and bad debt, check out the Practical Vat Loose Leaf Service.
 


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