According to these figures, 58% of the budgeted income from VAT has been collected in the eight months of the 2008-09 tax year.Edward Kieswetter, chief operating officer at SARS warned, in no uncertain terms, that VAT and transfer-pricing will be squarely in their sight as these income streams for the fiscus hold the biggest risk of oozing out.
SARS said it has already seen an increase in fraudulent VAT claims.In reaction to this surge it announced radical changes to the registration process that has provoked sharp criticism.Badenhorst warns companies who are tempted to manipulate VAT payments in order to improve cash flow to refrain from doing so.It does not only amount to tax evasion, but also to tax fraud.He refers to the sentence of six years given to former cricket player Garth le Roux and his accountant due to massive VAT fraud.
According to Badenhorst, companies who deliver goods and services on credit must realise that they are going to wait longer for their payment.Their customers are also experiencing difficult times and will try to manage their cash flow as best they can."VAT is normally payable once the invoice is made out, irrespective of whether a payment was made or not.This means that the company will have to make a VAT payment to SARS even before it is paid by its customers,” Badenhorst said.
He has some practical advice for companies who are on the brink of succumbing to temptation that could have a VAT auditor on their doorstep.He added that partnerships with an annual turnover of less than R2,5 million and whose partners are all natural persons should register for VAT on the payment rather than accrual base.VAT is then payable to SARS only in the period when the money is received from debtors.Even smaller companies with an annual turnover of R1,2 million qualify for a regime where VAT returns have to be submitted only every four months.He suggested that companies request their clients to pay an amount that at least covers the VAT when they have to deliver goods and services.
Companies who pay VAT per cheque should pay it on the 25th day of the month (that follows at the end of the tax period).Companies who choose to go the e-Filing route have to make the payment only on the last day of the month.Badenhorst warned that a contravention of the VAT Act can expose a company to fines of up to 200% plus interest.
Source: By Gerhard Badenhorst (TaxTALK)