Can you really afford not to be 100% sure about every input tax claim you submit?
Make sure you're 100% sure. Here's how…
Claiming less money than you should; or
Claiming more money than you should, and getting a black mark from SARS plus penalties and interest!
You could be the reason you receive a 'Review of VAT201 Declaration letter' from SARS
If you haven't received this letter before, generally you will when your VAT return differs from other tax periods.
This is the mistake Derek made. He filled in a block on his VAT return which he never uses.
You see, if you insert an amount into one of the blocks (output or input) you don't usually use, it will trigger an alarm bell at SARS.
Such instances can include filling in:
Block 3 for exempt supplies;
Block 12 for adjustments;
Block 17 for bad debts; and/or
Block 18 for adjustments.
These are all blocks that in general, you'd seldom use, if at all.
Always make sure you complete your VAT return correctly and put the correct amounts in the correct blocks as allocated.
But it's not as simple as that, read on to find out what Derek's next mistake was…
.....................Hot off the press..................
Errors in VAT invoices could cost you thousands!
Are there any inaccuracies in your VAT invoices? You may be charged a very high penalty!
The truth is brutal! Even if it wasn't you who made the mistake, it may be you who will bear the consequences. If SARS has found inaccuracies, you will be assessed, held liable to penalties and interest and possibly even additional tax! You may even be prosecuted!
To be continued here
If you ignore the SARS' letter, you're opening yourself up to an audit!
When you ignore SARS' letter, or don't respond, SARS will take it as if you agree with its audit and assessment.
So in Derek's case, SARS reversed his input tax deduction. His output tax suddenly became payable and SARS raised penalties for late payments and for claiming VAT when he shouldn't have.
And, just helped itself to his business bank account!
If Derek had this report
he could've saved himself the R150 000 and received his R30 000 input tax.
Don't make the same mistakes Derek made. Get your hands on 'That dreaded SARS VAT pop-up letter ANTIDOTE' and protect your bank account today!
P.S. Think Vat doesn't apply to your payroll? You're wrong! Here's how to avoid this common error
and keep SARS away from your door at audit time.