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Thread: VAT - How and when should it be charged?

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    Bronze Member rfnel's Avatar
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    VAT - How and when should it be charged?

    Good Evening Everyone

    If I can get straight to the point - could someone please explain how VAT works? When should VAT be charged? If your company is not VAT registered, does that mean that you should never charge VAT?

    Please bear in mind that my business knowledge is very limited (but I'm hoping that the forum will help me change that).

    Thank you for your responses.

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    Diamond Member AndyD's Avatar
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    If a business is not VAT registered then that business is the end user, not the customers it invoices. If you're not VAT registered you should never charge your customers VAT.
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    rfnel (12-Jun-11)

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    AndyD is right. Only VAT registered businesses are allowed to charge VAT. If you are not registered you may NOT charge VAT. You do still have to pay the VAT on invoices given to you by suppliers though.

    Registering for VAT has become a bit more of a process recently. If your annual turnover is likely to be under a million Rand, its not easy to do. Also if you are selling to the public its not always worth the effort.

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    rfnel (12-Jun-11)

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    Bronze Member rfnel's Avatar
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    Andy and BusFact, thank you for your swift responses. You cleared up something that I had been wondering about for quite a while.

    What are the advantages/disadvantages of registering for VAT? My understanding is that you can offset VAT paid on your purchases with VAT that you received from your sales. I am not sure exactly how that works though.

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    Site Caretaker Dave A's Avatar
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    My view is that if you are mainly supplying entities that are registered for VAT, being registered for VAT is a competitive advantage (essntially it is more tax efficient). However, if you are predominantly supplying entities that are not registered for VAT and hence can't use the VAT portion to reduce an output VAT liability, you are better off not being registered for VAT.

    There is a previous thread that went into this in some detail, but I can't find it just at the moment
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    rfnel (15-Jun-11)

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    Hi

    If you are not registered for VAT then you should not charge for VAT

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    Hi Guys

    I need help. A construction company that was responsible to build 6 houses were asked to get 3 tenders for the supply to those houses as there were no electricity supply to that houses only temporary power to those houses.Then the engineer asked them to get 3 tenders and to see that is done as they was getting paid profit and attendance for that job.iI used to work for him before.So he have my whole company details.Now what this company did ,they got 3 tenders but took the lowest tender and filled in my company details.They forged my signature.They charge vat where my company are not vat registered.They done the work and claim the vat on my companys behalf without me knowing.What makes it worse at the time i was working full time for another company. He called me to resign from that company to supervise another project for him and asked me to finish that project he got on my company name for him without me knowing.

    I only found out 2 weeks ago how the tender procedure were handled'

    What is the way forward,please advise as it is very urgent please.

    regards

    Jaboel

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    Jaboel your problem is a legal one, not an accounting one.

    You have two avenues available to you, fraud charges at SAPS and reporting a suspicious activity at SARS. You can do that here: https://secure.sarsefiling.co.za/AdH...FlashForm.aspx

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    Hi Adromeda

    Thanks alot , i will do it immediately.

    Regards

    Jaboel

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    Your question helped me.

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