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What to do if Your VAT Refund is Delayed

31 July 2011   (0 Comments)
Posted by: Author: Peter Franck
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What to do if Your VAT Refund is Delayed

Your rights when dealing with SARS

For sometime now, SARS has been very reluctant to make a big VAT refund unless it is sure that the claimant is really entitled to it and that they are not a fraudster. It has recently lost millions of rand to fraudsters, sometimes with the participation of their very own staff.

One can therefore understand their concern regarding large VAT refund claims.Recently, this has caused many refunds to be delayed for long periods of time, with serious cash flow implications for vendors.Vendors are entitled to have refunds due to them refunded within the period prescribed in the VAT Act. The law places obligations not only on vendors but also on SARS.However, many SARS employees appear to be unaware of (or insensitive to) what the law requires of them.

In terms of Section 44 read with Section 45 of the VAT Act, SARS must process a refund within 21 business days of the return being submitted. If a vendor does not receive the refund by the end of that period, they must contact SARS in writing and ask why the refund has not been received.

A  call  to  the  SARS  call  centre  will  not solve the problem. I have recently dealt with a large number of cases  where  refunds  amounting  to  many  millions  of  rands  have  simply  not  been  attended  to by SARS. By  law,  SARS  must  notify  avendor  in writing if it refuses tomake the refund within 21 business
days.This  enables  the  vendor  to  resolve  any  outstanding  issue, or  object  and  appeal  against the
refusal to make a refund.SARS can refuse to make are fund where:
• It requires information (e.g.some large inputs or the reason for the refund), or it wishes to conduct an audit;
• The VAT return is incomplete,not signed or contains errors; or
• Any tax returns are outstanding.

It is in your interest to sort out any of these issues. Until you do—no refund.

SARS  also has the right to set off the VAT refund against any outstanding taxes.Where SARS has not refunded you or informed you in writing within 21 business days why it will not make the refund, it must pay you interest on the delayed refund.

Unfortunately, SARS does not automatically pay interest when they delay refunds.If your refund is delayed (not received within 21 business days)and you believe that SARS should have paid you interest, write to them and demand the interest in terms of Section 45 of the Act.

Also state in your letter or email that if they are not prepared to pay the interest, they must give their reasons in writing.You are also entitled to inform them that, should they not pay the interest within, say 14 days of the date of your letter,you demand mora interest (at 15.5% per annum) on the interest not paid to you.

Source: By Peter Franck (Tax breaks)


Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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