[Question] To ask Vat or not to ask Vat that is my question.

[Lu-Zanne]

I attended a makeup course last year and now I am having trouble clearing something up.

I was asked to pay VAT but the course principal is not VAT registered. I also received a kit which was bought product for product and I was asked to pay VAT on this too.

I do understand from what I have read that one can ask VAT on a product which you have paid VAT for, when you resell the product? In order to break even before your markup. (if this rudimentary explanation of what I understand it to be, makes sense)

BUT

Can you ask VAT for class fees if you are not VAT registered?

[Christel]

simple answer, no, they cannot charge you VAT if they are not registered for VAT... they should then just increase the fee so that it does not show as a separate line entry on the invoice.

[Dave A]

+1 for Christel's answer.

This part of your post is cause for concern:

I do understand from what I have read that one can ask VAT on a product which you have paid VAT for, when you resell the product? In order to break even before your markup. (if this rudimentary explanation of what I understand it to be, makes sense)

That could be read two ways, unfortunately the more likely interpretation of which would be incorrect. So to try to clarify:

If you have bought the product from a VAT registered vendor which you intend to resell for a profit, and you are not a VAT registered vendor, you would be correct to use the VAT inclusive cost of the product as your base cost and mark up from there.

However, as you are not a VAT registered vendor, in no way or form could you indicate to your client that any part of the fee you are charging them includes VAT.

[Lu-Zanne]

+1 for Christel's answer.

If you have bought the product from a VAT registered vendor which you intend to resell for a profit, and you are not a VAT registered vendor, you would be correct to use the VAT inclusive cost of the product as your base cost and mark up from there.

However, as you are not a VAT registered vendor, in no way or form could you indicate to your client that any part of the fee you are charging them includes VAT.

Thanks Dave and Christel. Dave this is exactly what I meant in a very uncomplex manner, and just the case. The entity seems to have stated Rx.xx excluding VAT, and then the asking price seems to be Rx.xx + VAT. I am also being held liable for this hence my researching possibilities.

[Blurock]

Thanks Dave and Christel. Dave this is exactly what I meant in a very uncomplex manner, and just the case. The entity seems to have stated Rx.xx excluding VAT, and then the asking price seems to be Rx.xx + VAT. I am also being held liable for this hence my researching possibilities.

If the price is quoted excluding VAT, it means that VAT has to be added on. It does not mean that no VAT will be charged.
This is standard practice in industry so that VAT registered vendors can calculate their real cost as input VAT will be claimed back.

[Lu-Zanne]

Blurock - Yes, I know VAT needs to be added on, problem is the "vendor" in this case is not VAT registered. The "vendor" is also stating that there was no VAT added, yet I have emails stating otherwise. The use of the word VAT is also on all documentation and it is in my understanding that if you are not VAT registered then you may mentioned it on your documentation.

[DieterT]

I almost made the same mistake when I started trading in my own name. I almost added VAT to my invoice which include goods used and labour. Luckily I got good advice before invoicing my client.

As for this person, wheter he/she is doing it intentionally or by mistake does not change the outcome.

Personally I would tell her that as per agreement the amount was for Rxx.xx exclusive of VAT and that due to him/her/the person selling you the goods and services not being VAT registered that it is concidered fraud for them to charge you VAT.

If he/she is smart enough they will take this opportunity to reinvoice you for the amount excluding VAT

If not, then pay the amount agreed upon and submit a fraud claim to SARS with evidence in hand and also hand the submitted fraud claim to this person so they can see you are for real.

You might not ever hear from him/her again or maybe they will try to blacklist you due to unpaid/underpaid invoice, but then you have the proof of the submitted fraud claim.

"I used to have a lot of anger issues, now I just have a passion for justice"