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Six simple steps to cancel your VAT registration with SARS

by , 21 October 2015
Has your turnover fallen below the R1 million compulsory VAT registration threshold? Or has your company stopped operating in South Africa? If so, you can de-register from VAT.

But watch out, SARS catches out some unknowing VAT vendors when de-registering. If you don't de-register correctly, SARS can make you pay over additional VAT, even if you didn't charge it!

So read on as I let you in on five steps you should take to de-register from VAT correctly.

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VAT registration and de-registration has never been this easy!
Do you know:
  • When you're eligible to apply for VAT;
  • How to correctly fill in your VAT101 form for registrations;
  • How to correctly fill in youVAT123e form for de-registrations;
  • What supporting documents you need to take to SARS; and
  • Your VAT responsibilities while waiting for your confirmation from SARS?

We'll give you answers to all this and more. Click here…
Why cancel your VAT registration?
Before I tell you how to cancel your VAT registration, let's look at the four conditions where you can ask SARS to cancel your VAT registration. These are:
  1. The value of your taxable supplies during any12-month period is less than R1 million, excluding VAT. If your sales drop below R1 million in any period of 12 months, you can apply to de-register;
  2. You cease to carry on any enterprise and don't plan to start conducting any enterprise in the next 12 months;
  3. You applied for registration of a new business but never commenced operating the business; and/or
  4. You sell your business. If you close your business, you must apply for de-registration – failure to do so can cost you a fine of R80 000 (Section 24 of the VAT Act)!
If you don't fall into these categories, SARS isn't likely to accept your application for de-registration!
Read on to find out how to apply to cancel your registration correctly…

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Do you know how to handle the VAT in these situations?
  • How to treat input tax before you became VAT registered;
  • Correctly charging VAT on the sale of a going concern; and
  • VAT on bad debts.
The ordinary VAT rules don't apply!
Here's what you need to know…
How to apply to have your VAT registration cancelled
Step #1: Make sure you meet the VAT de-registration criteria.
Step #2: Apply to SARS in writing on a VAT123e form to cancel your VAT registration.
Step #3: Attach a letter setting out more details. Tell SARS why you're de-registering and quote the Act to support your claim. If you're selling your business, give SARS the details of the sale and the buyer.
Step #4: Sign the form and submit it to SARS.
Step #5: Get proof that you submitted your form to SARS. If SARS doesn't get notification of your de-registration, they'll will hold you liable for VAT on your future sales, even if you didn't charge any!
Step #6: Keep your documents in order! If SARS approves your cancellation it may not be the end of the matter. SARS will probably carry out a final audit on your business to check you've correctly accounted for the VAT!
There you have it, now you can correctly apply to de-register for VAT when you need to.
P.S. You must declare output tax "exit Vat" on the goods you keep when you de-register (section 8(2) of the Vat Act). Turn to chapter D05: De-registering form VAT in your Practical VAT Loose Leaf for practical in-depth examples on how to do this correctly.

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