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Overdue Vat account payments: What you need to know about applying for amnesty

by , 17 February 2014
There's no denying that we're living in tough economic times. Businesses are going under and basic goods are getting more expensive. This alone means it's possible to find yourself in a situation where your Vat account runs into millions and you're unable to pay SARS. If this happens, apply for amnesty. Read on to find out more about this...

Did you know that you're an agent?

That's right.

The fact that you're a Vat vendor makes you an agent for the state.

'When you're registered for Vat, SARS requires you to collect your Vat on its behalf and then pay it over,' says the Practical Vat Loose Leaf Service.

And that means the Vat you collect is never part of your turnover – it belongs to the government.

Section 7(1) of the Vat Act makes it clear that the tax levied (in other words the Vat) is for the benefit of the National Revenue Fund. That's why there are heavy penalties for paying Vat incorrectly or late as this translates into interest lost for the government.

But, Vat law takes into account that financial trouble can arise at any moment and result in you being unable to fulfill your Vat obligations.

It's for this reason that you're allowed to apply for amnesty when it comes to overdue Vat account payments.

But, there are certain terms and conditions to doing this.

Here's what you need to know amnesty for overdue Vat account payments

If you owe the taxman money from previous years and you've never applied for any previous amnesties, go to SARS and enquire about a settlement.

Note: If you and SARS reach an arrangement that you'll pay the amount in installments, stick to the agreement.

If you don't, SARS has the power to:

  • Issue a judgement against you;
  • Withdraw the money in your bank account;
  • Attach all your assets and stock and sell everything at an auction to secure the money!

When it comes to overdue Vat account payments, 'don't lose what you've spent great amounts of time and energy to build up, rather approach SARS and see what can be arranged for you,' cautions the Loose Leaf Service.

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