VAT

[Hannes.Gouws]

Hi all

I recently registered my business for VAT.


We have made some sales without charging any VAT.

Now I have a question: Must I recover the VAT from these customers or how must I go about this?

Any best practices around this issue?

Thanks

[Dave A]

We have made some sales without charging any VAT.

After the effective implementation date?
And if so, how did that happen? (I'm asking to help understand the problem and as a caution for others approaching this hurdle).

I suspect you're going to have to just take the hit. VAT is an inclusive tax anyway - from a client's point of view if you only quote one price, it is deemed as including VAT unless clearly indicated otherwise. Technically you're not supposed to only quote prices ex-VAT anyway, although we all know it happens.

The other factor you need to consider seriously regardless of strict application is the potential damage to goodwill with your clients if you do go back trying to up the bill.

Obviously, how seriously you are affected by this could vary considerably depending on your circumstances. A little background might help us identify something you might not have thought of that could ease the pain.

[Hannes.Gouws]

Hi Dave

Thanks for your reply. I share your view about any potential damage that may occur when I try to do it this way.

These transactions happened before the VAT registration, so do I even have to pay VAT on these?

If I need to pay VAT on these transactions the amounts are not that big (just a couple of 1000's) so it won't be a issue to take a little knock.

Thanks

[Dave A]

I think the key issue is identifying the effective date, and to some extent one of the issues is whether your turnover had crossed the compulsory registration threshold of R300k per annum prior to registration.

I'd work from the month of registration onward if there isn't any particular reason why you're forced to go back further than that.

The nice part about conversion to a VAT vendor is you can claim input VAT for things like stock on hand and certain other assets on your balance sheet at the time. That can certainly ease the pain of transition some.