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Do you have options while you're still waiting for your Vat registration number?

03 March 2014   (0 Comments)
Posted by: Author: Simangele Mzizi
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Author: Simangele Mzizi (FSP Business)

There's a lot of confusion around what you must do as a vendor while waiting for Vat registration to be approved. Should you start trading right away or should you wait until you get your Vat registration number? Continue reading to find out... Here's what to do while waiting for your Vat registration number.

Before we get to what you must do while waiting for your Vat registration number, let's answer the question: How long do you have to wait for your Vat registration to be approved?

According to Philip Rosenberg, from FSP Business, there's no set time for how long the registration process takes.

'You must await a SARS investigation at your premises. This will ensure your business is operating there and precedes SARS approving your Vat registration application,' says Philip Rosenberg.

So what must you do while SARS completes its processes?

Here are your two options while waiting for your Vat registration number

According to Basil Dikobe's South African Institute of Tax Professionals (SAIT) article, your first option is to levy and collect Vat from customers. But, he says the implications of doing this are that:
  • The document issued won't comply with the requirements of a valid tax invoice as it doesn't contain your Vat;
  • Customers won't be able to claim the input tax since they're not in possession of a valid tax invoice;
  • You won't be able to submit a Vat return and remit the Vat levied and collected as you don't have a reference number to do this; and
  • You'll be exposed to possible penalties and interest when SARS finally allocates your Vat number.
  • The good news is you'll be in possession of the Vat inclusive amount and won't have to finance the Vat not received.
What's your other option?

Dikobe says the second option is NOT to levy and collect Vat from customers. The implications are that:
  • Since you're obliged as a vendor to levy Vat, the amount you charge to the customer without levying Vat will be deemed inclusive of Vat;
  • This means the Vat amount will have to be financed out of your profits;
  • The document issued will not comply with the requirements of a valid taxinvoice as it doesn't contain a Vat number;
  • Customers won't be able to claim the input tax since they're not in possession of a valid tax invoice;
  • You'll be exposed to possible penalties and interest from SARS.

So what do you do since it seems like you can't with either of these options?

Dikobe has two words for you: Be proactive. 'Until SARS provides proper guidance on how vendors should proceed whilst waiting for Vat numbers; we can only recommend that vendors apply for Vat registration well in advance to avoid being trapped in this Vat registration maze. Alternatively, seek guidance from a tax professional early in the process to avoid costly mistakes,' He advises.

This article first appeared on fspbusiness.co.za.

WHY REGISTER WITH SAIT?

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.

MINIMUM REQUIREMENTS TO REGISTER

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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