5 year old error in a VAT return: does section 98(1)(d)(ii) of the TAA apply?
24 June 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
Q: The taxpayer
(a company) is a VAT Vendor. During its statutory audits (2007/2008), audit
journals were passed which resulted in an increase in input VAT. The accountant
did not realise that he/she has to account for this input VAT on the VAT returns
and that it needs to be done within 5 years from the date of the invoice. The
accountant claimed the VAT in later periods (2013/2014) and the SARS auditor
denied the input VAT claim based on the above section that 5 year period has
Can the vendor request under section 98(1)(d)(i)(aa) and
section 98(2) of the TAA that the 2007/2008 VAT assessments be withdrawn and
that the correct amounts be declared on it based on the fact that the returns
contain undisputed factual errors by the taxpayer? According to section
99(2)(d)(iii) the period of limitations for issuance of assessments does not
apply if section 98(2) is applicable.
Or can the vendor request under section 93(1)(d)(ii) that
reduced assessments be issued for 2007/2008 also based on the fact that these
returns contain undisputed errors by the taxpayer in a return?
A: We accept that
none of the exceptions in section 99(2) applies.
The only option available to the taxpayer would be the one
where the assessment is withdrawn (section 98(2)). Section 93 results in a reduced assessment
and that is caught by the 3 year prescription rule. Where the assessment is withdrawn in terms of
section 98(2) it regards the assessment as not having been issued and
prescription therefore is not an issue.
SARS would therefore not be able to entertain a reduced assessment under
section 93 as section 99 would not permit that.
The taxpayer of course bears the onus to proof that it was,
amongst others, a bona fide error – see the JB Mining case.
Disclaimer: Nothing in this query and answer should be construed as
constituting tax advice or a tax opinion. An expert should be consulted for
advice based on the facts and circumstances of each transaction/case. Even
though great care has been taken to ensure the accuracy of the answer, SAIT do
not accept any responsibility for consequences of decisions taken based on this
query and answer. It remains your own responsibility to consult the relevant
primary resources when taking a decision.