Is your company issuing and receiving valid tax invoices?
'The most important link in the Vat chain is the tax invoice. Get it wrong and you won't be able to deduct input tax on your purchases,' warns the Practical Vat Loose Leaf Service. Don't let your company fall into the 80% of the assessments raised by SARS that relate to defective tax invoices. Read on to find out the eight requirement for valid tax invoices are so you can make sure you issue and receive correct, watertight tax invoices every time.
The tax invoice provides an audit trail in your company records and verifies your output tax.
'Without [them] you can't prove your input tax claims and your customers who're registered for Vat can't claim the Vat back you charged,' says the Practical Vat Loose Leaf Service.
But that's not the only price you'll pay for getting it wrong.
If your company issues a defective tax invoice, or fails to issue a tax invoice within 21 days of making a supply, you could face two years in jail or a fine of R80 000.
To ensure all invoices your company receives or issues comply with the following requirements of the Vat Act (if they're for a value greater than R5 000), they must have the following aspects to be valid:
Eight requirements for a valid tax invoice
The words 'Tax Invoice'; 'Credit Note' or 'Debit Note', depending on the document required;
The name, address and Vat number of the supplier (the Vat number will be a ten digit number, starting with '4'). SARS sends you your Vat number when you register for Vat;
The name, address and Vat number of the purchaser. If you sell to someone that isn't a vendor, leave it open;
A serial number of the invoice;
The date the product or service was issued;
A description and the mass or quantity of the goods bought;
The amount paid for the goods bought; and
The price of the goods, the amount of Vat and the total, or one amount including the Vat. A statement that Vat is included in the price and the rate at which it was charged (either 0% if zero rated, or 14% if standard-rated must appear on the tax invoice).
Make sure your company's tax invoices meet these requirements so you can deduct input tax on your purchases and avoid hefty fines.