VAT 101e Registration

[Elijah]

Hi All, I have a Vat related query:

On the Vat101e form there is a question that one has to fill: "Date on which the person became / will become liable for Registration". If one back dates this [to for example 01 July 2012]can one start charging VAT to clients - from 01 July 2012 - before receiving Vat Registration number? If not what is the purpose of this question.

Thanks in advance.

[dellatjie]

In theory, that is what is supposed to be happening, yes. I mean, the VAT Act requires you to register the moment you will receive a turnover of more than R1 million during ANY 12 consecutive months. What the Act doesn't provide for, is the time passing between SUBMITTING your application, and receiving your VAT103/ Vat registration number.

What I have seen some vendors do, is the put the words "registration pending" on the tax invoice where the VAT registration nr is supposed to be.

[GrantD]

Hi Dellatjie

Just to clarify as I am looking to register for vat in October, must I charge output vat on my invoices this month, state registration pending on invoice, and then pay over on my first Vat 201 after my regsitration is confirmed.

Thanks

[dellatjie]

GrantD, that is the way I understand it, and I have a similar situation at the moment, which I will be handling in the exact same way. You should, however, register straight away should your taxable turnover exceed R1 000 000 during any 12 months.

[Ru_star]

Grant D

I am also having some issues with regards to the period between application and registration for VAT.
I have spoken to a few consultants from SARS and they have all said that untill VAT registration has been confirmed by SARS, the company is not deemed to be registered for VAT and all invoices issued are not seen as valid Tax invoices. I also mentioned including the words "VAT registration pending" but this does not change the fact that it is not a tax invoice.

Therefore invoices for all sales/services rendered by such a company will not be VAT compliant and customers will not be able claim input VAT on these invoices. (Thus these products/services will be 14% more expensive than competitors)

My question is how is a new business supposed to be competitive if they have to pay over VAT to suppliers but cannot issue tax invoices for their customers to pay input VAT on. SARS's response was that you have to re-issue all invoices once registration have been confirmed (with your new VAT number). Only then can your customers claim input VAT.
They can obviously still include the input VAT on invoices issued before registration in their return, but if SARS investigates them and a valid tax invoice hasn't been issued subsequently, they will be seen to have defrauded SARS. My customers are therefore taking the risk in claiming input VAT on these invoices.

I find this whole thing very frustrating. Is there anyone that has dealt with SARS and has found a practical sollution to this problem?

[CLIVE-TRIANGLE]

1. Put a current date on the VAT201
2. In the interim, do not charge VAT
3. Once the registration has been done, you will be advised from which date you are VAT liable; it will be the date that you specified on the VAT201
4. If you issued any invoices without VAT in the interim, issue a credit note without VAT with the same date as the original invoice, and issue the customer with a new Tax Invoice, with a current date, including VAT.

SARS will not help you smooth this issue. They don't care.

[dellatjie]

This just does not make sense. Our shop applied for registration in September 2012, and were liable since then. We received our VAT103 3 weeks ago. Since September, the invoices issued amounts in number to more than 1000 invoices!

Which means that we will have to credit all invoices and re-issue them?

I will never understand this!

[CLIVE-TRIANGLE]

Dellatjie, I have in the past simply submitted nil returns for the arrear periods and where VAT was not charged. However now with the SD14 that can be tricky.

I know of outfits that used a nonsense vat number on their invoices for the period between application and registration. That is very dodgy but truth be told it worked out fine, except for the penalty for late submission.

The method I suggested earlier solves the SD14 issue and the late penalty issue.

Like I said, forget about SARS helping out; I am sure you tried that, like I have? If there is a more elegant work around, I'd be very happy to try it.

[dellatjie]

I spoke to someone yesterday who said they were at a seminar where this was discussed.

The recommendation they got, was to fill out the date of liability on your form for 3 months later. Problem is, in most new businesses, a lot of expenses is incurred in the first 3 months, so they will be losing out on a couple of refunds.

I will be going to a seminar about VAT today, and will ask this question and get back to you.

[Dave A]

Problem is, in most new businesses, a lot of expenses is incurred in the first 3 months, so they will be losing out on a couple of refunds.

If we're talking about expenses of a capital nature, you will be able to do a once-off input tax claim at the point of conversion from non-registered to registered.

[GrantD]

My new start up is involved with the export of wine with ost of my expenses being incurred from August 2012. I am only ow in a position to register for vat. Im confident Ill be able to claim my net input for all my net costs to date.

[dellatjie]

Dave,

I meant purchases in order to stock the shop and other expenses to start off.

I went to a SAIPA seminar on Friday. The speaker covered VAT and the Tax Admin Act. She was brilliant!

The advice she gave us, was the following"
On the tax invoice, do not indicate that VAT is charged, but include VAT in the price, as you are deemed to be registered the moment you earn more than a million in any 12 months. She further said, that we should add a paragraph at the bottom of the invoice, explaining the situation.
But she said, that is what her firm does, and she could, to date, not get any answers from SARS in this regard.