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Using one company’s VAT number on the tax invoices of another company

Wednesday, 29 October 2014   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: Our client’s company is applying for liquidation and one of the directors is using the VAT number of the liquidating company on invoices of a new company that has been formed. Please advise on the implications of such an action.

A: Please note that the service offered by SAIT is limited to guidance and no advice can therefore be provided. The issue raised is also technically not tax related. The following may be relevant to the issue raised:

Section 20(1) of the Value-Added Tax Act requires that, except as otherwise provided in section 20, a supplier, being a registered vendor, making a taxable supply to a recipient, must within 21 days of the date of that supply issue a tax invoice containing such particulars as are specified in section 20.  

The section requires that both the full tax invoice and the abridged tax invoice must contain the VAT registration number of the supplier.  

Section 234(g) of the Tax Administration Act provides that a person, who wilfully and without just cause issues an erroneous, incomplete or false document required to be issued under a tax Act to another person is guilty of an offence and, upon conviction, is subject to a fine or to imprisonment for a period not exceeding two years.  

We submit that the director is committing an offence by issuing the invoices with the VAT registration number of the other company. You may need to obtain legal advice here, but may want to point this out to the director.  

Another problem is that the new company would not be able to submit a return (VAT201) and make payment to SARS. The recipients also run a risk in respect of the input tax deduction.  

SARS considers that a suspicious activity would include:

1. A person or business is eligible for any type of tax but not paying any form of tax.

4. A person or business is eligible for any type of tax, registered for the tax, but not submitting the required returns to SARS.

Suspicious activities can be reported to SARS by;

  • Filling in the suspicious-activity report form online; or 
  • Phoning the fraud and corruption hotline on 0800 00 28 70.  
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.



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