FAQ - 20 January 2016

Author: SAIT Technical

1. How do I declare VAT from periods prior to registration date?

Q: A company bought a franchise business in the motor industry 18 months ago.  They initially invoiced customers, who were taken over from the previous franchise, with zero VAT.

All the customers requested a tax invoice and they were told that in the motor industry, no one would buy from them unless they were VAT registered.

For some reason the company was unable to register immediately for VAT so they invoiced their customers with 14% VAT and used the VAT number of the previous franchise owner.

Now, 18 months later they are registered and want to pay the VAT over to SARS but SARS refused to backdate the registration date.

I requested a VAT201 for prior periods but got a message on eFiling that it would be rejected as it was for a period prior to registration.

How do I file prior period VAT201's? 

A: We are not sure if we understand the facts correctly.  You mention that the client "initially invoiced customers, who were taken over from the previous franchise, with zero VAT”.  We accept that the acquisition of the franchise was not the acquisition of an enterprise as a going concern.  

We also accept that the reason why SARS didn’t want to change the effective date is because the application was made and the registration by SARS was done under section 23(3)(b).  In terms of section 23(4)(a) SARS can then determine the effective date.  All references to sections are to sections in the Value-Added Tax Act.  

If the application was or should have been brought under section 23(1)(a) section 23(4)(b) applies.  SARS must then register the person with effect from the date on which that person first became liable to be registered.  

The following fact is problematic – you state that "they invoiced their customers with 14% VAT and used the VAT registration number of the previous franchise owner”.  This may well require a voluntary disclosure application – see section 234(g) of the Tax Administration Act.  

We suggest that you should formally request SARS (in writing that is) to change the effective date.  In this request you should explain why SARS was wrong to refuse to register the vendor from an earlier date.  This of course assumes that the earlier date is the date where the R1 million was exceeded (as it is unlikely that the earlier date was before 1 April 2014).  

The voluntary disclosure will also assist with the late payment penalties.  

If any of our assumptions are wrong the guidance would not be appropriate and you must please then raise a new request providing more detail.  

2. How do I update SARS registered details without visiting a branch?

Q: On the old format of the company tax returns, one was able to update the public officer details.  Since that functionality has been removed, that option is no longer available to Tax Practitioners.  How do we go about updating these details without spending valuable time at a SARS office?

A: You are able to update and maintain details by making use of the RAV01 form on eFiling.  Please see this link for step by step assistance on using the RAV01.  It’s noted in the guide that a Practitioner may action the following:

TAX PRACTITIONER 

A natural person is regarded as a tax practitioner if they submit returns on behalf of other individuals or businesses and are currently registered with a recognised controlling body. 

On the eFiling Tax Practitioner profile, using the RAV01 form, the tax practitioner will be able to maintain the following: 

• Selected Identity Information 
• Bank Account details 
• Address details 
• Contact details 
• Indicate the non-representative relationships or updating representative detail 
• Add a new tax product subscription if delegated by the representative.

Please note that in order to make use of this service, you should have activated yourself as the practitioner and activated the Registered Representative on eFiling. Sometimes, if there is no registered representative on SARS’ system, or if SARS requires more info, they might request that the representative goes into the branch for first time activation.  Please note that details should have been captured correctly when first registering the business.

We understand that visiting the SARS branch office is counter-productive for practitioners but, unfortunately, SARS has experienced increased fraudulent activity and this is why the procedure is in place. 

Here is further information on the topic:

http://www.sars.gov.za/ClientSegments/Tax-Practitioners/Pages/Enhancements-for-Tax-Practitioners-with-Single-Registration.aspx 

Disclaimer: Nothing in these queries and answers 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 answers, SAIT do not accept any responsibility for consequences of decisions taken based on these queries and answers. It remains your own responsibility to consult the relevant primary resources when taking a decision.