Are there any inaccuracies in your tax invoices?
Have you ever thought about if:
invoices you receive are issued properly; and
All the SARS requirements are on the tax
If they aren't accurate, you could be liable for penalties, interest and even prosecution!
Here's what you need to do…
What happened to Mr X?
Because Mr X couldn't produce a tax
invoice, SARS raised an assessment on him. And they added an understatement penalty of 200% and interest. This came to more than R4.5 million in total!
Mr X tried to get out of his assessment. He claimed there was fraud at his supplier's business. So because of this, he couldn't get the necessary tax
invoices. He said SARS should exercise their discretion in terms of Section 20(7) of the VAT Act
, to allow the input tax
But SARS refused to do this. And to make it worse, the VAT Act doesn't allow you to object or appeal against such a decision!
So this meant Mr X couldn't go to the tax
court to review SARS' decision! He had no choice but to pay the R4.5 million or go to the High Court.
Here's what you can learn from this case…
**********Recommended for you**********
SARS issues TWO MILLION VAT review letters a year
That's the letter that pops up immediately after your submit your VAT returns. The same letter that has seen people around the country wake up to thinned out bank balances.
Now get this: There are only 700 000 vendors registered with SARS…
You do the math.
Every vendor should receive this letter at least once a year.
Here's how to protect your bank account before you do…
Three lessons we can learn from this case
1. Don't claim input tax
If you can't produce your tax
invoices, SARS will think you're trying to claim money fraudulently and will raise an assessment against you. They will slap you with penalties and fines!
Mr X is now out of pocket by over R4.5 million. Something he could've easily avoided if he just didn't claim the input tax
when he had no tax
invoice to support it!
2. Make sure you have valid tax
invoices for all your purchases.
If your tax
invoice doesn't meet all the requirements of a valid tax
invoice according to the VAT Act, SARS will deny your input tax
claim. So make sure you know what should be included in your tax
3. Keep your tax
invoices safe and on file for at least five years.
It's your responsibility to get valid tax
invoices for purchases over R5 000 from your suppliers with your correct VAT registration number. Or you'll forfeit your refund. Here's how you can make sure it's valid…