One sure way to trigger a SARS audit is to deal with Vat incorrectly when you sell your business assets.
Since that's a risk you can't afford to take, you must deal with Vat correctly.
Here's how to deal with Vat when you sell business assets
According to the Practical Vat Loose Leaf Service, you should charge Vat if you:
This means you have to charge the Vat on the selling price of that asset and pay the Vat over to SARS on your Vat return which covers the period in which you issued an invoice or received payment for that asset (whichever happened first).
You'll fill in the amounts at blocks 1A and 4A on your Vat return.
Here's an example of how you would do this: Company ABC sells their old computers for R1 140during August 2013. They claimed input tax on the computers when they bought them, seven years ago.
Company ABC has to charge R140 Vat on the sale of the computers and pay it over to SARS on the Vat return that covers the August 2013 tax period.
They input R1 140 in block 1A and R140 at block 4A on the Vat return.
So when should you not charge Vat?
Don't charge Vat if you:
Here's an example: Let's say Company ABC sells two company cars. They weren't entitled to claim the input tax deduction on these cars when they bought them five years ago.
Company ABC doesn't charge Vat on the sale of these cars as the input tax was denied to them at purchase.
It's that simple. Make sure you follow this procedure to deal with Vat correctly when you sell your business assets.