I run a small business, but now have a big problem I hope someone here has the answer to.
A few months ago, one of my suppliers (who I have dealt with for some time) issued a invoice, including VAT, which I paid across to him. In retrospect, I should have checked the invoice and his VAT details carefully, but I am sorry to say that I didn't take that much care. It actually wasn't the first time I was working with that supplier, and past input VAT of a much lesser amount had been repaid, even after one his invoices had been supplied to SARS (after they flagged a previous VAT return for checks after submission on the efiling system).
Needless to say, this was a relatively big transaction, and SARS subsequently rejected the repayment of the VAT component of this invoice (no reason given). At that point, I found out that the supplier's VAT number had been de-registered quite some time previously. I lodged an objection to SARS, but this was turned down on the basis that the invoice did not meet certain criteria (e.g. the wording "tax invoice" was missing, as well as some other details).
I have requested that the supplier pays me back directly, but he is evasive....one story after another. He says that he is applying for re-instatement of his VAT number, and I will then be able to claim the funds back from SARS. I am dubious of this plan, though, after these dealings with him.
My questions are:
1) What is the best way to get recourse (i.e. repayment of the VAT component, that was paid across to my supplier in good faith at the time). I want to do this in a legitimate way, that cannot be argued by SARS (if the refund must come from them) and that is 100% legal.
2) Can I expect any assistance from SARS? For example, if I report the supplier to SARS for the obvious VAT fraud, and they audit him, will he be required to pay me back? Or will he only be fined, which does not solve my problem?
3) Is there any VAT ruling / legal precedent that anyone knows about for such a case?
Moral of the story I guess is to check supplier's VAT registration and invoices carefully before paying them...an expensive lesson for me unless I can somehow get those funds back.
Thanks in advance for any advice that people here may have...