Invoicing for repossessed goods explained
'The most important link in the Vat chain is the tax invoice.' We mention this ALL the time because an invoice is really that important. Without it, you can't deduct input tax on your purchases. So what does the law say about invoicing for repossessed goods?
Vat law recognises that if the goods bought under an installment credit agreement are repossessed, it's difficult for the person the goods were repossessed from to issue an invoice or tax invoice to the financier.
Here's what you must do when invoicing for repossessed goods
So the following must happen:
The Practical Vat Loose Leaf Service explains that if the goods are repossessed from a vendor, the person exercising the right of repossession, (normally the financier) must create and furnish a tax invoice to the debtor; and
If the goods are repossessed from a non-vendor, the person repossessing the goods must record the following details:
The name, address and ID number of the supplier;
Date of purchase;
Quantity or volume of goods;
A description of the goods;
The consideration paid for the supply; and
A declaration by the supplier that the supply isn't a taxable supply (for purchases more than R1 000).
Also make sure you verify the person's ID number. And if the value of the supply is above R1 000, make a copy of the person's ID.
What of the supplier is a company?
In that case, make a copy of the official company letterhead, and keep it.
Now that you know how to invoice for repossessed goods, make sure you comply with Vat law to avoid penalties.
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