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Think fines and penalties are the worst thing you'll face if you don't pay your Vat on time? Think again...

by , 12 May 2014
There are two reasons why you should pay Vat on time. The first is failure to pay Vat on time results in harsh penalties and interest. But there's an even more important reason to pay Vat on time. Read on to find out what it is...

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Errors in Vat invoices could cost you thousands!

Are there any inaccuracies in your Vat invoices? You may be charged a very high penalty!

Click here to find out how to make sure your Vat invoices are 100% legal.

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Here's why you MUST pay Vat on time

You must pay Vat on time so SARS won't kick you out of the Vat system.

The Practical Vat Loose Leaf Service says if you're a small business with an annual turnover of under R1 million, SARS can cancel your Vat registration if you repeatedly fail to pay Vat when it's due.

The danger here is that if you have large inputs and your customers are other Vat vendors, you'll forfeit the Vat on your input tax claims. Plus, you won't be able to recover Vat from your customers!

This will have a significant impact on your cash flow.

Don't take that risk. Always pay your Vat on time.

In addition, apply this tip when it comes to Vat payments to ensure you don't get into trouble with SARS.

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Think Vat doesn't apply to your payroll?

You're wrong!

Avoid this common error and keep SARS away from your door at audit time.

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Here's a useful tip when it comes to Vat payments

Like any other creditor, SARS looks favourably on debtors who make a special effort to pay outstanding taxes.

It'll often consider reducing penalties where you've done your best to settle the debt.

For example, let's say Gerry Builder employs Slap Happy to do his bookkeeping, pay wages and prepare his Vat returns.

When SARS performs an audit of Gerry Builder it finds that Slap Happy has claimed input tax on invoices that aren't valid. In addition, Slap Happy made Vat calculation mistakes.

SARS then concludes that Gerry Builder and Slap Happy were trying to evade Vat and imposes a 200% additional tax.

After this, Gerry Builder fires Slap Happy, employs a qualified bookkeeper and installs an appropriate accounting package. And he visits his SARS office to make arrangements to pay off the amount owing.

He asks SARS to reduce the additional tax.

Important: Since Gerry Builder has pulled his socks up, SARS reduces the additional tax from 200% to 75%.

The first lesson here is you must pay your Vat on time so SARS won't kick you out of the Vat system. The other lesson is if you owe SARS, you must make an effort to pay what's outstanding.



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