Implications of using another companies Vat number

[ac1]

I was wondering if anyone knows what the implications are and how to correct the error?

This person (owner of the company) used a previous company (that he use to be a part of) vat number to levy Output Vat. He did this because his company was new and was not registered for vat yet, and the client only deals with companies that can give a vat number.

He didn't understand that this actually has implications...

He is now aware and want to correct this error.

So he basically levied Vat without being registered using a former companies Vat number.

(He is still not registered for Vat due to the book keeper being super slow.)


Will he have to pay back the vat levied to the client? (He will loose the client)

Or will he have to pay it over to SARS when he gets his own Vat number (and then do Vat retrospectively)?

Or will he maybe just be penalized?

[adrianh]

Just phone SARS and ask them., they are actually most helpful.

[HR Solutions]

Yes they are very helpfull. I doubt very much that he would be able to keep money that he has received and should not have received. Ie the vat levied on every invoice.

[Dave A]

I doubt very much that he would be able to keep money that he has received and should not have received. Ie the vat levied on every invoice.

Actually, that raises a good question. When he cooked up this stunt, how did he intend to account for and pay the money collected over to SARS?

[Greig Whitton]

Using another company's VAT number to feign market credibility isn't an "error", it's fraud. The only way to sort out this mess is to come clean with SARS and pay the inevitable penalties (there is no way they are going to believe that a company owner didn't know that you can't use another company's VAT number). There is a very good chance that the client will find out somewhere along the line (even if it is only when their supplier starts invoicing with a different VAT number), so that relationship is definitely in jeopardy.

Why didn't this oke just partner with another VAT-registered supplier temporarily? He could have maintained the client relationship while his partner handled supply and invoicing until his company was VAT registered.

[ac1]

Thank you so much for all the responses.

Yes I guess phoning Sars is going to be the only way at the end.

Dave I don''t think he even thought about it.He has no Idea how Vat or accounting works.He just focuses on doing the physical work.

Yes Greig you are right wen he gets his own Vat Vat number the client is going to raise questions,and this is his only client without this client he will have to close down.

I was wondering about what you said about partnering up with a Vat registered supplier temporarily?

The company's who's Vat number he used is his parents company.He went off on his own (new company) due to the usual family and business issues.

But they would obviously help him if they can with a Joint venture/Partnership arrangement to sort out the Vat problem.

I have also thought about it before but couldn't figure out how it would work?

Lets say "he did partner up with them" so now the Vat will then be done under that number (along with that companies Vat)?

And the income tax will still be done normally under the new company.

Then they will just get a penalty for being like 9 months late with this Vat..

Maybe it's too late now, he should have done it from the start.

I seems no matter what route, the end result is going to be the same, the vat is going to have to be paid over and their will be penalties, irrelevant under what number.

Hopefully everything will work out.
Thank you all for the help!

[HR Solutions]

ac1 Even if he is using his parents vat number - he still has to pay the vat over, so he is committing fraud ! He cannot charge vat, use someone else's number and then still keep the money. It is fraud, theft and a whole lot of other offences that SARS will come up with !

[Dave A]

Dave I don''t think he even thought about it.He has no Idea how Vat or accounting works.He just focuses on doing the physical work.

Angazi and Weet Nie can be very, very expensive employees.

They also tend to cover up for wilful mischief too
(and the fact that the sole client views VAT registration as critical doesn't help dissipate my cynicism much either.)

With that out of the way - the big question is once in the cart, how can you get out of it?



You know, SARS still has the voluntary disclosure program running - no penalties and no interest if you come clean (and pay up the actual tax owed to SARS). Approaching SARS might well be the way to go for a fairly clean exit from a messy situation.

[adrianh]

How much money did he invoice and what did he do with the vat payments that he received?

[CLIVE-TRIANGLE]

All that you need to do is use the date of the first problem invoice as the date of liability on the VAT201.

It will of course result in late submission penalties, but will avoid other nasty consequences. Anyway, it's what I have done more than once in the past.

[Greig Whitton]

You know, SARS still has the voluntary disclosure program running - no penalties and no interest if you come clean (and pay up the actual tax owed to SARS). Approaching SARS might well be the way to go for a fairly clean exit from a messy situation.

Excellent advice and almost certainly the way to go. It's going to look suspicious ("I didn't know that I couldn't use someone else's VAT number ... honest!") but I don't see any other viable alternative. With a bit of luck, penalties may be waived or (at the very least) reduced (especially if the VAT portion is relatively negligible).

Retaining the client may be the trickier challenge. I guess you have to choose between coming clean and trying to build a relationship on trust (and risk losing the client) or keeping quiet about the whole thing and settling for a relationship that will always be on thin ice (and hoping they never find out).

[Justloadit]

The worst part here is that the client is seen to be negligent here by SARS, cos they never requested a copy of the VAT Tax certificate, nor did the client do a verification of the VAT number before claiming the input VAT.

How many of us actually request a copy of the VAT certificate from our supplier and verify that it is correct before claiming the VAT from the invoice?

[ac1]

So I phoned Sars:

The lady first suggested that it should just be done on the his new Vat number backdating.

But I reminded her the vat number on the Invoice is not going match his new Vat number.

The end result "It's complicated come into a branch"

If the vat is paid on the old number the Company name on the Vat Invoice doesn't match. On the new number the Vat number wont match.

What a mess!!

Ill check out the voluntary disclosure thanks Dave...

Hopefully it can be paid and solved soon.Calculate input output Vat owed,fill in the forms and pay..

For completion's sake I will update what the verdict is after visiting the branch.

Thank you for all the help!

[Justloadit]

Maybe issue a credit note with the old VAT number, and issue a new invoice with the new VAT number. Provide copy of VAT registration form with new VAT number to client for their records.

[HR Solutions]

So I phoned Sars:

The lady first suggested that it should just be done on the his new Vat number backdating.

But I reminded her the vat number on the Invoice is not going match his new Vat number.

The end result "It's complicated come into a branch"

If the vat is paid on the old number the Company name on the Vat Invoice doesn't match. On the new number the Vat number wont match.

What a mess!!

Ill check out the voluntary disclosure thanks Dave...

Hopefully it can be paid and solved soon.Calculate input output Vat owed,fill in the forms and pay..

For completion's sake I will update what the verdict is after visiting the branch.

Thank you for all the help!

Why are you doing all this ac1 ? Why don't you let that person do it ?