FAQ - 17 August 2016
17 August 2016
Posted by: Author: SAIT Technical
Author: SAIT Technical
1. Would the period
of limitations apply to a taxpayer where SARS is asking for VAT returns for the
2011 and 2012 tax years?
Q: A VAT query
arose which led to SARS requesting missing VAT returns for 2011 and 2012 even
though the payments of VAT for those periods reflect. At the time, the returns
must have been manually submitted as we can see payments but new owners have no
copies of those returns.
A: We accept that
the reference to "the period of limitations” is a reference to section 99 of
the Tax Administration Act. As this is
an instance of self-assessment for which a return was required, SARS may not
issue an assessment five years after the due date of the original
assessment. On that basis the period of
limitations for the 2012 returns (and some 2011 ones) may well not be
The vendor had the duty to keep the relevant records. If the returns were submitted, amongst others,
to prove that. If the returns were not
submitted the period will only start when the assessment is issued.
The problem with your suggestion, to use the financial
statements is that SARS would then refuse the input tax deductions, in the
first instance because the tax invoices are not available, and then also where
they are older than 5 years.
It is one of the risks of taking over a company – the
company has the duty, through its public officer, and the fact that the
membership was sold is irrelevant.
2. When can SARS
Q: How does a
current tax practitioner deal with any potential SARS audit going back 5 years
if the client file records are handed over to a new tax practitioner appointed
by a client?
A: In terms of
section 46 of the Tax Administration Act, a request (by SARS) for relevant
material to a third party is limited to material maintained or kept or that
should reasonably be maintained or kept by that person in respect of the
taxpayer. The taxpayer is ultimately
responsible to answer the request for relevant material. We suggest that you respond to the SARS
request by explaining the position and provide them with the information that
you do have.
3. Can a VAT
registration be back-dated?
Q: Client started
business in May 2015. VAT registration was done on July 2016. SARS rejected all
the VAT201 from 2015 05 stating invoices needs VAT number displayed. If a new
business is registered for VAT after it started operating, should the VAT
number be displayed on the invoices, even if he didn't have the VAT number at
A: We are not
sure why the registration was backdated to May 2015 – we accept application was
made under section 23(1)(a) of the Value-Added Tax Act.
The relevant requirement for a valid tax invoice, in this
instance, is that it should contain the name, address and, where the recipient
is a registered vendor, the VAT registration number of the recipient – see
section 20(4)(c). For invoices under R5
000 it is not a requirement.
We submit that the fact that the Act refers to a ‘registered
vendor’ (the emphasis on ‘registered’) implies that where the vendor was not so
registered at the time of the supply, the registration number is not
required. You will have to use this as
your ground when you object to the VAT217.
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.