02 May 2012
Posted by: SAIT Technical
By Michael Stein (Friday Page)
While the person liable to account to SARS for VAT output tax is usually the vendor who makes a taxable supply of goods or services, there are some exceptions to this rule. Well known is the fact that importers of goods and services are liable to account for vat on the importation of the goods or service, although there are special rules for the supply of taxable services to an importer.
But there is a less well known exception.
Section 61 of the Value-added Tax Act provides that when, for a supply made by a vendor, the vendor has, in consequence of any fraudulent action or any misrepresentation by the recipient of the supply, incorrectly applied a rate of zero per cent or treated the supply as being exempt from tax, the Commissioner may, notwithstanding anything to the contrary contained in the Act, raise an assessment upon the recipient for the amount of tax payable, together with any penalty or interest that has become payable on the amount. In raising the assessment, the Commissioner may estimate the amount on which the tax is payable.
This means that if a customer fraudulently or, through a misrepresentation, induces a supplier to zero rate or exempt a supply, sars may recover the output tax that should have been paid by the supplier, as well as any applicable penalty or interest, from the errant customer.
Nevertheless, s61(3) states that s61 must not be construed as preventing the Commissioner from recovering the amounts of unpaid tax, penalty and interest from the supplier. But in the event of the amounts being recovered from the customer, the supplier will be absolved from liability for the payment of the amounts due.