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Want to register your legal practice for Vat on a payments basis? Make sure you know these two rules...

by , 20 January 2014
Vat law allows you to register your legal practice for Vat on either an invoice or payments basis. But, special rules apply if you want to register on a payments basis. Read on to find out what these rules are...

That's right. Special rules apply if you want to register your legal practice on the payments basis.

But, before we get to the rules, let's first define what a 'payment basis' is.

Registering a legal practise for Vat: Payment basis explained

According to the Practical Vat Loose Leaf Service, the payments basis is where you pay Vat over to SARS on all payments you receive. You then claim input tax on expenses or purchases you've actually paid.

The following rules apply if you want to register your legal practice on the payments basis

If you want to be able to account for Vat on the payments basis, take note of these rules:

Rule #1: Your practice must be that of either an individual or a partnership where the partners are natural persons and not companies, Closed Corporations (CCs) or Trusts; and

Rule #2: The turnover of your practice must NOT be more than R2.5 million in a 12-month period.

Note: In all other cases, the practice will be registered for Vat on the invoice basis!

The invoice basis is where you pay the Vat over to SARS per invoice you issue, whether they've been paid or not. You can also claim your input tax on invoices whether you've paid them or not.

Remember, ignorance of the law is NEVER an excuse. You can only register your legal practice for Vat on the payment basis if you're in line with these two rules.

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