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Thread: VAT201 CORRECTIONS

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    VAT201 CORRECTIONS

    I have a client whose VAT201 Return was rejected by SARS. They are newly registered for VAT and had bought a vehicle in the first period which resulted in a refund being due from SARS. Subsequently, and without advising me, they have gone ahead and paid SARS the amount that SARS insists they owe. The VAT period has already been closed on Pastel (it was 2013/08) and now I'm not sure what I should do - with SARS or Pastel!

    My client does their own e-filing and they have not submitted a corrected return because they don't think it is necessary - I disagree, who is right?!!

    How am I going to make sure my VAT Control Account in Pastel balances? The tax period has already been closed. The VAT was introduced via a supplier invoice for the full amount of the vehicle cost.

    My client has just called and told me that SARS have instructed them to submit the 2014/03 VAT Return and include the vehicle invoice from August 2013. Does this mean I should pass a credit note for the August invoice and re-enter the invoice in the current period?

    I'd really appreciate any insight here!

    Thanks.

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    Diamond Member Justloadit's Avatar
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    If the company does not deal in vehicle sales, then if I am not mistaken, they can not claim VAT on a vehicle purchase. There are a few exceptions, and some of my learned friends on this forum will comment further on this.
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    Platinum Member Marq's Avatar
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    I dont know about the pastel side, but I can tell you:-

    If you make any adjustments to the return and numbers for that period, then make sure it is done in that same sars period.

    I made corrections and put adjustments (on their helpdesk recommendation) in the next period and have been explaining ever since.
    On the one side I have an under payment which has now attracted penalties and interest for short payment and the next period shows an over payment and unallocated amounts. Every time I have attempted a correction (under their guidance) the story gets worse.

    Now I have had to write to please explain and beg forgiveness and tell them how sorry I am that I stuffed up and its all my fault but its just an admin error that all squares up if you take the two months together.
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    I'm with Marq. If the payments get behind the returns, SARS isn't going to hesitate to burn your client for penalties and interest.

    If the invoice is correct, the input VAT is claimable, and the period's VAT201 return was correctly submitted, you probably should contest the rejection.
    The trouble with opportunity is it normally comes dressed up as work.

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    Diamond Member Justloadit's Avatar
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    From my experience and VAT and SARS, that once a VAT return has been filed, and mistakes are encountered in this return, I would strongly suggest, that all correcting entries be made in the new yet un-filed VAT period, even if you have overpaid/underpaid, the adjustment is made in the new VAT period. Ensure that you make detailed notes of what was done, and file it in your local file in the VAT period that you made the corrections for, in case there is an inquiry at a later date.

    What is important, is that the year end figures balance, that is turn over, input VAT, Output VAT.

    NEVER fiddle with filed VAT returns, the please explain and amount of time and effort is just not worth the aggravation, of making the correction in the already filed VAT period, versus the un-filed VAT period. In the case that SARS does a query at a latter stage, you then present the corrections that was made to rectify the error on the VAT period that the correction took place. Far easier for them to accept.
    Victor - Knowledge is a blessing or a curse, your current circumstances make you decide!
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    Platinum Member Marq's Avatar
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    Quote Originally Posted by Justloadit View Post
    What is important, is that the year end figures balance, that is turn over, input VAT, Output VAT.
    Not true in my recent experience as described above. The taxman looks at each period separately and does not have a year end figure for vat purposes.

    Now for normal tax he will look at the year scenario where the tax system will look at your vat output tax paid - calculate a potential turnover and compare it to your declared turnover. This is a reconciliation that you should do every year to make sure you have your ducks in a row.
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    Site Caretaker Dave A's Avatar
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    From the book-keeping side -
    Quote Originally Posted by Hazel1971 View Post
    My client has just called and told me that SARS have instructed them to submit the 2014/03 VAT Return and include the vehicle invoice from August 2013. Does this mean I should pass a credit note for the August invoice and re-enter the invoice in the current period?
    If the client "overpaid" the VAT liability account, that overpayment balance should still be in the VAT account and merrily carrying through to date - and is a fair reflection of the client's VAT liability. Therefor no additional entries required.

    If you claim the input VAT in the 2014/03 return, and pay the amount due per the return, life returns to normal.

    (Sorry, I know with Pastel the VAT liability accounts are set up differently to QuickBooks. So as I don't use Pastel, I can't give the default account numbers / account names for where that "overpayment" should be reflecting.)
    The trouble with opportunity is it normally comes dressed up as work.

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    Diamond Member Justloadit's Avatar
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    Quote Originally Posted by Marq View Post
    Not true in my recent experience as described above. The taxman looks at each period separately and does not have a year end figure for vat purposes.
    I must admit my experience was a couple of years ago, so things may have changed. But SARS had the audited balance sheets in front of them, and had compared the year figures to the figures that were sent to SARS via the VAT forms, and were simply doing a spot check.

    Anyway if you do as I suggested, each period would balance.

    Quote Originally Posted by Marq View Post
    Now for normal tax he will look at the year scenario where the tax system will look at your vat output tax paid - calculate a potential turnover and compare it to your declared turnover. This is a reconciliation that you should do every year to make sure you have your ducks in a row.
    This may a general rule to pick up supposedly variances in same type of business scenario, but is no yard stick they use, its simply a list which they use to do spot checking on. In my case, my input/output VAT is erratic, simply because of manufacturing times can take up to 12 weeks to complete from the time of purchase to the time of invoicing, and to add to the mix, quite a number of orders are exported directly to clients, meaning, no Output VAT.
    Victor - Knowledge is a blessing or a curse, your current circumstances make you decide!
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    Hazel1971 (28-Feb-14)

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    It is now system driven. If the turnover in the ITR14 does not approximate that submitted via VAT201's, they simply issue an SD14 supplementary declaration as part of your ITR14 and require you to reconcile it within R100.

    The request for correction thingy iro VAT201's has also changed. You can increase the turnover on the corrected one, but you cannot increase any of the input credits. Sneaky huh?

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    Thanks Dave A - I did advise my client to contest but apparently they didn't think it was worth it. Some people's kids eh?

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